Organisational carbon footprint

Exploring the workings of this system and highlights how a company can establish an effective model.

by Nicola Pichel-Juan

An ‘organisational carbon footprint’ measures the amount of carbon dioxide (CO₂) and other greenhouse gases (CO₂e) released into the atmosphere as a result of a company’s activities. It can be a daunting prospect for any business which wants to measure its footprint to understand how to start the process and to find a way through the various reporting scopes, legislative requirements and even some of the terminology used. In this article, we will provide an overview of the concept of organisational carbon footprints, practical advice on how to get started, and where to find the information required, as well as sharing some of our experiences so far as we work to calculate SATRA’s own footprint.

It is perhaps important to start by understanding why it is important for organisational carbon footprints to be calculated and, more crucially, for reductions to be targeted. The science is unequivocal – the planet is facing a climate emergency. During 2022 we saw, for example, the highest temperatures ever recorded in Western Europe, one-third of Pakistan under water due to floods and China’s worst drought on record. What were ‘once in a lifetime’ events are now happening with increasing frequency and intensity as a result of climate change. The Paris Agreement signed in 2015 aims to keep a global temperature rise this century to well below 2°C above pre-industrial levels, and ideally to limit it to a 1.5°C increase. In order to do that, reductions in greenhouse gas emissions will need to be made globally across all industries.

Growing demands

Such a challenge means that all organisations will come under increasing pressure to accurately measure and report their emissions. There are already legislative requirements in many countries which oblige larger businesses to report on and disclose their emissions. The amount of legislation and the proportion of companies impacted are only going to increase in the coming years, as countries set and strive to achieve targets to reduce emissions. For instance, the UK government has set a goal to be ‘net zero’ by 2050.

Demonstrating environmental credentials and providing robust data on emissions will be required as part of tender processes – particularly with larger organisations, already requesting that smaller businesses within their supply chains make similar emissions reports.

Consumers are also increasingly expecting and demanding that companies are taking action to counteract climate change. Therefore, there is a clear commercial benefit for firms which are already working to minimise their emissions. Organisations that are recognised as taking sustainability seriously are also likely to have an advantage when seeking to recruit and retain employees.

In addition, with soaring energy prices and cost of living challenges being encountered across the world, there is a clear cost benefit. As an example, any activity undertaken to cut energy consumption is also going to reduce costs, and for many companies this will be a much more significant reduction than it would have been even just a year ago. Larger strategic projects, such as onsite energy being generated through the use of solar panels which may not have previously been regarded as cost-effective, will now also have much shorter pay-back periods.

Considering the differences

When reporting an organisation’s carbon footprint, the emissions are accounted for across three different ‘scopes’ in line with the ‘Greenhouse Gas Protocol’ – a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Scope 1 emissions are from sources that are owned or controlled directly – for instance, company cars or fugitive emissions from equipment such as air conditioning systems. Scope 2 emissions are associated with energy purchased by the organisation, and Scope 3 emissions cover all other impacts in the supply chain – upstream or downstream. These include purchased goods and services, business travel, commuting, waste disposal, and freight and transportation. Many businesses will choose to focus, at least initially, only on Scopes 1 and 2, as these are directly under its control and typically easier to measure. However, it is important to consider that Scope 3 emissions can account for up to 90 per cent of the total footprint – particularly for companies purchasing large volumes of finished goods. In that case, a purchasing organisation can have a positive influence on the entire supply chain through its own policies and priorities.

Once the scopes to be reported on have been decided, the next step is to identify from where data can be sourced in order to calculate the footprint. Each business is different, although a considerable amount of data should be readily available.

Examples of some of the data SATRA has used include the following. Scope 1 – fuel card data for the litres of fuel purchased for company cars and ‘F-Gas’ survey data for emissions from our air conditioning systems. Scope 2 emissions – units of electricity consumed measured in kWh, which can be taken directly from utility bills.

Facts and figures

Collecting data for Scope 3 emissions is where the process starts to get much more challenging, and the type and complexity of Scope 3 emissions will vary greatly from organisation to organisation, according to the type of activity that is undertaken as part of its business.

For SATRA, one of the main sources of data was a ‘spend report by supplier’ for a given period. Each supplier was initially assigned to a fairly broad service category – for instance, ‘professional services’, ‘freight’, ‘metals’, ‘polymers’, and ‘printing and recording’. Where further information was available, the data was refined into sub-categories, which resulted in ‘freight’ being broken down into ‘air’, ‘sea’ and ‘road’ sectors.

Physical items (such as metals and polymers) should ideally be classified in more detail – for example, a ‘polymer’ could be polyvinyl chloride (PVC), polypropylene or nylon. The purchased weight of each item should be recorded, as it is more accurate to use this than ‘financial value’ as the basis to determine an item’s environmental impact.

Data on SATRA’s waste streams was provided by our waste services contractors, who supplied reports detailing the total weight of each type of waste collected from us. Finally, data was collated for foreign business travel, as well as staff commutes.

A balanced approach

When collecting data, particularly for Scope 3, it is important to strike a balance between having sufficient detail to represent the organisation’s activity with the amount of time and other resources available to carry out the work. As an example, at SATRA we identified that 95 per cent of our spend was accounted for by 84 per cent of our suppliers, so for now we have only looked at those companies. Any particular ‘hotspots’ identified once the impacts have been calculated will then be the focus for more detailed analysis.

Once sufficient data has been collected relating to a firm’s activities, it needs to be converted into an environmental impact. In the UK, much of the data needed to do this is published by the Department for Environment, Food & Rural Affairs (DEFRA) and the Office for National Statistics (ONS), and updated on an annual basis. Some examples of environmental impacts expressed in kg CO₂e are included in table 1. For context, a ‘typical’ pair of shoes is likely to have an impact of 10 to 15 kg, and a return flight from Heathrow to Bangkok in premium economy has an impact of 4,531 kg.

Table 1: Examples of environmental impacts for different items (UK figures)
Item	kg CO2e impact
1 kWh of electricity	0.21
1 kg of R410 refrigerant for air conditioning	2,088
1 km long-haul flight in premium economy	0.32
1 mile driven in a medium-size petrol car	0.29
Impact data taken from UK Government GHG Conversion Factors for Company Reporting 2023 published by DEFRA.

Some organisations will opt to do all the data collection and conversion into an environmental impact themselves, particularly if they are only considering Scopes 1 and 2. Others will use specialist consultants to do some or all the work, or to provide at least some support or verification of the results. Another option is to use a carbon data management platform, which is the option currently chosen by SATRA. We are working with a platform which allows us to input and refine our data. This is then converted into an environmental impact using data from a number of sources including DEFRA and the ONS. The platform also provides additional functionality, such as built-in commuter surveys.

While it can clearly take considerable work and effort to reach a point where the environmental impact of an operation has been calculated, that is only the beginning of the process. Targets must be set to reduce impacts and action taken to make those reductions. It is important at this point to understand some of the often-misunderstood key terminology used.

Setting targets

Targets established in line with the ‘Science Based Targets initiative’ (SBTi) are often seen as a ‘gold-standard’, and involve setting ambitious decarbonisation goals that will keep the global temperature increase to within 1.5°C compared to pre-industrial levels. They must be validated by the SBTi, and ‘offsetting’ is not permitted as a way to reduce emissions. In contrast, setting targets to be ‘net zero’, ‘carbon neutral’, ‘carbon negative’ or even ‘climate positive’ will all involve at least some degree of carbon offsetting (see table 2).

Table 2: Terminology and definitions
Term	Definition
Carbon neutral	Removal of CO2 equivalent to emissions for Scopes 1 and 2
Net zero	Removal of all greenhouse gases equivalent to emissions (CO2e)
Carbon negative*	Removal of more carbon CO2 than is emitted
Climate positive	Removal of more of all greenhouse gases than are emitted (CO2e)
*The terms ‘carbon negative’ and ‘carbon positive’ are sometimes used interchangeably for marketing purposes to mean the same thing – that more carbon has been removed than was emitted.

How to then make emissions reductions will depend upon the activity of the individual organisation involved. For Scope 1 emissions, switching company vehicles from petrol or diesel to electric is one option, as well as investigating cooling systems which use lower impact refrigerants and making sure that any leaks are identified and fixed. Scope 2 emissions relate to energy consumed and must involve an overall reduction in energy consumption. This can be done, for example, by ensuring that equipment is not switched on unnecessarily, determining if anything can be permanently removed, or by changing to more energy-efficient equipment. Where feasible, the onsite generation of energy that is created by renewable sources should also be investigated.

Scope 3 emissions cover a wide array of items and efforts should be targeted to reduce any hotspots identified through the process. Airfreighting of goods and business travel by air are common examples of where a high impact is likely to be incurred. There are also probably some ‘quick wins’ that can be identified to both reduce emissions and increase employee engagement in the process.

Publishing Data

This article was originally published on page 18 of the April 2023 issue of SATRA Bulletin.

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