Ok, this one is probably the biggest topic in the A-Z that I’ll cover: you could write a whole book on the topic and indeed, many people have. I’ll keep it all fairly top level, but even so it’s going to be a bit longer than most of these articles and there will be some technical definitions.
I was just going to say that C is for carbon reduction, because climate as a topic has been around for so long. But I thought it worth recognising why we are doing all this footprinting and the bigger picture, not least because when I started out, we had to do a lot of work to convince people that climate change was real and that business had a role in doing something about it. For younger readers that may sound strange, because these days we all know the planet has warmed significantly, that humans are the cause and that we are off track in addressing what is increasingly referred to as a crisis. I’m not saying that there are not still people who are deniers or at least delayers in companies, but they are very much in the minority even if they are vocal. That’s a big change even in the last few years and I think sustainability folk were slow to realise that the focus needed to change from convincing people action was needed, to putting in place specific actions to reduce emissions. That doesn’t mean that it isn’t worth occasionally reminding people why this topic is so important, referencing real events to remind them that the impacts are already happening, but it should be a reinforcement, not the main focus of your efforts.
So, before we get into some thoughts on what a carbon reduction plan is, let’s just step back briefly to make sure we are clear what we mean, because although we talk about carbon emissions, it’s a bit of a misnomer. When we say carbon, what we are really talking about is a range of so-called greenhouse gases, abbreviated to GHGs, which trap heat in the atmosphere and cause the overall warming of the planet that we see. Carbon isn’t actually one of these GHGs, it’s carbon dioxide (CO2 for those that remember their school chemistry lessons)! But that’s too long winded, so many years back this got abbreviated to just carbon. Each GHG causes a different amount of warming for each unit of gas. This is called their global warming potential, and it varies hugely across the different gases: 1 tonne of methane has the same impact as 28 tonnes of CO2 over 100 years and 1 tonne of a gas called sulphur hexafluoride has the same impact as over 23,000 tonnes of CO2. To be able to add all the emissions together to get a single number, each gas’s impact is converted into CO2 equivalents. This is what the e means in CO2e that you will see in various data. So, when we say what is the carbon emissions what we really mean is the emissions of all GHGs expressed in carbon dioxide equivalents.
So how do you calculate a carbon footprint for an organisation? Well, many years ago a bunch of smart people pooled their expertise and developed something called the Greenhouse Gas Protocol. This is the bible for how to do the calculations and consists of technical standards and guidance documents. Some of it is easy to read, much is not, and because it is trying to cover all companies in all industries there are still some grey areas where a bit of interpretation is needed. In some industries there are also sector specific guides to help.
There is a lot of jargon in this area, and you won’t get far into footprinting without coming across the different scopes. There are three and they are separated because the nature of them is quite different. Firstly scope 1 covers what you burn in your own operations (factories and offices) such as oil and gas for heating or steam, leakages from things like air conditioning units, and also any gases that are emitted from your manufacturing (so called process emissions). These last ones are sometimes missed, but depending on the industry can be significant. Second, we have the emissions from the electricity you buy to run your operations: these are called scope 2. Category 3 covers emissions from the raw materials you use (right back to the mining), transportation from suppliers and to customers, business travel and employee commuting, and your products in use – in other words everything that happens in your value chain that is not your own operations. This is why scope 3 are often termed “value chain emissions”.
In the past companies could get away with just calculating scope 1 and 2, but these days unless you calculate scope 3 it’s not really credible. The reason for this is that for many companies, certainly anyone in manufacturing, most of the emissions are likely to be scope 3. Some people worry at this point that this approach leads to double counting – my scope 3 emissions are someone else’s scope 1& 2 etc. Well, it’s not double counting, because the emissions from every company are not all added up to create a country’s emissions, but it is by design that both parties include the same emissions in each of their companies’ calculations. People will generally accept that scope 1 is their responsibility: you can replace a gas fired heating system with an electric one, change your manufacturing processes to eliminate some emissions etc, and also scope 2 as you can reduce your electricity use by process improvements and investment in more efficient equipment. But people will often push back on scope 3 as they feel it’s down to the supplier (or customer) to take responsibility for them. This doesn’t tell the whole story though. Where and who you purchase from makes a difference to your footprint and if your product consumes electricity in use, you can innovate to make it more efficient. These are just two examples of where you make a difference to your scope 3 footprint.
Calculating scope 1 and 2 is usually straightforward. You know how much oil, gas, electricity you have used and there are databases that give you the emissions factors for each in different countries. Multiply them together and you have the total emissions. There’s a bit more to it that that but we’ll keep it at that summary level for this article. Scope 3 is a different matter. Firstly, there are fifteen different types of scope 3 that need to be considered and there are a few different ways that calculations can be done. These are going to be the basis of some key targets for your business, and it really does pay to get some help when you are doing this for the first time as it is not always straightforward. You’ll need to decide if each of the fifteen categories is material for your business, but you may also choose to include categories that aren’t material (such as business travel or employee commuting) because they can help engagement in the business.
I’ll just mention a couple of different approaches that can be taken to calculate scope 3 to illustrate the sort of work involved. Many companies will take the easiest way and do what are called spend based calculations. This involves looking at how much you spend on goods and services in different categories and then looking at government statistics to get estimates on how much carbon each pound spent in each category accounts for. There are a couple of fundamental issues with this approach. Firstly, carbon emissions do not perfectly correlate with spend, if at all. Secondly the data that underpins this approach was never really intended for this sort of calculation and is very high level ad not always recent. Also, if you use this approach for calculation, it is much harder to reflect improvement actions unless the action is simply to buy less. Spend-based calculations have their place, particularly in a business purchasing services, but in a manufacturing context it is not the way to go.
It's far better to use data based on the quantities of materials you buy, by looking at total purchases, or by using example products and grossing up from there. Either way you will end up mapping the raw materials you use to databases that hold industry average data for the emissions per unit or weight of the raw materials. You can refine this process further by getting supplier specific information but bear in mind that if suppliers are new to this, their data may not actually be as accurate as industry average data derived from extensive academic analysis.
Scope 3 analysis takes time. You’ll need to extract data from your (often multiple) systems and map it to external data. And it’s not an exact science. You’ll need to make assumptions along the way. It is fundamentally different from financial data in this regard, and this often makes people wary. It’s best to be up front about this when you are talking internally about doing this work. You’ll probably find things out the first time you do it that mean that when you recalculate in the future, you’ll improve your methodology. I’d suggest going into it with this mindset is really important. Accept that it won’t be perfect, but that’s ok because your reason for doing it is to find out where the big emissions are in your value chain and to take steps to reduce them, so as to reduce risk for your business. It will be a frustrating process and you will feel uncomfortable with some of the assumptions you have to make, but ensure everything is documented and involve others in agreeing the assumptions to help buy-in. Also consider what actions you are likely to want to take to reduce emissions and ensure the methodology allows for reductions from those actions to be reflected in what are likely to be annual recalculations.
If you’ve already done some footprinting this will hopefully be a reassurance that your process is just as frustrating and full of assumptions as everyone else’s and maybe it will prompt you again to look at some aspects of your calculations, particularly if you have gone down the spend-based route.
If you haven’t done any footprinting, I’ll be blunt, you are late and really need to start without delay. Your investors will expect it, your customers will expect it, your employees and prospective employees will expect it, and without a doubt the regulatory expectations are very high in this area. You will need to report on your total emissions and what you are doing to reduce them.
Bringing this back to the bigger picture, when it comes to climate change, every gram of GHG counts. We are way past the time when the effects of climate change are some theoretical future impacts. We are in the middle of a fundamental shift to a low carbon economy and how quickly we make that transition will determine how extreme the impacts of climate change will be. Every little bit of emissions reduction impacts this.
Well done for getting to end of this article, there was a lot to pack in! This is an area where you really can benefit from others’ experience, so talk to your customers, suppliers, and industry associations, and consider outside help. CEN has a lot of experience in this area and the team would be happy to help, not just in the calculations, but in supporting you through the whole process.
About the Author
Chris is a senior strategic leader with over 25 years’ commercial experience including sales, marketing, strategic planning and major business change initiatives at AkzoNobel and ICI. He has a wide knowledge of sustainability and how to integrate this into business having held senior sustainability roles at AkzoNobel for 12 years, including as Global Sustainability Director Decorative Paints and AkzoNobel Planet Possible Programme Manager. Chris is now an independent sustainability consultant and a pension trustee director.
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