Carbon Footprint: an essential tool for carbon management
What is a carbon footprint?
The concept ‘Carbon Footprint’ is used to describe the total Carbon Dioxide (CO2) and other greenhouse gas (GHG) emissions for which an organization or individual is responsible for. We can consider that mainly all human activities generate CO2 emissions that contribute to climate change. Whether through electricity consumption, burning fuel to generate heat or driving a vehicle, each person is responsible for generating CO2 emissions, the most relevant GHG emissions resulting from human activities. Additionally, each product or service consumed generates indirect GHG emissions, whether due to the energy required for its production, transport, consumption, final treatment or other stages in its life cycle.
As such, understanding and addressing the impacts of a company is crucial for minimizing climate change and that’s why the concept of carbon footprint becomes essential. As referred, it can be described as the total amount of GHG emitted, expressed in CO2e, generated directly and indirectly by individuals, populations, governments, companies, organizations, processes, industry sectors, among others.
For the estimation of a company’s carbon footprint, it is relevant to quantify, as far as possible, the largest range of emission sources, in order to make the emissions inventory as complete as possible, providing a more realistic picture of the organization’s impacts (direct and indirect). An organization’s carbon footprint comprises a wide range of sources of emissions, such as direct fuel use, indirect energy consumption (e.g. electricity), or other indirect impacts, like upstream and downstream transportation, employee travel, purchase of raw materials, among other indirect GHG related emissions that are generated in the value chain of the reporting company.
GHG emissions are categorised into three groups or ‘scopes’ by the most widely-used international accounting standard, the Greenhouse Gas Protocol, namely:
- Scope 1, that covers direct emissions from owned or controlled sources;
- Scope 2, that covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company;
- Scope 3, that includes all other indirect emissions associated to the company’s value chain. For this purpose, the GHG Protocol published a specific Guide in which identifies 15 different GHG categories (upstream and downstream), associated to the value chain, that can be accounted for.
The logical journey
The logical path in the carbon footprint journey involves different interrelated steps. The first step is to measure, by calculating the carbon footprint, setting the scope (e.g. for an individual, business, product, among others) and boundaries. Following completing a carbon footprint assessment, and knowing the current state, the second logical step is to set targets to reduce the GHG emissions and improve performance. After setting the goal, the next phase for delivering will be implementing emission reduction activities to address ambition and targets set. In order to confirm if goals are met, GHG emissions must be monitored over a period of time. Finally, but not less important, carbon footprint should be communicated to all stakeholders.
Other complimentary steps may include the external verification of the carbon footprint by a third party, in order to increase confidence on data reported and communicated.
How to calculate a carbon footprint
Main used methodologies for calculating organizational carbon footprints include the GHG Protocol, from the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) which provides requirements and guidance for companies and other organizations preparing a corporate-level GHG emissions inventory. Other references may include ISO 14064, a standard developed by the International Organization for Standardization (ISO), that specifies principles and requirements at the organization level for quantification and reporting of greenhouse gas (GHG) emissions and removals.
More specifically, several sectoral organizations deepen the carbon footprint concept, by developing sectorial guides and references to better adapt the carbon footprint calculation to the sector’s reality. A clear example comes from the wine industry with the publication of the guide ‘Methodological recommendations for accounting for GHG balance in the vitivinicultural sector’ by the International Organization of Vine and Wines (OIV).
Why should an organisation measure its carbon footprint?
Calculating the carbon footprint of an organization has several benefits that can be pointed out. The main reason for calculating a carbon footprint is to understand the company’s impact and to inform decisions on how to reduce the climate-related impacts of a company, service or product. It also allows establishing objectives, strategies and actions to reduce these emissions and thereby make the production processes of goods more effective and economic. Another advantage is providing information to the consumer and raising awareness.
For many businesses, most of their emissions and cost reduction opportunities lie outside their own operations. By measuring its scope 3 GHG emissions, organisations can assess where the emission hotspots are in their supply chain and identify resource and energy risks. It also allows them to identify the environmental performance of suppliers, energy efficiency and cost reduction opportunities in their supply chain.
Lastly, it can help to engage with suppliers and assist them to implement joint sustainability initiatives and also to positively engage with own employees, by identifying opportunities to reduce direct emissions and by influencing them to reduce indirect emissions from business travel and employee commuting.
Carbon footprint reduction
Businesses can implement several initiatives to reduce the carbon footprint and consequently contribute to the reduction of the climate-related impacts. Carbon footprint may be reduced, among others, through improving energy efficiency on operations and value chain. This may be accomplished, for example, on primary energy usage and transportation, by choosing less carbon intensive fuels. Other examples may be installing energy-efficient lighting, adding insulation in buildings, or using renewable energy sources to generate the electricity required.
Companies can also purchase carbon offsets (by investing in a carbon-reducing activity or technology) to compensate for part or all of the carbon footprint (becoming carbon neutral). Many companies, after making efforts to reduce their carbon footprint, choose to offset the so called unavoidable GHG emissions.
Carbon footprint on the wine industry
As a relevant sector in economy, several studies[i] have been performed on carbon footprint from the wine industry. These studies include Life Cycle Analysis of a wine bottle, studies concerning specific phases of the production process, supply chain analyses and also comparative analyses between conventional and unconventional viticulture activities.
Studies[ii] have shown that particular relevant activities in terms of CO2 emissions in wine industry are in glass packaging and transport, which account for a whopping 68% of the wine industry’s carbon footprint. Contributions from grape growing and winemaking are relatively minor, respectively 15% and 17%.
Conclusion
Carbon Footprint is therefore a powerful and relevant tool for carbon management, allowing the understanding of specific situations when considering different locations, methodologies and production processes. Calculating the carbon footprint is the first step to identify and understand the climate-related impacts that an organization generates and also a way to start aligning with best sustainability reporting practices. It’s the basis for the definition of strategies, monitoring of performance and communication of results.
[i] Rinaldi et al (2016) – Water and Carbon Footprint of Wine: Methodology Review and Application to a Case Study: https://www.mdpi.com/2071-1050/8/7/621/pdf
[ii] Robinson (2019) – Carbon footprints, wine and the consumer: https://www.jancisrobinson.com/articles/carbon-footprints-wine-and-consumer
Ana Claudia Coelho and Carlos de Llera Ramos
PwC
