The term carbon footprint has become a significant buzzword in the modern business world. But what exactly does it mean, and why is it so crucial for businesses today? Paul Harper of Auditel provides some answers.
What is a Carbon Footprint?
A carbon footprint refers to the total amount of greenhouse gases that are emitted into the atmosphere as a result of human activities. In the context of business, it includes the emissions produced directly or indirectly through various operations, such as manufacturing, transportation, and energy consumption.
Direct emissions come from sources that are owned or controlled by the business, such as the fuel used in company vehicles, or the gas used to heat offices and factories.
Indirect emissions are the result of activities from assets not owned or controlled by the business but related to its operations, like the electricity purchased from a utility provider.
Did someone mention “Scopes”?
You may have heard these emissions described as “Scopes”, with Scope 1 being direct emissions and Scopes 2 and 3 being indirect emissions. The “elephant in the room” when it comes to emissions is Scope 3, which covers everything other than electricity purchased (Scope 2) and is sub-divided into 15 categories including activities such as transportation, distribution, business travel, employee commuting, the use of purchased goods and services, and waste from operations. Scope 3 emissions often make up the biggest proportion of a company’s carbon footprint and can be the hardest to measure – not surprisingly!
So why measure?
In the current global landscape, there is an increasing awareness of climate change and the urgent need to reduce greenhouse gas emissions. A company’s carbon footprint is not just a measure of its environmental impact; it also reflects its social responsibility and commitment to sustainable growth.
Depending on the type and size of company, and the market in which they operate, there are certain regulatory requirements already in place which must be met, such as Streamlined Energy and Carbon Reporting (SECR), the Energy Savings Opportunity Scheme (ESOS), and the Procurement Policy Note 06/21 (PPN 06/21) for public sector contracts. Even if you do not qualify under these schemes, if you supply to a larger company which does it is likely that they will be asking you about your carbon reduction plan soon, as a company’s supply chain is often a major component of its emissions.
Does it give me a competitive advantage?
Additionally, businesses that actively work to reduce their carbon footprint can gain a competitive advantage. Customers, investors, and stakeholders are becoming more concerned with environmental stewardship, often preferring companies that prioritise sustainability.
What about reducing costs?
Another key benefit comes from embracing energy-efficient practices and reducing emissions is that this often translates into cost savings. Through careful analysis and implementation of green strategies, companies can reduce energy bills and other associated costs.
So, what exactly is Net Zero?
Net Zero is a term often mis-used by organisations when making claims about their emissions status, which has led to claims of greenwashing and reputational damage. Recently, the Committee of Advertising Practice (CAP) in conjunction with the Competition and Markets Authority (CMA) has released an amended set of guidelines to combat ‘greenwashing’, protecting consumers from deceitful green assurances.
A simple description of net zero is that you balance the carbon you emit with the carbon you absorb. A plan for net zero (as outlined by the Science Based Targets initiative) must first look at reducing both direct and indirect emissions by at least 90%, leaving no more than 10% of emissions being removed by some means. The UK has committed to being net zero by 2050, and most UK organisations have aligned to this date or in some cases earlier (the NHS by 2045, for example).
How do I know if I am complying?
A company can look to obtain third party verification of their carbon reduction plan, such as through ISO14064:1 or BSI PAS2060. Verification through an accredited third party adds credibility to the company’s carbon neutrality claims, and ensures that the company continues to reduce emissions, fostering a culture of continuous improvement.