How to measure your carbon footprint
Measuring your company’s carbon footprint is more important than ever. Customers, employees and other partners are increasingly asking businesses about their greenhouse gas emissions.
It’s not enough to make a guesstimate. Companies need accurate and credible data on their climate change impact and sustainability efforts.
Calculating your carbon footprint is the first step in figuring out how to reduce your emissions. “Data keeps us honest and insightful about where our impact is,” says Elizabeth Sheehan, Director of Climate Smart Strategic Engagement at Radicle, a company that advises businesses on how to reduce emissions.
Doing the calculation properly isn’t for the light-hearted. “The electricity grid is different depending on where the business is located,” Sheehan says. “A company in Vancouver is going to have a different footprint than a company with the same energy consumption in Alberta or Ontario.”
What is a carbon footprint?
A carbon footprint is the total amount of greenhouse gases an organization contributes to the atmosphere. Seven greenhouse gases covered by the Kyoto Protocol are typically measured, including carbon dioxide (CO2), methane and nitrous oxide.
A company’s carbon footprint is measured in tonnes of carbon dioxide equivalent (CO2e). Canada’s 1.2 million small and medium-sized enterprises (SMEs) produce an estimated 200 million tonnes of CO2e per year, according to Radicle’s calculations. That works out to about 165 tonnes per business on average.
Various standards exist that detail how a business can credibly measure and report its carbon footprint. Radicle’s Climate Smart program uses the GHG Protocol Corporate Standard—the oldest and most commonly used method. Another option is ISO 14064, which is an ISO-adapted version of the GHG Protocol Corporate Standard.
The 3 emission scopes
Under the GHG Protocol Corporate Standard and ISO 14064, emissions are broken down into three categories, known as “scopes”:
Direct emissions from sources controlled or owned by your company (e.g. vehicles, furnaces, boilers, equipment)
Indirect emissions from energy bought by your company (e.g. electricity, heat, cooling)
All other indirect emissions (e.g. material use, waste, business travel, staff commuting with vehicles not owned or controlled by your company)
Companies are required to report all emissions that fall under the first two scopes. The third scope is optional. Many businesses include it too as a way to act more sustainably and be more transparent.
“It’s amazing how many SMEs are stepping up and including scope three, even though it’s not required,” Sheehan says.
What are the benefits of measuring your carbon footprint?
The most obvious benefit is the fact that you’re helping to save the planet. But many other benefits come from measuring your carbon footprint. “There’s a whole range of potential ways you'll need to use that data going forward,” Sheehan says. The data can be used for:
Creating an emission reduction strategy
Businesses that worked with Radicle to calculate their carbon footprint achieved 24% emission reductions on average.
Emission reductions can lead to cost savings through reduced waste, energy and water use. After factoring in cost savings, subsidies and grants, businesses often achieve a return on the investment, with a payback period of as little as a year or two in many cases.
“Measuring your carbon footprint is an opportunity to take stock of how you’re doing business, your operations, your behaviour and technology that might help save waste and energy costs,” Sheehan says.
ESG reporting, certifications and eco-labelling
Businesses can include carbon footprint data in reporting on their environmental, social and governance (ESG) efforts. The data may also be required for B Corp, ISO and GHG certification, eco-labelling, participating in carbon markets and calculating carbon taxes.
Better access to supply chains and financing
Businesses are increasingly asking about the carbon footprint of partner firms, including in requests for proposals, bids and tenders.
Sheehan says over two-thirds of the world’s GDP is somehow tied to organizations that have set a net-zero emission target—meaning they’ve pledged to reduce net emissions to zero through emission reduction and offsets.
“A business needs to have quantifiable data on their footprint to stay competitive within a supply chain,” she says. “It's a great decision to start calculating your footprint because it will be an issue of transparency that your partners and others will increasingly ask you to measure and take responsibility for.”
Happier customers and employees
Customers and employees increasingly demand tangible climate change action from businesses. Having quantifiable data on your efforts gives credibility to your sustainability commitment.
Sheehan says being conscientious about the environment also makes a company more attractive to employees and helps with hiring, retention and team engagement. “It shows you’re modernizing and going to stay relevant in the future,” she says.
“It’s important and rewarding for employees to know their company is taking positive action. This is also a chance to provide your health, environment and safety team and others with carbon skills, which is a future skill for anyone in your organization.”
How can I measure my company’s carbon footprint?
Follow these two steps to measure your carbon footprint.
1. Understand your goals
First be clear on why you want to measure your carbon footprint and how the exercise fits into your sustainability strategy and overall business strategy. Having this understanding will help you pick the best method for measuring your emissions and prioritizing reduction projects.
Examples of possible goals:
- internal reporting
- cutting costs
- reporting for eco-labelling or certification requirements
- reporting to regulators or partners (e.g. supply chains, financial institutions, insurance companies, investors)
- reporting to customers or employees
2. Collect emissions data
The next step is to collect data on your emissions. It’s possible to do this yourself. But if your reporting requires accuracy, detail, credibility and transparency, it’s a good idea to bring in an outside expert.
Consultants will either complete all the work with you or work with your team on the measurement.
Either way, the next step is to choose an appropriate accounting standard to collect the data depending on your company’s goals. If you decide on the GHG Protocol Corporate Standard, you’ll need to decide if you want to include emissions from scope 3, or stick with only scopes 1 and 2.
Now you’re ready to collect data on your company’s emissions. This involves going through all of your business activities and assets to determine what emissions are produced in each area. Steps typically include:
- mapping out your company’s facilities, machines, equipment, vehicles and activities
- collecting bills for each one, such as utility bills and vehicle gas bills
- determining the CO2 equivalent based on what are called “emissions factors”—factors that affect the CO2e calculation in your area. These can include the carbon intensity of the local electricity grid, types of energy used and modes of transportation. For instance, Radicle’s Climate Smart software calculates approximately 250 climate factors, updating them continually as conditions change.
Companies typically calculate their carbon footprint on an annual basis. To report the data, you’ll need to choose between two reporting approaches:
- Equity share approach: Under this approach, the company accounts for emissions based on its share of equity in an operation (e.g. an affiliate, franchise or joint venture).
- Control approach: This approach requires the business to account for 100% of emissions from operations that the company has financial or operational control over.
In some cases, you may need to develop several datasets for different reporting requirements. Those requirements also determine what breakdowns are needed for the data (e.g. by facility).
Collecting and reviewing the data can lead to surprising revelations. “You start to see patterns of where are your largest sources of emissions,” Sheehan says. “People are often surprised.”
She cites one company that realized it had been paying the residential rate for electricity, rather than the commercial rate, which was lower.
“Just by starting to measure, you may realize that, wow, leaving that bay door open is inefficient from a carbon emissions perspective, but also those are dollars and cents out the door. There are a lot of a-ha moments.”
For example, below is a breakdown of emissions for businesses that have worked with Radicle in the NAICS 33 manufacturing sector.
Where emissions come from in the NAICS 33 manufacturing sector
How can I reduce the carbon footprint of my business?
Knowing how your business generates emissions will help you develop a reduction plan. Experts typically focus in on the largest sources of emissions. It’s helpful to look at what other companies have done, including those in your sector.
You can use lean and operational efficiency principles to identify ways to reduce emissions. One method of prioritizing the most impactful solutions is Pareto analysis, aka the 80-20 rule, which is based on the idea that a small number of factors is typically responsible for most issues.
Emission reductions are possible in any sector, Sheehan says. She cites one professional services firm that didn’t think it had many opportunities to reduce its carbon footprint. “Then we crunched the data, and they achieved a 10% reduction in one year just by changing their office products.”
Most emissions happen in four areas: electricity, heat, materials and transport. Here are examples of possible projects in each of the different categories.
1. Electricity—Areas to focus on:
- behaviour change (turning off and unplugging appliances)
- capital equipment (investing in newer, more efficient freezers)
- simple equipment (switching to LED lightbulbs and motion sensors for lighting)
2. Heat—Areas to focus on:
- behaviour change (temperature adjustments)
- capital equipment (boiler and hot water tank retrofits, HVAC upgrades)
- simple equipment (installing low-flow aerators on sinks and low-flow nozzles on dishwashers)
3. Materials—Areas to focus on:
- packaging (reducing the size of packaging, using recycled material)
- paper use (switching to e-statements, buying 100% recycled paper)
- waste diversion (improving waste sorting, introducing new recycling streams)
4. Transport—Areas to focus on:
- third-party shipping (consolidating orders and shipments into one trip)
- business travel (webconferencing, switching to fuel-efficient company vehicles)
- fleet behaviour (idling reduction, speed monitoring, route optimization)
- fleet fuel switching (using alternative fuels)
- fleet replacement/capital (vehicle upgrades with more fuel-efficient models)
- staff commuting (allowing remote work)
When planning your emission reduction strategy, be sure to include your team in order to get their input and buy-in for changes. “In the end, it's your people who actually make emission reductions happen,” Sheehan says. “It’s important to have really good engagement and a team that feels equipped, empowered and educated around where the opportunities are.”
Reducing emissions isn’t a one-time project. It’s a process of continual improvement. As you accomplish projects and see results, meet again with your team to plan the next round of reductions.
Sheehan recommends communicating your actions and results to employees, customers and the community. “Telling others about your climate efforts is an act of generosity,” she says. “You’re contributing your good ideas and innovation and sharing with others how we’re going to get there faster and better.”