Chapter V: How to calculate the organisational carbon footprint

In this eight-chapter series, Ganeshkumar V, head – sustainability and climate risk, DQS India, explains the importance of managing carbon emissions

21 Oct 2021 | By WhatPackaging? Team

What is your organisation’s carbon footprint? Would you know the answer if a consumer or an investor asked you? Organisations across the globe are pledging towards net-zero emissions and focusing on carbon reduction in the supply chain. All this begins with carbon footprint measurement - the most important aspect of carbon management. After all, you can’t manage what you haven’t measured. First, a rewind – what is a carbon footprint?

Carbon footprint or greenhouse gas emissions inventory is a way of quantifying the amount of carbon dioxide and other greenhouse gases released into the atmosphere by a particular individual, organisation, community, event, product or service. Now, there are many types of carbon footprints. Let’s dive deep here on organisational carbon footprints. From a compliance point of view, the command and control and carbon pricing policies have emissions thresholds that often dictate which organisations need to comply, and which don’t. Hence, first, you need to know your organisation’s carbon footprint before you understand whether it is covered by a particular climate policy.

However, carbon footprint management is not just about compliance. Many organisations voluntarily report their sustainability performance now, including carbon footprints, to staff, customers, shareholders and investmentknowledge related schemes, such as the Carbon Disclosure Project (CDP). The finance and the resource sector are some industries where voluntary carbon footprint management is now largely expected. In such cases, organisations need to know how to undertake a carbon footprint according to best practice standards. This requires skill and knowledge to gather the appropriate data, apply emissions factors, categorise emissions by Scopes and report clearly and consistently.

Here are five steps for undertaking an organisational carbon footprint.

The timeframe: The first step is to determine the reporting timeframe. Usually, this is a calendar year. Alternatively, the reporting timeframe could be the organisation’s fiscal year. The choice should be made on what’s most useful and consistent within the organisation’s reporting needs.

Drawing the organisational boundary: This step involves determining which facilities and assets within an organisation require carbon footprint calculation. For instance, an organisation may have a power plant, a separate administration building and a vehicle fleet. Generally, you calculate the emissions from each of these facilities individually and then add them together to get a carbon footprint figure for the whole organisation. Sounds simple right? Well, it’s a bit complicated. Assume, if the power plant is owned by your organisation but operated by another. In such as case, you don’t want both organisations to calculate the carbon footprint of the power plant, as this would mean emissions are double-counted. So, who has the responsibility of ensuring the emissions from the power plant are accounted for? This will be the organisation with the overall operational control - the one that has the power to make changes to processes and equipment that increase or decrease emissions.

Determining emission sources: Carbon footprint management uses a system of emission Scopes – 1, 2 and 3. Scope 1 includes all emissions that occur within the organisational boundary as a direct result of a particular activity. While Scope 2 includes indirect emissions from purchased electricity, heat and steam. These emissions pertain to outside the facility’s boundary, as a consequence of the unit’s activities. Scope 3 emissions are also indirect. They include all emissions from upstream or downstream of the organisation’s value chain. Carbon footprint management for compliance purposes generally requires only Scope 1, and only in some cases, the Scope 2 emissions are to be reported. However, for voluntary reporting and beyond compliance carbon management, organisations should additionally include Scope 3 sources

The calculation: Once an organisation knows which facilities and sources it will include in its carbon footprint, it can then begin calculating the emissions. There are two ways an organisation can do this - direct measurement and usage of emission factors. For instance, a big organisation may use measuring equipment to determine the exact amount of carbon dioxide and methane coming from the flue gas stack of a power plant. Meanwhile, for a smaller organisation, the more appropriate method would be to use emission factors. This method is, by far, the most commonly used. Here, an organisation would collect input data such as litres of fuel or kilowatt-hours of electricity used, which is often readily available through invoices and accounting systems. It would then convert this data into tonnes of CO2 equivalent by applying the appropriate government-endorsed emission factors.

Aggregating the emission estimates: And finally, the most essential step of carbon footprint management involves aggregating all emission estimates for each source from each facility; and to compile a carbon footprint for the entire organisation in tonnes of carbon dioxide equivalent. Simply put, undertaking a carbon footprint is relatively straightforward. First, an organisation decides the reporting timeframe. Next, it determines the organisational boundary, and which emission sources to include. Then collects data and converts this into emissions estimate for each Scope. And finally, the organisation aggregates these estimates to form its carbon footprint.

Many standards provide robust frameworks for performing organisational greenhouse gas emission calculations. All these standards follow the same steps. However, they may differ in geographic specificity, auditability, and public reporting guidelines. The two most widely-recognised international standards for organisational carbon footprint management are ISO 14064 (International Standards Organisation) and GHG Protocol Corporate Standard (World Resources Institute). Country-specific carbon footprint guidelines and tools also exist in some countries, such as the United States, France, United Kingdom, and Australia. The choice of carbon footprint management standard will depend on your organisation's location, business characteristics, and reason for measuring and reporting the carbon footprint.

Ganeshkumar V heads the sustainability and climate risk segment at DQS India. He is a CII sustainability assessor and sustainable procurement ambassador. He has over 16 years of experience in Corporate Social Responsibility, sustainable procurement energy and carbon footprint management among other focus areas.