Business Carbon Footprint: Calculate, reduce and report
Any business aiming to take part in the fight against global warming needs to know how much their company carbon footprint is contributing to the problem. The carbon footprint of a company is the total amount of greenhouse gases (GHG) emitted directly or indirectly through its activities.
What is the carbon footprint in business?
Just like individuals each have their own personal carbon footprint, companies also carry out activities that produce greenhouse gases. Examples of this are during the manufacturing phase or the transport of products. The carbon footprint of an organisation measures all the greenhouse gas emissions emitted directly or indirectly through the activity carried out by said company.
The forces that drive companies to adopt policies to combat global warming can be both mandatory (international agreements, national legislation, etc.) and voluntary (environmental conviction, saving resources, etc.).
Streamlined Energy and Carbon Reporting (SECR) framework for UK businesses.SECR is legislation introduced in April 2019 by the UK government with the aim of putting more responsibility on organisations and businesses to measure and report their emissions. The legislation means almost 12,000 companies need to comply with reporting requirements. Large UK incorporated companies are required to comply with SECR if they have two of the three conditions; at least 250 employees, an annual turnover greater than £36m and an annual balance sheet total over £18m.
How to measure the carbon footprint of a company
Calculating the carbon footprint for business is the first step for an organisation to know its impact on the planet and take action to reduce it.
Business carbon footprint calculator
The formula to calculate the carbon footprint of a business is simple: the result is obtained by multiplying the activity (or consumption) data by its corresponding emission factor. Based on this formula, there are several methodologies to calculate the carbon footprint (UNE-ISO 14064, GHG Protocol, etc).
- Carbon Footprint = Activity Data x Emission Factor
- Activity data: the parameter that defines the level of activity that generates greenhouse gas emissions.
- Emission Factor: amount of greenhouse gases emitted for each activity.
Activity data is divided into three main scopes:
- Scope 1: This is defined as the direct greenhouse gas emissions controlled by a company. Examples of this include fuel consumption - heating, process equipment, and vehicles - as well as manufacturing, refrigerant systems, on-site waste facilities and fugitive emissions.
- Scope 2: These are the indirect emissions associated with the energy consumption acquired and consumed by the organisation. Examples include lighting, equipment, water heaters and the like.
- Scope 3: These are the greenhouse gases emissions that an organisation can influence but does not control. In this category are things such as transporting raw materials to make products, business travel, employees commuting to work in vehicles not owned by the company, and transportation of purchased fuels. It is often the largest scope and hardest to quantify.
The steps to follow to calculate the carbon footprint are the following:
- Choose a year of calculation.
- Establish organisational and operational limits.
- Collect consumption data.
- Carry out the calculations by multiplying the activity data by the emission factors.
- Prepare a reduction plan including the measures to be carried out.
Ways a company can reduce carbon footprint
Companies often have the option of reducing or offsetting their carbon footprint:
- Improving your energy efficiency and saving money on your energy expenses.
- Consuming renewable energy and participating in the transition to this type of energy.
- Carrying out awareness campaigns.
- Implementing a corporate social responsibility strategy.
- Investing in environmental projects, such as Selectra's Gandhi project.
- Buying tons of CO2 in the international emissions market.
Reduce your CO2 emissions
The signing of the Kyoto Protocol has raised awareness around the world about climate change and the impact of our activities on the environment.
Greenhouse gas emissions produced by human activities are the main cause of global warming and contribute to climate change. That is why the UK promised to keep global warming below 2°C by the year 2100 in the Paris Agreement.
How to reduce the carbon footprint of a company?
For those looking at reducing carbon footprint in business, it is possible to offset part of the CO2 emissions considered unavoidable, and even achieve a zero carbon footprint.
There are three steps to achieving carbon neutrality:
- Know and measure your carbon footprint.
- Reduce your greenhouse gas emissions by reducing your dependence on fossil fuels.
- Compensate for carbon emissions that could not be avoided in the second stage. To achieve carbon neutrality, the financing of the environmental project must correspond to the amount of CO2 produced.
Carbon footprint offsetting can only be applied once the organisation has implemented actions to reduce its greenhouse gas emissions.
Carbon footprint in business - how to comply with SECR?
SECR was introduced with the aim to bring the benefits of carbon and energy reporting to more businesses in the UK. The reporting framework encourages the implementation of energy efficiency measures, with both economic and environmental benefits. The legislation, which replaced the Carbon Reduction Commitment (CRC) scheme, is intended to support companies in cutting costs and improving productivity at the same time as reducing carbon emissions.
What are the reporting requirements?
Depending on the size of the company there are different requirements to fulfil in order to comply with the regulations.
UK incorporated quoted companies:
- Need to report on the annual quantity of greenhouse gas emissions and energy consumed from their purchase of energy (gas, electricity) for their own use.
- State what proportion of energy consumed relates to emissions in the UK and UK offshore areas.
- Describe the main measures taken to increase their energy efficiency.
Large UK incorporated unquoted companies:
- Need to report on the annual quantity of GHG emissions and energy consumed in the UK arising from their activities relating to the combustion of fuel for transport or the combustion of gas.
- Report on the purchase of electricity for their own use.
- Describe any action taken to increase energy efficiency.
Large UK incorporated LLPs:
- Prepare a report equivalent to the directors’ report for each financial year, including figures on energy consumptions and energy efficiency measures.
“If you don’t measure it, you can’t manage it. New simplified rules will ensure more than 11,000 large businesses report on carbon emissions and cut down the amount of energy they use. The UK is already a world leader in cutting emissions, doing so faster than any other country in the G20. By accounting for carbon emissions, investors and shareholders will be able to see the opportunity and potential savings from cutting down on energy waste and increasing the efficiency of their businesses.”
Are there any exemptions?
The introduction of SERC two years ago means that nearly 12,000 UK-based companies now need to report on the carbon emissions on a yearly basis and what action they are taking to reduce it and therefore help combat climate change.
There are a number of exemptions to SECR, including the following:
- Companies not registered in the UK.
- UK subsidiaries that qualify for SECR but are already covered by a parent’s group report (unless the parent company is not registered in the UK).
- Public sector organisations, charities and private sector organisations that don’t file reports to Companies House.
- Companies that use less than 40,000 kWh of energy in the reporting year.
For more information about what you and your company can do to reduce carbon emissions and tackle global warming, visit our Selectra climate website.