Calculating your company's carbon footprint: understanding scope 1 and 2 emissions

The more complex the structure of the company or holding, the more demanding the carbon footprint calculation project - in terms of required personal capacities and knowledge.

To carry out a carbon audit of your company, it is necessary to be organized in project mode, by structuring the data collection and analysis, and by knowing what you want to communicate and improve. 

Three main reasons for the analysis

The first one is that the regulations oblige more and more companies to provide their complete carbon footprint (Scopes 1, 2 and 3). The CSRD, seen earlier, will continue to expand the number of companies that have to calculate their Corporate Carbon Footprint. Thinking about this in advance gives you a competitive advantage because you will stand out from the crowd. You will be more valued by your customers, partners and investors. Taking care of your environmental performance becomes essential as CSR requirements grow.

Secondly, if the carbon footprint is accompanied by a decarbonization plan validated by professional third-parties (SBTis for example), the company can strongly reinforce its employer brand because it will have demonstrated that it cares about the environment. Most customers, partners and consumers will be reassured by your company's good and verifiable environmental intentions.

Finally, calculating and reducing your carbon footprint will allow your company to become resilient. As we see with the energy crisis, the entire economy is based on carbon energy. If your company manages to gradually detach itself from this dependence, it will have great chances to be sustainable because it will be safer than companies that have not thought about the danger of the scarcity or non-availability of earth resources.

What are greenhouse gases?

Now that we have talked about the framework, let's talk about the content. The Kyoto protocol defined 7 greenhouse gases, divided in 2 categories, the non-fluorinated gases, and the fluorinated gases. In the first category, we find the famous carbon dioxide (CO2), methane (CH4) and nitrous oxide (N20). In the second category, we find hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), Sulphur Hexafluoride (SF6) and nitrogen trifluoride (NF3). These gases are all naturally present in the atmosphere, but their emissions have increased dramatically due to human activities.  

How to analyse greenhouse gases impact?

These greenhouse gases, because of their chemical properties, do not have the same effect on the climate. To be able to analyse them, we use the Global Warming Potential, which is the ratio indicating the effect of a quantity of a greenhouse gas on climate change compared to an equal quantity of carbon dioxide. It is usually expressed over a period of 100 years. Carbon dioxide always has a GWP of 1. Methane has a GWP (over 100 years) of 27.9, which means that, for example, a leak of one ton of methane is equivalent to the emission of 27.9 tons of carbon dioxide. Similarly, one ton of nitrous oxide, from manure for example, is equivalent to 273 tons of carbon dioxide.  This explains the meaning of ‘’e’’ in jargon we use for reported units of measured carbon footprint – CO2e stands for CO2 emission equivalents.

To calculate a company's emissions, we then look at the data from the activities (e.g. energy consumption, number of wastes, kilometres travelled by employees) and multiply them by the emission factors, which are the ratios corresponding to the amount of a greenhouse gas emitted by a given unit of activity. They are often provided by supranational institutions, universities or governments and expressed in kg or tons of CO2

In these calculations, we distinguish Scope 1, Scope 2 and Scope 3 emissions. It is sometimes a challenge to successfully collect consumption data for the first two scopes – companies do not always have an access to metering devices, some consumptions may be reported only in financial terms, etc. Solutions to overcome those drawbacks exist in a form of pre-calculated qualified estimations offered by trustable software designed specifically for this purpose.

A little bit of history to close up

Anything that can be measured can be improved. It is with this adage in mind that the carbon footprint calculation methods must be understood. The carbon accounting system follows basic principles of  the financial accounting model, created by Amatino Manucci in the 13th century. In the early 2000s, a French engineer, Jean-Marc Jancovici, in collaboration with the French Environment and Energy Management Agency (Ademe), created the so-called "Bilan Carbone" method, which aims to account for carbon emissions triggered by company's activities . This method was later on internationalized by the GHG Protocol. . Even though carbon accounting was known among experts, the public awareness was rather low. It was not until 2004 when  British Petroleum launched a publicity campaign around the individual carbon footprint. The aim was to encourage individuals to reduce their personal consumption - such approach would be commendable if it did not obscure the role of companies and the economic system in CO2 emissions. In spite of its original intentions and authorship, carbon accounting and auditing developments have been a real success, especially since it is now present in the European directives (CSRD) and since 2021, more than 50,000 European companies must provide a carbon section in their extra-financial report.  

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