How To Calculate Your Businesses Carbon Emissions: A Simple Guide

Carbon accounting, also known as greenhouse gas accounting, is a systematic method for measuring, quantifying, tracking, and reporting the amount of greenhouse gas (GHG) emissions at an organisational level or for a specific project, product, or service. GHG emissions include carbon dioxide (CO2) and other gases like methane and nitrous oxide.

Why is Calculating Carbon Emissions Important?

Society, via the Paris Agreement, must significantly reduce greenhouse gas emissions to reach Net Zero targets by 2050. As Peter Drucker once said, “You can't manage what you can't measure.”

As a result, organisations that measure accurate GHG emissions can focus on appropriate emissions reduction strategies and contribute to a sustainable future with less impact on climate change.

Identifying the hotspots presents the opportunity to prioritise emission reduction strategies, and it can save costs through efficient operations and life cycle assessment. Additionally, there is increasing demand from regulation, investors, and customers for organisations to reduce climate impacts.

Different Groups of Carbon Emissions

CO2 is the most common GHG emitted by human activities on Earth. Nonetheless, other major GHGs are allocated a carbon dioxide equivalent (CO2e), calculated by multiplying the GHG quantity by its global warming potential (GWP). The current standards for measuring GHG emissions may be grouped into direct emissions from:

• Scope 1: Sources owned by an organisation.
• Scope 2: Indirect emissions from purchased energy.
• Scope 3: Indirect emissions from sources not controlled or owned by the organisation, typically from the supply or value chain.

How to Calculate Your Organisations Carbon Emissions

Step 1: Choose the Carbon Accounting Calculation Framework

Many calculation frameworks are available for companies to use to complete their carbon accounting, and the selected framework must be chosen to ensure credibility and robustness. The most commonly used frameworks include:

• Greenhouse Gas Protocol
• ISO14064
• Climate Disclosure Standards Board (CDSB)
• Global Reporting Initiative

Exercise your concentration on each of the listed frameworks to see which one is right for you. This will influence the next few steps of the process.

Additionally, several tools are available that companies may use to assist in completing the carbon accounting process. However, companies must choose any tool that meets their needs and ambitions, consider the expertise and cost associated with using these tools, and make appropriate allowances to accommodate the organisation's data collection and sustainability maturity over time.

Step 2: Identify Emission Sources and Collect Emissions Data

The next step after choosing the carbon accounting framework is to complete the GHG audit to identify all sources of GHG emissions within the company operations and in the value chain, with specific guidance from the chosen carbon accounting framework.

The carbon accounting framework helps to classify the emissions into three scopes as mentioned earlier. It also helps to determine the financial/organisational boundaries and gather the relevant activity data such as energy and fuel consumption, production output, distance travelled, waste generated, and other materials used.

Companies can convert the relevant activity into carbon emissions using published emission factors from reliable sources, such as the UK Government and the IEA.

Step 3: Calculate Emissions

Organisations can calculate their GHG emissions as part of their carbon accounting using several calculation methods, such as spend-based, activity-based, or hybrid systems, as stipulated by the carbon accounting framework chosen in step one.

The spend-based approach is based on readily available company financial data; however, the industry averages employed in the method may need to be more accurate.

On the other hand, the activity-based method uses specific physical activity data, such as energy and material consumption.

Step 4: Verification and Reporting  

Organisations can use verification services to enhance their reliability of carbon emissions data, align with the nominated accounting standards, improve transparency to build trust with stakeholders and avoid the risks of inaccurate reporting. The EU has recently implemented a ban earlier this year on companies making environmental claims about their products or services if they can't be supported by scientific research. This is also known as Greenwashing. Not to be confused with Greenhushing.

Also, verification by independent third parties is an effective way to build credibility and confidence with stakeholders. The process may involve auditing and using recognised verification standards such as ISO 14064 or ISO 14067.

Step 5: Repeat Annually

Establish a baseline year as a starting or reference point for monitoring progress over time. Organisations must regularly calculate GHG emissions on an annual basis and, as much as possible, break down the emissions into categories of business activities, processes, products, or services to make it easier to identify emission reduction opportunities and monitor progress.

Where Can Organisations Learn How to Achieve NetZero?

For society to limit global warming to 1.5 ℃ and achieve Net Zero by 2050, businesses must contribute their share in reducing their carbon emissions. An effective emission reduction process starts with measuring carbon emissions, and there is no better way to build on that than by enrolling on the IEMA Pathways to Net Zero course.

Not only do learners gain a full understanding of more complex methods of carbon emission accounting, but they will also be able to:

• Build the capability and skills needed to help the whole organisation develop a strategy and a pathway to achieving net zero objectives.
• Implement a plan to reduce emissions and consider ways to become more energy efficient.
• Develop messaging to support the business with communication of lower carbon goods and services.

The ever-increasing demand from regulation, investors, customers, and other stakeholders means companies that achieve a reduction of their emissions are better placed to gain credibility, trust, and competitive advantage. Not only that rapid changes are being made in sustainability reporting standards in the EU, so it imperative to educate yourself as soon as possible. There is no better time to start your journey to Net Zero than now.

About the Author 

Enock Ebbah MSc has a wealth of combined experience, having spent 13 years developing and delivering energy, environment and sustainability projects, energy research and responsible engineering. His specialist expertise in strategic Net Zero solutions, energy transition, decarbonisation initiatives, and sustainable approaches to using energy, materials, and resources for sustainable development. As an Environment and Sustainability Consultant at Astutis, Enock helps organisations deliver ambitious environment, sustainability, and Net Zero outcomes by providing environmental assessments, environmental and sustainability training, ESG materiality assessments, and sustainability reporting and strategy.