Calculating your Corporate Carbon Footprint: from voluntary measurement to obligation

Since 2023, large companies have been required to measure and report their carbon footprint, that is, all greenhouse gases (GHGs) emitted as a direct or indirect effect of their activity. For this calculation, GHG emissions are analysed throughout the life cycle of a service or product. This spans from production and consumption to the end of its useful life.

We’ll explain the background of this ‘footprint’ and the potential advantages, both environmental and strategic, of calculating a company’s corporate carbon footprint all along the value chain. We’ll also look at why it matters, and how organisations can effectively address it to decarbonise their processes.

Towards the decarbonisation of the economy

Climate change is one of the biggest challenges our world is facing. This global phenomenon is closely related to the increase of GHGs in the atmosphere, especially carbon dioxide (CO₂), due to human activity. By analysing the level of emissions generated throughout the life cycle of an organisation or product, it’s possible to identify maximum concentrations and develop a strategic plan to reduce them.

We call this analysis calculating a company’s carbon footprint. Expressed in CO₂ equivalent (CO₂e), this environmental indicator gained popularity in 2003 when the company British Petroleum (BP) coined the term ‘carbon footprint’ and launched the first CO₂ calculator. They did this as part of an advertising campaign in which they encouraged people to calculate their personal carbon footprint.

In 2015, with the signing of the Paris Agreement, countries were able to analyse precise data on their carbon footprint, and the focus shifted to corporations. As the climate crisis became an increasingly central concern in international conferences, some companies began to voluntarily calculate and report the environmental impact associated with their activities.

Previously, the approval in December 1997 of the Kyoto Protocol launched the United Nations Framework Convention on Climate Change (CMNUCC), with industrialised countries committing to limit their GHG emissions according to agreed individual targets. Europe, the main driver of the battle against climate change, has since adopted mandatory legal framework that encompasses a growing number of sectors of the economy, including the waste sector. In this regard, Regulation 2021/11/19 establishes the framework for achieving climate neutrality in 2050.

In order to meet the Paris target of limiting warming to 1.5ºC and comply with EU regulations on lowering emissions, Law 7/2021, on climate change and energy transition, was passed in Spain. This legislation makes it mandatory for companies to calculate, record and reduce their carbon footprint from 2023 onward. Its scope of application includes organisations with the following characteristics: companies with more than 50 employees, those with turnover greater than 10 million euros and those operating in the Balearic Islands.

Why is it important for companies to address these emissions?

Calculating the carbon footprint has become a requirement imposed by regulators in most countries. But, beyond regulatory compliance, calculating and disclosing their carbon footprint has a number of advantages for companies. Its measurement and the subsequent measures implemented can lead to benefits in terms of energy, material and financial savings for an organisation. It allows companies to detect inefficient processes and reduce operating costs by optimising them.

In addition, they can identify top suppliers in terms of sustainability versus those who do not meet the minimum requirements, and strengthen those commitments and business relationships. The information obtained can be used for purchasing and logistics decisions, as well as finding innovative solutions or developing new products with a lower environmental impact. All of this, in turn, improves a company's image with customers, investors, collaborators and even employees.

Methodology for calculating a company's carbon footprint

To measure an organisation's carbon footprint, there are international standards and rules for calculating GHG emissions based on their scope. Three scopes have been identified:

• Scope 1: Direct emissions from sources owned or controlled by a company. Derived from fuel consumption in fixed installations (boilers, D.H.W.), business trips with owned vehicles, refrigerant gas leaks, etc.

• Scope 2: Indirect emissions through energy consumption.

• Scope 3: Other indirect emissions as a result of the company's activity, but from sources not owned or controlled by the company. Linked to purchased goods and services, waste generation, business trips with external means of transport, etc.

The tools most used today by companies to calculate their carbon footprint are the GHG Protocol and the ISO 14064 standard. These allow us to measure and certify the carbon footprint of an organisation (sum of GHGs emitted as a result of the direct or indirect effects of its activity) and of products (emissions throughout their entire life cycle, from the extraction of raw materials, to processing, manufacturing, distribution and use, to storage, reuse or recycling). Companies that offset their carbon footprint are listed in the National Carbon Footprint Registry, upon request to the Spanish Climate Change Office (OECC).

Calculating the carbon footprint is the first step in reducing and offsetting the greenhouse gases emitted by a company. It also allows them to anticipate regulatory developments in the area of business sustainability and meet the established decarbonisation objectives. Zero measures the carbon footprint associated with waste management, providing a digital platform for multinational companies that are committed to circularity and traceability and helping them manage their entire value chain and make smart business decisions.