Businesses have been pressured by new carbon reporting requirements worldwide. To meet these requirements, they need to know where and how they can start collecting data for accurate accounts of their emissions, but many don’t even understand what’s required or how it all works!
Here are five steps that your business should follow in order to successfully measure its own carbon footprint.
1. Establish organisational boundaries
There are two approaches to defining organisational boundaries when it comes to the measurement of carbon emissions.
One is the equity approach, where organisations take into account the amount of emissions according to the percentage of stake they hold in an enterprise or operation. For example, if Company A has 75% equity share in an enterprise, and Company B has 25% equity share, then the companies are accordingly responsible for the emissions of that enterprise.
In a control approach, the company is responsible for all emissions from operations they oversee. This means, conversely, that if a company has no control over an operation, then it cannot be held accountable for its emissions as the company had no input.
2. Define operational boundary
A company’s carbon footprint includes emissions from all aspects of its operations, including both direct and indirect emissions. Therefore, after establishing its organisational and operational carbon reporting boundaries, the business needs to consider all sources of emissions.
The most common approach is to report emissions from scope 1 (direct emissions from owned or controlled sources) and scope 2 (indirect emissions from purchased electricity, steam, heat, or cooling).
However, some companies also choose to report on scope 3 emissions (indirect emissions from other upstream and downstream activities). Material scope 3 categories can include a wide range of activities, from employee travel to waste disposal.
While including these additional categories can provide a more complete picture of a company’s carbon footprint, it can also be more challenging to gather the necessary data. As a result, each company needs to carefully consider its carbon reporting goals and objectives in order to decide which scopes to include in its reporting.
3. Choose a base year
The company needs to select a base year which is recent and reflective of their typical energy consumption. This will ensure that the data provides an accurate representation for future progress towards net zero.
By selecting an appropriate base year, companies can ensure that their net zero journey is accurately represented in data form. This will help them to better understand and document the progress they are making on this important task as well as provide a more comprehensive overview of how things stand right now for their business going forward with less uncertainty or guesswork involved.
4. Identify sources of emissions
As businesses continue to strive for net zero emissions, it is essential that they identify which activities within their defined boundaries generate carbon dioxide. Data on energy consumption and greenhouse gas emitters must be accurately categorised into scope 1, 2, or 3.
Failing to properly categorise carbon emissions can result in businesses overestimating or underestimating their carbon footprint, which could lead them down the path towards an ineffective strategy for managing greenhouse gases. The consequences of this are significant as it may hinder a company’s ability to fulfil its net zero goals and other reporting obligations related with environmental compliance issues.
5. Start collecting activity data
Now the business can start collating all relevant data from its sources. This initial analysis will provide an accurate representation of how much carbon is being released through their daily operations, providing them with one big picture towards tackling this global issue head-on.
Once this is done for each operation or service offered by the business, then it’s possible to determine patterns or trends in energy consumption and carbon emissions that will help reduce the business’ overall impacts even further.
Conclusion
Carbon accounting is an important yet complicated system for reporting a company’s carbon footprint. It requires thorough examination of the organisational structure, emissions sourcing and grouping by scope, and historic data comparison. Nonetheless, once the system is in place, companies can better plan and optimise their energy consumption and carbon footprint to meet their strategic targets.
About the Author
John van Vliet is a content writer for ClearVUE.Business. He studied journalism and International Relations before starting his career as a writer and editor, working for various companies and clients in Europe and Africa. He enjoys spending time with his wife and son, playing and watching sports, and volunteering at his local church.
