Is your company looking to report its greenhouse gas (GHG) emissions for CDP, Ecovadis, TCFD, GRI, or SBTi purposes? Or has an investor requested an emissions disclosure? Then you might need a corporate carbon footprint.
Developing a complete corporate footprint enables companies to understand their full emissions impact both on-site and across the value chain, and to focus decarbonization efforts where they can have the greatest impact.
A corporate carbon footprint is the total amount of greenhouse gas (GHG) emissions produced by a company’s operations, supply chains, products, and services. This includes direct and indirect emissions across three Scopes (1, 2 and 3).
By regularly calculating their corporate carbon footprint (a process known as carbon accounting), businesses can understand and analyze the carbon impact of their operations and supply chains, fulfill carbon reporting requests, and identify opportunities to reduce emissions.
There are five overarching steps to preparing a corporate carbon footprint, in line with the Greenhouse Gas Protocol (the international standard for carbon accounting and reporting).
Before undertaking the steps, you need to select a year of calculation (usually the most recent 12-month period).
Firstly, an organization needs to select a consolidation approach, to define the businesses, subsidiaries, entities and operations that constitute ‘the company’ for the purpose of corporate GHG emissions accounting and reporting. Companies can choose from the following consolidation approaches:
The operational control approach is the most common method. Only one party can have operational control of an entity or activity. If there’s ambiguity, CarbonChain helps companies use a scorecard approach to determine which party has the highest % of influence or control.
It’s critical to review and update your organizational boundary year on year, and to record any changes in your carbon reporting.
Establishing the reporting boundary involves two stages:
i) Identifying all existing emissions sources across Scopes 1, 2 and 3 and categories from all entities identified within the organizational boundary;
The most challenging part of this step is setting out Scope 3 reporting boundaries. This involves mapping out all of your business’s Scope 3 emissions sources according to the GHG Protocol’s categories.
ii) Conducting relevancy testing of Scope 3 sources to determine whether or not they should be included in the reporting boundary.
A Scope 3 emissions source is deemed relevant if two or more of these criteria are triggered:
For your year of calculation, collect activity data (the level or amount of activity that generates GHG emissions) and emissions data (normally in the form of emissions factors) across Scopes 1, 2 and 3, and conduct data quality checks.
A screening of your Scope 3 sources can help prioritize data collection efforts from suppliers.
There is a hierarchy of best practice when it comes to data collection. In order from best to worst:
It’s important to improve data quality over time. For example, if you need to rely on estimates to meet a reporting deadline, then start putting the process in place to gather supplier emissions data before your next reporting deadline.
Where available, emissions data from direct emissions measurements should be collected (e.g. from a device measuring the emissions from a chemical reaction or industrial process).
For a corporate carbon footprint, generally all greenhouse gas emissions are represented as carbon dioxide equivalent (CO2e) and should be calculated using the formula:
activity (unit) * emissions factor (tCO2e/ unit) = emissions (tCO2e)
Emissions factors represent emissions per activity e.g. for electricity grid intensities, fuels, transport, and water supply, waste disposal. Emissions factors can be activity-specific, supplier-specific or higher-level spend-based emissions factors.
In general, mapping the best available activity data with the best available activity-specific emissions factor will result in the most accurate and robust calculations.
Reporting emissions is frequently the next step after calculating them, whether to fulfill internal and external requests for your business’s carbon information, or to comply with carbon reporting regulations and legislations.
By following Steps 1-4, you can submit your corporate carbon footprint information for any GHG Protocol-aligned request. For example CDP, Ecovadis, TCFD, GRI, SBTi, or your investors, suppliers, and other regulatory bodies.
➡️ As an accredited CDP solutions provider, CarbonChain makes your most complex supply chain emissions calculations easy
Calculating your corporate carbon footprint brings a range of business benefits such as:
Leading businesses use CarbonChain for accuracy and automation in their corporate carbon footprint.
CarbonChain's software provides manufacturers and commodity traders with their corporate footprint broken down into Scope 1, 2 and 3 (across 15 categories) to easily report into key sustainability reporting frameworks (regulatory or voluntary).
Our team of carbon accounting experts also offers support defining your organization’s reporting boundary (i.e. identifying entities, relevant emission sources, justifications for exclusion) for transparent documentation.
CarbonChain’s corporate carbon footprint is a report of the company’s Scope 1, 2 and 3 emissions following the GHG Protocol:
Read the step-by-step explainer of how we calculated CarbonChain’s carbon footprint
This rule refers to personal carbon footprints rather than corporate carbon footprints.
In business, people refer to the 80-20 rule: 80% of the gains come from 20% of the effort. According to shrinkthatfootprint.com, when it comes to a personal carbon footprint, it’s more like 60-15: 60% of emissions comes from 15% of spending.
Calculating Scope 3 emissions is the biggest challenge in corporate carbon footprinting. While these emissions make up as much as 90% of a company’s carbon footprint, it’s extremely tricky to trace large complex supply chains, collect data from suppliers or to independently obtain asset-level emissions factors for upstream and downstream activities.
According to CDP, over half of reporting companies leave out Scope 3 emissions in their carbon reporting, despite impending regulations, from SEC disclosure to EU CBAM.
Companies and financial institutions who use CarbonChain get accurate accounting of Scope 3 and supply chain emissions. CarbonChain incorporates data from the point of resource extraction, from raw materials, all the way through to the point of consumption to create emissions insight across the entire supply chain.