Climate change is a critical issue facing the world today, and reducing greenhouse gas emissions is a key solution. Companies have a duty to reduce their carbon emissions to safeguard our planet for future generations. Moreover, governments around the world are proposing carbon taxes, which present a financial risk to companies and their shareholders. In this article, we will explore how to identify and measure your company's carbon emissions, and strategies for reducing them.
The first step is to measure your company's total current carbon emissions. To do this, you will need to consider the sources of emissions from your company's operations, such as energy use, transportation, and waste disposal. You should also consider the emissions associated with the production of goods and services that your company sells. These are broken-up into three types of emissions:
Scope 1 emissions — the direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by your company (for example, emissions associated with fuel combustion in boilers, furnaces, and vehicles).
Scope 2 emissions — the indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling.
Scope 3 emissions — all indirect emissions that come from activities that occur in your company’s supply chain, but are not directly controlled by your company. These sources include the use of purchased goods and services, fuel- and energy-related activities, employee business travel, waste generated from operations, transport-related activities, and the use of leased assets. On average, Scope 3 emissions account for over 80% of an organization's emissions.
Once you have identified the sources of your emissions, you can use carbon management software to effectively measure them. A good solution will allow you to simply upload your spend data (procurement spend, utility bills, fuel receipts), or connect to your existing finance applications. It will then take the financial value of your purchased good or service and multiply it by an emission factor – the amount of emissions produced per financial unit – resulting in an estimate of the emissions produced. This will automatically calculate your company’s total emissions, and allow you to visualise its carbon footprint.
Because the vast majority of your company’s emissions likely come from its value chain, you should seek out a carbon management software solution that allows your suppliers to upload their own Scope 1-3 emissions into the platform. This will save time and effort on your part, while providing a comprehensive view of your value chain emissions and ensuring that all emissions associated with your organisation are accounted for. From there, you’ll be able to identify hotspots in your supply chain and start working on emissions reduction strategies.
Once you have measured your company's carbon emissions, you can begin to develop strategies for reducing them. One way to do this is to forecast what your future emissions will look like under a number of different scenarios. Depending on the type of industry you are in, there are various scenarios you can test. For example:
This will allow you to compare the carbon performance of suppliers in the same categories to each other, and create a carbon reduction plan that aligns your suppliers' targets with your own net zero targets, so you can work collaboratively to reduce your shared emissions over time. For more info, see: 5 ways to engage your supply chain on Scope 3 emissions.
Finally, you might want to consider implementing a carbon offset program. This involves investing in projects that reduce emissions elsewhere, such as planting trees that absorb carbon dioxide or investing in renewable energy projects. Offsetting your company's carbon emissions can help make up for any emissions that your company is unable to reduce. While your primary focus should be reducing your Scope 1-3 carbon emissions, a carbon offset program can be a useful supplement.
Avarni is an AI-driven carbon management software solution used by some of the world’s biggest companies. Our comprehensive calculation methodology and data collation technology automates your emissions management. Avarni empowers you to:
Get in touch with us to see how Avarni can help you to effectively measure and reduce your company’s carbon emissions.