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Organisational carbon footprint

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

by Nicola Pichel-Juan

Image © Tomas Ragina | istockphoto.com

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.

An ‘organisational carbon footprint’ measures the amount of carbon dioxide and other greenhouse gases released into the atmosphere as a result of a company’s activities

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.

What legislation is there relating to reporting emissions?

Legislation varies around the world, with most only currently being focused on certain sectors or obliging the largest companies (based on turnover or number of employees) to report. In the UK, any organisation meeting at least two of the following criteria must report its emissions in line with ‘Streamlined Energy and Carbon Reporting’ legislation (SECR):

i) turnover of GBP 36 million or more, ii) a balance sheet of GBP 18 million or more, and iii) 250 employees or more. EU businesses with over 500 employees must disclose information on the way they operate and manage social and environmental challenges, in accordance with the Non-Financial Reporting Directive (NFRD). Further legislation is planned in a number of countries over the next few years, which will oblige more firms to report on their emissions and the actions they are taking to reduce their environmental impacts.

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.

ArtistGNDphotography | iStockphoto.com

Large strategic projects, such as onsite energy generation through the use of solar panels 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.

bfk92 | iStockphoto.com

Scope 3 emissions – which can account for up to 90 per cent of the total footprint – include such aspects as freight and transportation, purchased goods and services, business travel, commuting and waste disposal

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.

F-Gas regulations?

Under EU and UK law, a particular group of fluorinated gases widely used in air conditioning and refrigeration systems are subject to certain controls due to their very high global warming potential. Any company with air conditioning or refrigeration systems installed must have regular ‘F-Gas’ surveys carried out according to the size of the system. These will provide details of how much refrigerant is in the system and how much has been added when any leaks have been fixed. It is important to note that there may be many onsite systems – apart from office air conditioning – which require refrigerant. These may include (using SATRA as an example) climate chambers, machinery with self-contained climate-controlled environments and laboratory conditioning systems, all of which are likely be maintained and surveyed by different providers.

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 0.24
1 mile driven in a medium-size petrol car 0.19
Impact data taken from UK Government GHG Conversion Factors for Company Reporting 2021 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.

What is carbon offsetting?

‘Carbon offsetting’ is a reduction or removal of emissions that is made to compensate for other emissions. For instance, offsetting might be used if it is not possible through other reduction strategies to reduce emissions sufficiently to achieve a desired target. Examples of carbon offsetting schemes include investing in renewable energy or reforestation projects. The projects will either prevent or reduce the amount of greenhouse gases being released into the atmosphere or remove them entirely through sequestration.

Some businesses may use offsetting for their entire operation, or for particular products in order to make carbon neutral claims. Ninety-nine per cent of plastics is still made from fossil sources, for which offsetting is the only option. It is also important to thoroughly check the credentials of any offsetting scheme, as questions have been raised about how effectively some are in reducing emissions and how long it might take for the reductions to be realised.

In comparison, ‘carbon insetting’ is a particular type of offsetting that occurs within the organisation’s own supply chain or sphere of influence.

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.

mediamasmedia | iStockphoto.com

Switching to electric-powered company vehicles is an option to reduce Scope 1 emissions

Is signing up for a renewable energy tariff an effective way to reduce Scope 2 emissions?

In the UK, signing up to a renewable energy tariff does not reduce the requirement to report Scope 2 emissions. The total energy consumption must be declared using the UK’s ‘grid average emission factor’ for all purchased energy, and this is usually available from government or providers websites. However, for larger organisations obliged to report their emissions under Streamlined Energy and Carbon Reporting (SECR) legislation, there is an option for dual reporting using a market-based approach that reflects a reduced emissions figure where Power Purchase Agreements are used or Renewable Energy Guarantees of Origin (REGOs) have been purchased.

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.

How can we help?

SATRA intends to share more information on our own carbon footprint and the actions we are taking to reduce it over the coming months. Please contact eco@satra.com for advice on how to reduce the environmental impact of your products and organisation.eco@satra.com

Publishing Data

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

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