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4 Steps to Calculate Your Organization's Carbon Footprint in '24

4 Steps to Calculate Your Organization's Carbon Footprint in '244 Steps to Calculate Your Organization's Carbon Footprint in '24

The perception of regulators, investors and consumers regarding environmental challenges is changing rapidly. All stakeholders want to see real efforts to mitigate the negative impacts of climate change.

Therefore, organizations’ environmental, social and governance (ESG) strategies and reporting become an important indicator for their compliance requirements and customer and investor relations. The first stage in ESG reporting and identifying strategies for organizations to minimize their carbon footprint is to measure their carbon footprint. In this article, we will provide you a step-by-step method to calculating your carbon footprint.

What is the Corporate Carbon Footprint?

The carbon footprint is the measurement of a company’s greenhouse gas (GHG) emissions in units of tons. The larger the carbon footprint, the more negative the impact on the climate.

Companies release GHG such as carbon dioxide, methane, hydrofluorocarbons into the atmosphere  during manufacturing, transportation, or other business activities. Carbon footprint of a company accounts for both the direct and indirect GHG emissions of the company.

  • Direct GHG emissions: GHG emission can be the result of company actions that come from facilities owned by the company. For example, if a fossil fuel power plant burns coal to generate electricity or a factory releases CO2 while producing goods as a by-product these count as direct GHG emissions.
  • Indirect GHG emissions: The companies that use intermediate or final goods for their operations indirectly cause GHG emissions because the production and transportation of these goods emit a certain amount of GHG. Supplier emissions, electricity consumption for the company’s operations, and waste disposal all fall into this category.   

Direct and indirect GHG emissions vary considerably from sector to sector (see Figure 2). It is important to note that the Greenhouse Gas Protocol provides a three-tiered classification for greenhouse gas emissions, referred to as Scope 1, Scope 2, and Scope 3. Scope 1 emissions correspond entirely to direct GHG emissions, Scope 2 emissions are a subset of indirect GHG emissions that essentially relate to a company’s energy consumption. Scope 3 emissions are also a subset of indirect GHG emissions and arise from upstream and downstream value chain carbon emissions.   

Figure 2: Direct and indirect GHG emissions by sectors in the U.S. (direct emissions yellow, indirect gray). 

Image shows direct and indirect GHG emissions for different business activities.
Source: EY

How to calculate carbon footprint?

As shown in Figure 3, carbon footprint is measured by multiplying unit of business operation (e.g. gallons of gasoline) with operation specific emission factor (which is equal to 8,887 times 0,001 metric tons CO2/gallon for gasoline according to the US Environmental Protection Agency. So, for instance, a field sales team that consumes 13503 gallons of gasoline per month for transportation purposes creates a carbon footprint of approximately 120 tons per month.

Figure 3: Calculation of carbon footprint

By multiplying specific business activities with related emission factors you can calculate your carbon footprint.

To effectively apply this formula, we divide the task of calculating carbon footprint into four main parts, namely, identifying business operations, collecting data on each business operation, determining operation-specific emission factors, and performing the final calculation and interpretation. 

1. Identify business operations 

First, you must identify every business operation that emits GHG into the atmosphere. For example, heating, transportation, any business-related activity that consumes electricity or energy, waste management, etc. are all sources of GHG emissions. You should choose a metric to determine how much your organization executes each business operation. Transportation of products, for example, emits GHG due to fuel usage. Metrics such as liters or gallons can be used to calculate your fuel consumption. Electricity consumption can be measured by kilowatt hours etc. 

2. Collect data

Collecting the necessary data to calculate your carbon footprint can be challenging because, as mentioned earlier, companies release greenhouse gasses through direct and indirect activities, and indirect activities can account for the majority of greenhouse gas emissions in some sectors, (see Figure 1 above). Therefore, you will likely need external data to accurately calculate your company’s carbon footprint. 

Getting consulting services or using tools/platforms that specialize in carbon footprint calculations can be helpful since they have access to larger datasets. However, if you can export data from the companies you work with, this will also work.

Also, cloud-based enterprise resource planning (ERP) technologies can help determine direct emissions since they combine real-time financial and operational data on a single platform. The data that a firm uses to disclose its expenses, such as heating, on audit reports can be utilized to calculate the company’s carbon footprint. Since they both related to certain amount of natural gas consumption.

The same principle can be extended to the usage of gasoline, diesel, electricity, and so on.

3. Find operation-specific emission factors

To calculate your carbon footprint, you need to know how much GHG emissions are generated per kilowatt-hour of electricity used, per gallon of gasoline consumed, and so on. To find out this information, you can use reputable data providers like EPA for transportation, electricity and waste emissions, the UK version of the EPA which is Defra that provides similar data. To find out greenhouse gas emissions from materials, you can use the Higg Index.

To determine operationally specific emission factors, it may be easier to work with consulting firms or use cloud-based tools. In addition, such alternatives could provide better insight into your company’s carbon footprint. For example, the EPA provides US-wide data on greenhouse gas emissions per kilowatt-hour of electricity consumed. However, the composition of electricity generation varies from state to state. One state may generate most of its electricity by coal-fired power plants, while others may use environmentally friendly resources. 

4. Calculate and interpret   

The final step is to calculate your company’s carbon footprint and interpret it. By doing so, you can find out which activities are the biggest problems in terms of GHG emissions. Once you identify these areas, you can develop action plans and inform your customers and investors about the implementation and results of these plans.

For interpreting your carbon footprint, using cloud-based carbon footprint calculators can be helpful, as they illustrate how your company is performing on specific business operations. In addition, advanced analytical capabilities of such tools can help you find pain points of your operations (see Figure 4).

Figure 4: An example of carbon footprint calculator’ data visualization.

Image shows how carbon footprint calculators visıalize data.
Source: AIMultiple

Keep in mind, you may lower your carbon footprint while increasing operational efficiency by implementing digital transformation.

To improve your corporate sustainability you can also read our articles on ESG best practices and circular economy best practices.

If you need help taking proactive environmental measures, please contact us. 

Find the Right Vendors

This article was drafted by former AIMultiple industry analyst Görkem Gençer and is dedicated to his grandmother, Çağlayan Gençer, who was always concerned about her environmental impact. Her last words to Görkem Gençer was: “While going to the ambulance, I left the lights on. I hope you turned off the lights after me.” AIMultiple hopes that soon everyone will be aware of our impact on the environment, be concerned about it, and work to lessen it.

Access Cem's 2 decades of B2B tech experience as a tech consultant, enterprise leader, startup entrepreneur & industry analyst. Leverage insights informing top Fortune 500 every month.
Cem Dilmegani
Principal Analyst
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Cem Dilmegani
Principal Analyst

Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

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