Claire Scott, Environmental Business Advisor at GC Business Growth Hub, explains what a carbon footprint is, how they are calculated and why it’s something every business should consider.
Within a few short years, knowing your carbon footprint has gone from a niche ‘nice to have’ to a relatively common occurrence in business. Many large UK companies and larger energy users have had to report on their carbon emissions by law for over 10 years, and many are beginning to make carbon a key part of their procurement process. In the public sector, buyers are increasingly asking for evidence of reducing carbon emissions as part of their social value commitments.
It’s not surprising, then, that we’re seeing more and more forward-thinking SMEs in Greater Manchester ask us about carbon footprinting and how to get ahead.
2021 is certainly the right year to get started. Being seen as a ‘green’ business has already become more important in the wake of COVID-19, and this year we’ll see it become centre stage as the Net Zero agenda takes off. Companies of all sizes from around the world are committing to net zero emissions – and you can’t set a target without measuring your carbon footprint first.
On a more practical level, measuring your carbon footprint provides many direct benefits. You can’t manage what you don’t measure, and by collecting the data you’ll need for a carbon footprint you’ll be able to identify and prioritise where you can make the biggest improvements to the way you use energy, fuel and other resources.
What exactly is a carbon footprint?
So what is a carbon footprint? Put simply, it’s a measure of your contribution to climate change. There are generally two types – organisational carbon footprints and product carbon footprints. This blog focuses on the former.
Your organisational carbon footprint stacks up all the greenhouse gas emissions you emit over a 12-month period and gives you a total figure expressed in tonnes of ‘carbon’, or to be more precise, carbon dioxide equivalent (CO2e). There are six key greenhouse gases emitted by human activities that contribute to global warming, but to make things easier we measure everything in relation to CO2 because it’s the most common.
There are many possible sources of greenhouse gas emissions from a business. To make managing them easier, we split them into three ‘scopes’:
Scope 1: These are the emissions from sources you own and control and are therefore directly responsible for. For most businesses, this will be any gas heating or fuel oil you burn on-site, and the fuel you use in your company vehicles. If you use industrial refrigeration or air conditioning, refrigerant losses would also be included here, along with any emissions that may be released directly during a manufacturing process.
Scope 2: These are the emissions you indirectly produce through the energy you purchase, which for most businesses is solely electricity. By using electricity, you are indirectly responsible for the greenhouse gases generated at source by the energy producer.
Scope 3: These are any other emissions you’re indirectly responsible for from sources outside your direct control, e.g. the goods and services you purchase, the distribution and use of your own goods and services by customers, the disposal of your waste, employee commuting or business travel, and so on.
For most emissions sources, there is a specific ‘emissions conversion factor’ to calculate the total carbon from that activity. For example, to measure the carbon emitted by a van that runs on diesel, you take the litres of diesel consumed by the van and multiply it by the corresponding emissions factor for diesel.
The UK emissions factors are publicly available so you can do this yourself on a spreadsheet (which GC Business Growth Hub’s Resource Efficiency team can help you with), or you can use one of many tools available online that do it for you.
There are also a number of formal routes to verify your carbon footprint to a recognised standard, such as ISO 14064 or the Carbon Trust Standard, to name just two. But, as I said above, if you’re just starting out, with the right data to hand you can do it yourself and achieve a good internal benchmark for future improvement.
A quick step-by-step guide
Start by setting the boundaries for your footprint. The best approach for you will depend on what your major emissions sources are, which sources you have most influence over and how much data is available to you. Carbon footprints should include scope 1 and 2 emissions as a minimum. Scope 3 emissions are more difficult to measure, so there is flexibility here in how much or little of these you include. Some of the more commonly measured scope 3 activities include emissions from waste going to landfill, water consumption and business travel.
For most small businesses measuring their footprint for the first time, the emissions from your heating, electricity consumption and vehicle use are a good start.
Once you’ve identified all the activities you want to measure, begin collecting data for each using a relevant metric, e.g. litres of fuel or mileage for vehicles, kWh of gas or electricity from your energy bill/meter, cubic metres of water from your water bill/meter, and so on. Track them in a spreadsheet, separating them out into the different scopes.
To calculate your footprint, convert the data in your spreadsheet using the relevant CO2e conversion factor for each of your emissions, or use an online tool such as the Carbon Trust’s SME Carbon Footprint Calculator (others are available). It’s normal practice to calculate your carbon footprint on an annual basis. You may wish to align it with your accounting period.
Once you have your carbon footprint, use the data to identify the most suitable actions to reduce your emissions and make cost savings. If electricity use is by far your biggest contributor to your carbon footprint, for example, prioritise measures that reduce your electricity use.
Use your first carbon footprint as a baseline to set targets. The Science Based Targets initiative, which helps companies to set targets based on what climate science tells us we need to achieve, currently recommends an absolute reduction of 2.5 – 4.2% year-on-year as a minimum – although many companies are moving far faster.
Communicating your progress to stakeholders – both internal and external – is a great opportunity to demonstrate your commitment to improving environmental performance and tackling climate change.
Carbon offsetting
You have probably come across the term carbon offsetting, where you purchase ‘credits’ from schemes that remove carbon from the atmosphere (often tree planting) to cancel out your own emissions. It can be tempting to jump for this option straight away, but to get the most out of your carbon reduction journey it should be the last resort if you can’t eliminate or reduce the emissions themselves.
Offsetting your entire carbon footprint is a huge missed opportunity to make efficiency improvements in your business and benefit your bottom line. As a rule of thumb – focus on efficiency first, then look at indirect measures such as securing a 100% renewable electricity supply, and only explore offsetting once all other avenues have been exhausted.
You should also be cautious about the claims you make when offsetting your emissions. Not all offsetting schemes are equal. Be wary of the quality of what you’re purchasing, the wider impacts of the project you’re investing in and whether the credits are verified/guaranteed.
GC Business Growth Hub’s Resource Efficiency service is perfectly placed to start you off on your carbon reduction journey. Specialist advisors can audit your business to identify the most effective efficiency measures, provide advice and support on data collection, and guide you through your carbon footprint calculation. They can also offer funding for eligible improvements through an Energy Efficiency Grant.
GC Business Growth Hub is part-financed by the European Regional Development Fund (ERDF). The Hub is also supported by the Greater Manchester Combined Authority and Greater Manchester local authorities.
