Why is calculating your carbon footprint important?
Calculating your carbon footprint is a vital first step in any business becoming part of the solution to the climate crisis. Many small businesses have already done this and it’s increasingly becoming an easy decision for you to get involved in this movement as well. The reputational benefits that provide new customers, future employees and potential investors are a great incentive to ‘go green’.
Carbon footprint calculations are also a sensible form of risk management for any future legislation changes, supply chain disruption and hikes in the price of carbon. Even without the price of carbon changing, calculating your carbon footprint, and reducing it, can lead to cost savings for your business.
Carbon reduction is especially topical today given the Procurement Policy Note (06/21) of the UK government. This policy note details how to take account of Carbon Reduction Plans in the procurement of major central government contracts. This measure requires suppliers bidding for major government contracts to commit to achieving Net Zero by 2050 and publish a ‘Carbon Reduction Plan’. This means that if you intend to apply for government contracts – or even if you work subcontract for companies that do – you may be passed over in favour of a company with a better record on sustainability!
Let’s look at the big picture
Before we delve into how to calculate your carbon footprint, there are some important terms we should understand. Climate change is being caused by humans emitting greenhouse gases into the atmosphere. A greenhouse gas traps the Sun’s heat within the atmosphere. There are naturally occurring greenhouse gases in the atmosphere (it’s why the Earth isn’t as cold as space), but humanity is causing the amount of greenhouse gas in the atmosphere to reach record highs and so global warming is occurring.
Almost every small business will emit greenhouse gases, usually in the form of carbon dioxide but sometimes in other forms. The aim of calculating your carbon footprint is to work out how much greenhouse gas you are responsible for emitting.
What is net zero?
Once you know your carbon footprint, you can identify areas to reduce it and work towards net zero. Net zero is the situation where your carbon footprint is zero. Net zero can be reached by reducing and eliminating greenhouse gas emissions and, if necessary, offsetting whatever is left. The UK has it signed into law, via the Climate Change Act, that the country will be net zero by 2050. Scotland has committed to becoming net zero by 2045.
How to calculate your carbon footprint
Your carbon footprint calculating can be considered carbon accounting, and similar to writing your balance sheet, there are rules that you must follow. These rules are set by the Greenhouse Gas Protocol. The Greenhouse Gas Protocol splits your greenhouse gas emissions into three categories: scope 1, scope 2, and scope 3.
Scope 1 is direct emissions caused by any process or activity by the company that causes greenhouse gas emission. Often this is in the form of fuels burnt on-site or by company-owned vehicles. Other forms are leaks of refrigerant gases (for example from refrigerators or air conditioning) or any emissions from industrial processes (for example from making cement).
Scope 2 is indirect emissions caused by your company purchasing energy (from sources you do not own or control). This is usually in the form of electricity, heat, or steam.
Calculating your scope 1 and scope 2 emissions should be relatively straightforward for most companies if you have all your fuel expenses and utility bills for the period you are calculating your carbon footprint for (usually 1 year).
Scope 3 emissions are all the indirect emissions that occur because of your business activity. For example:
- waste (decomposing waste emits greenhouse gases)
- emissions related to any goods or services purchased (for example any fuel emitted transporting them)
- employees commuting to and from work
Calculating your scope 3 emissions is hard. It is almost always only optional by the greenhouse gas protocol. But if you are willing to do it then you can show your company is going above and beyond and further that reputational gain. Your calculated scope 3 emissions shows a completeness and transparency that will look exceptional for anyone using your carbon management plan (your calculated carbon footprint and how you plan to reduce it is key to this plan).
The UK government already requires a carbon management plan for any tenders over £1 million and large companies and banks are following their lead. For achieving the internationally recognised carbon neutrality standard (PAS 2060), you will need to calculate most of your scope 3 emissions.
The first step to calculating your carbon footprint will be to measure your scope 1 and 2 emissions. You will need to find information like your fuel expenses, and electricity and heat used that can be converted to carbon emissions. There are many carbon calculators available such as Carbon Footprint Ltd, which has regularly updated conversion factors.
Where do I go from here?
Once you have got your carbon footprint, you can then put a plan in place to reduce your carbon footprint over time. It would be excellent to link this plan to the SME climate hub commitment, backed by the UN Race to Zero campaign and the UK government.
Alternatively, you can pay to link this plan to international standards to independently verify your green credentials. The long-term goal would ideally be net zero, in which case you could look at carbon offsetting after you have made all efforts to reduce your carbon footprint. This can also be verified by an internationally recognised standard (PAS 2060).