Business leaders must understand what a carbon footprint is, and at a high level, how it’s calculated. Why? Because measuring your footprint now will help you manage environmental risk, and position you to exploit future carbon-related opportunities.
These days, buyers are including greenhouse gas (GHG) reports in their supplier evaluations. Suppliers that can’t report their GHG emissions risk losing customers. In the public markets, carbon risk disclosure is considered the new indicator of a well-managed, and therefore investment-worthy, company.
Firms are using carbon audits to change their energy cost structures, prepare for higher energy prices, and to be ready for future carbon-credit markets.
A defensible GHG/carbon audit, which allows you to report your carbon footprint, isn’t as hard as you think. Much of the data used to calculate emissions is already tracked as part of your on-going management of operating costs. The GHG audit process can be broken down into three stages and eight steps in total:
Stage one: Plan
The planning phase is the key to success and should include the following steps:
1. Determine carbon drivers. What are the most visible business drivers for a carbon management plan in your company and industry? What are your stakeholders (customers, investors, employees, community) looking for?
2. Identify the champions beyond upper management. Who are the go-to people on the team who will help gather and manage data across all operations?
3. Set your boundaries. Identify the company facilities and GHG emission sources that the business will be taking responsibility for in its carbon measure.
4. Define your base year. This is an important consideration as it defines the starting point against which future GHG emissions will be compared. It’s a common and accepted practice to go back two or three years, prior to when any energy-efficiency measures had been put in place.
Stage two: Implement
The implementation phase can be more time-consuming in the first year of GHG measurement, but it’s greatly reduced in future years once data management procedures are in place. Stage two involves the following:
1. Collect data and calculate GHG emissions. These typically include natural gas and electricity invoices, transportation and mileage records, and any other significant sources and uses of energy, including that of major suppliers. Calculate GHG emissions using recognized standards and protocols such as the GHG Protocol.
2. Implement data management procedures. Procedures to ensure data quality and consistency must be established. These procedures often lead to operational efficiency improvements that impact other corporate reporting initiatives beyond GHGs.
Stage 3: Reap the benefits
Once the GHG management system is in place, your company is poised to use the information in many value-creating ways:
1. Report the results. GHG reporting is a highly effective communication tool. Your commitment to GHG management is a means to communicate your corporate sustainability efforts to stakeholders. Use your website, a corporate sustainability report, or a Carbon Disclosure Project submission among other options.
2. Identify reduction opportunities. A GHG inventory highlights where to prioritize emission reductions, both in terms of your facilities and emission sources, leading to cost reductions and sometimes, alternatives for energy and other resources used in the business.
Carbon footprint calculation may seem daunting, but with a methodical approach, your company can gain a competitive edge with reduced costs and a stronger corporate brand.
Susan Sheehan, president and CEO of Leapfrog Sustainability Inc., has 20 years experience in clean technology and sustainability strategies. Susan has worked with companies such as Philips Lighting, Ingersoll Rand, Haremar Plastics Inc., BASF, Canadian Standards Association, Tembec, Queens School of Business, and Rotman School of Management. She can be reached at (416) 479-4266 or firstname.lastname@example.org
This article was co-authored with Steve Boles, a member of the Leapfrog Sustainability All-Star Team and carbon, greenhouse gas expert. Boles is president of Kuzuka, a carbon emissions and sustainability management firm in Exeter, Ont.