What is the difference between carbon emissions and GHG emissions
“Carbon emissions” refers to CO2 emissions only, while “GHG emissions” refers to a multitude of gas emissions with diverse global warming potential, including CO2.
There are 24 indexed greenhouse gases (GHGs) in the atmosphere, causing the greenhouse effect. Gases with the most impact on global warming are carbon dioxide, methane, and nitrous oxide. Global warming potentials of these gases widely vary, meaning for the same amount of emissions, methane will have more impact on climate change than CO2.
In day-to-day conversations, “carbon emissions” and “GHG emissions” tend to mean the same thing, i.e., gas emissions driving climate change. It is common to use the term “CO2eq emissions” (carbon dioxide equivalent) to make up for the warming potential variations between greenhouse gases (GHGs).
What is a carbon footprint for a business
Definition of carbon footprint: “All direct and indirect greenhouse gas emissions linked with a certain product or activity.”
Direct emissions can be, for example, the burning of fuels for the business’ machines, or the use of electricity generated from coal or natural gas.
Indirect emissions refer to all emissions from assets not owned by the company. They include, for example, emissions from employees burning gasoline to drive or flying to attend a business meeting, from the shipping of merchandise, or from the company’s end-of-life sold products.
The carbon footprints of companies are divided into 3 categories, called scopes, representing the degree of direct and indirect emissions. Scope 1 corresponds to the most direct emissions, while Scope 3 focuses on indirect emissions. Most companies' carbon emissions fall into the Scope 3 category.
How can companies measure their carbon emissions
More and more companies are required to measure their carbon emissions and report on their climate impacts. Companies must disclose their carbon footprints, whether because they have to comply with climate regulations such as the CSRD (for companies operating within the EU) or to meet customers’ and investors’ expectations.
To measure carbon emissions and calculate its carbon footprint, a company must follow an established protocol to ensure the accuracy of these calculations. The GHG Protocol is recognized as an international standard for measuring and categorizing companies’ carbon emissions, from SMEs to the world's largest corporations and public organizations.
Fortunately, technologies and methods to measure carbon emissions throughout companies’ supply chains and operations are becoming easier to use and implement. Meaning that calculating a business’s carbon footprint can now be an easy-to-implement process.
3 steps to calculate a business’s carbon footprint
Any company can calculate its carbon footprint, from a small startup to a multinational corporation. Being aware, and showing awareness, of the climate impact of such or such activity is essential to mitigate future climate risks, implement an effective carbon reduction strategy, attract new talents and investors, and stay competitive. To calculate a company’s carbon footprint, follow these 3 steps:
- Build awareness (i.e., understand the carbon accounting jargon). Studies show that companies whose boards and employees complete a short training program about sustainability are more likely to achieve positive results regarding environmental activities. Start by learning the basics on Coolset Academy.
- Collect data (e.g., utility bills, travel expenses, supplier invoices, etc.) The more data a company has on its business activities, the more accurate its carbon footprint will be. Since most carbon emissions fall under Scope 3 (indirect emissions), companies must collect as much data as possible to track these carbon emissions.
- Find the right carbon footprint calculator. Once enough activity and spending data have been collected, companies must calculate the related carbon emissions. Since it is a complex and dynamic process, calculators have been developed to take the work out of businesses’ hands and ensure transparency and accuracy. Carbon footprint calculators allow companies to understand where their emissions come from and identify emissions hotspots, before designing an effective carbon reduction strategy. Carbon footprint calculators come in all forms to meet businesses’ needs, from SMEs to large enterprises and public organizations.
How to automatically calculate your company’s carbon footprint
Companies that decide to hire a sustainability consultant usually wait between 6 and 8 months to get reliable and accurate results through email and Excel sheets that often don’t match up. Hopefully, there are better alternatives: the carbon accounting industry has rapidly grown these past few years, and new disruptive technologies are being introduced. Because fast-growing SMEs can’t afford to spend their time filling endless Excel spreadsheets, doing manual calculations, and cleaning incorrect datasets, their carbon accounting tools need to be flexible and scalable.
Measuring emissions is now a matter of weeks or even days, depending on the company’s size. Implementing this low-effort method will significantly impact business growth, showing reported proof of sustainability commitment to potential investors and talents.
- Find automated carbon accounting software tailored to your needs. We can help you with that.
- Gather your financial data and import it into the software. Carbon specialists will classify your transactions and measure their related emissions.
- In a few days or weeks, you will have access to all your emissions, classified in categories and from scope 1 to 3. You can now set up a reduction plan.
Coolset provides fast-growing SMEs with an all-in-one decarbonization platform to measure their carbon emissions, analyze their carbon footprint and identify emissions hotspots. From there, companies create ambitious reduction plans using our tools and resources.
How to reduce a business’s carbon emissions (or carbon footprint)
Calculating their carbon footprint and identifying carbon emissions sources allows companies to design efficient carbon reduction plans. Only after evaluating its carbon emissions can a company actively reduce its carbon footprint. Based on its carbon footprint, a business will create an actionable plan and decarbonize its operations. Here is how to do it.
4 steps to reduce GHG emissions for business
There are 4 steps a company can take to reduce its carbon emissions and improve its carbon footprint to achieve net zero. Companies should implement them in the following order:
- Set a science-based target.
- Avoid future emissions when possible.
- Reduce current emissions where possible.
- Remove unavoidable emissions by offsetting them.
How to set a science-based target
What is a science-based target? Emissions (GHG) reduction targets are considered 'science-based' if they are consistent with what the most recent climate science indicates is required to meet the Paris Agreement's goals of limiting global warming to 1.5°C above pre-industrial levels.
Organizations like the Science-Based Target Initiative (SBTi) provide resources and support for SMEs worldwide to help them set up ambitious emissions targets, communicate properly about them, and achieve tangible results.
How to avoid future carbon emissions
Since rapid economic growth began in the 1950s, GHG emissions have skyrocketed. Time and again, scientists note in their reports that infinite growth is incompatible with a net zero emissions scenario, showing it will nearly be impossible to completely uncouple carbon emissions from economic growth. Meaning that to reduce emissions enough to reverse climate change, emissions not only need to be reduced and offset but avoided in the first place.
Painful as it can be, some projects will have to be abandoned to reach net zero emissions. To successfully reduce its carbon footprint, companies must consider not participating in such or such actions to avoid their consequential carbon emissions altogether. Highly carbon-intensive projects that are not vital to business should be avoided.
How to reduce current carbon emissions
Depending on the characteristics of the carbon footprint, reduction plans can be modified to match business objectives for organizations, save expenses, and reduce carbon emissions. While each firm may choose to take different steps to reduce emissions along the value chain, there are some general suggestions that any company can follow to begin lowering its carbon footprint:
- Consuming less energy by implementing a sobriety strategy and shifting to low-carbon electricity only (e.g., renewable energy or nuclear power);
- Electrifying equipment where possible (e.g., company vehicles);
- Reducing the consumption of meat in collective catering;
- Investing in well-insulated and energy-efficient buildings;
- Encourage low-carbon mobility (e.g., trains, bikes, public transport).
To learn more, read: 9 decarbonization methods to reduce supply chain emissions - 2022
How to offset unavoidable carbon emissions
Critics of carbon offsetting argue about the industry's lack of transparency and raise the possibility that certain offset programs may not be removing as much GHG as they claim to. Some carbon offsetting initiatives even have the unintended consequence of increasing carbon emissions due to a lack of experience and a profit-only mentality.
We at Coolset advise SMEs to choose small businesses that do not handle carbon offsetting in an industrial way as one method for reducing their carbon footprint. The success of carbon offsetting using natural methods, such as planting trees, typically depends on a variety of variables, in addition to the number of trees planted, such as the tree's species, the soil's composition, the planting technique, the local community's support, biodiversity, etc. Due to this, we have teamed with Regreener, whose carbon offsetting programs we highly recommend. Rewilding is also a powerful technique to offset your emissions while restoring nature and biodiversity.
To learn more, read: How to offset carbon emissions for business