As businesses increasingly prioritise sustainability, carbon reporting has become a crucial step in reducing environmental impact. Understanding and tracking your carbon footprint not only helps you comply with regulations but also opens doors to cost savings, operational efficiency, and a stronger brand image. In this guide, we’ll walk through the basics of carbon reporting, why it’s important, and how your business can begin tracking its carbon footprint.
What is Carbon Reporting?
Carbon reporting is the process of calculating and disclosing the greenhouse gas (GHG) emissions associated with your business’s operations. These emissions are typically measured in carbon dioxide equivalents (CO2e), allowing businesses to assess their overall environmental impact. Reporting these emissions is often part of regulatory requirements, but even for those without legal obligations, it’s a way to demonstrate commitment to sustainability and attract eco-conscious customers or investors.
Why is Carbon Reporting Important?
Regulatory Compliance: In many countries, businesses are required to report their carbon emissions as part of climate-related legislation. In the UK, for example, the Streamlined Energy and Carbon Reporting (SECR) framework mandates large businesses to track and disclose their energy use and carbon emissions.
Cost Savings: Tracking your carbon footprint can reveal areas where energy and resource use are inefficient. By identifying these, businesses can implement cost-saving strategies such as energy efficiency improvements or waste reduction.
Investor and Customer Expectations: Investors, customers, and stakeholders increasingly value businesses that demonstrate environmental responsibility. Transparent carbon reporting can enhance your company’s reputation, helping you meet ESG (Environmental, Social, and Governance) criteria that matter to stakeholders.
Risk Management: Understanding your carbon footprint can help you manage risks related to climate change, such as regulatory changes, increased energy costs, and supply chain disruptions.
Types of Emissions to Track
Emissions are divided into three key categories, known as Scopes, according to the Greenhouse Gas Protocol, the most widely used framework for measuring and managing emissions.
Scope 1 – Direct Emissions: These are emissions that come directly from your business’s operations, such as fuel combustion in company vehicles or on-site energy production (e.g., gas heating or diesel generators).
Scope 2 – Indirect Emissions from Energy Use: Scope 2 covers emissions from the generation of purchased electricity, steam, heating, and cooling that your business consumes.
Scope 3 – Indirect Value Chain Emissions: Scope 3 emissions include all other indirect emissions that occur along your value chain. These are often the largest part of a company’s carbon footprint and can include supplier emissions, employee commuting, waste disposal, and the use of sold products.
How to Track Your Business’s Carbon Footprint
Tracking your business’s carbon footprint involves gathering data across multiple areas of your operations. Here’s a step-by-step process to get started:
Set Clear Boundaries Decide what parts of your operations you’ll include in your carbon footprint calculation. For most businesses, Scope 1 and 2 emissions are easier to track, but Scope 3 emissions may also be necessary, depending on the depth of your reporting goals and industry standards.
Collect Data To calculate your emissions, you’ll need data on energy use, fuel consumption, and other relevant metrics. Common data sources include electricity and gas bills, fuel invoices for company vehicles, and waste disposal records. For Scope 3 emissions, you may need data from suppliers and partners.
Use an Emissions Calculator There are several tools available for calculating carbon emissions. Many businesses use online calculators provided by carbon accounting platforms, or they work with consultants who can develop customised emission tracking solutions.
Convert Data to Carbon Emissions Use conversion factors to turn your energy usage into CO2e. For example, the UK government publishes annual conversion factors for businesses to use when converting energy and fuel data into carbon emissions.
Document and Report Once you’ve calculated your emissions, document the results in a carbon report. This report should include the total emissions by scope, the methodology you used, and any steps your business is taking to reduce its carbon footprint. If you’re complying with a reporting framework like SECR, ensure your report follows its guidelines.
Setting Targets and Reducing Emissions
Tracking your carbon footprint is only the first step. To truly reduce your environmental impact, it’s essential to set reduction targets. These can be short-term (e.g., reducing electricity consumption by 10% over the next year) or long-term (e.g., becoming carbon neutral by 2030). Reductions can be achieved through energy efficiency improvements, switching to renewable energy, adopting sustainable procurement practices, and even offsetting unavoidable emissions through verified carbon offset programs.
Start Reporting Today
Accurately tracking and reporting your business’s carbon footprint is essential for regulatory compliance, operational efficiency, and maintaining a positive brand reputation. While the process may seem complex, it offers significant benefits in terms of cost savings, risk management, and environmental responsibility.
If you're ready to take the next step, ECBS can help you with energy audits, carbon footprint analysis, and tailored strategies to reduce your emissions. Reach out to our team today to learn more about our carbon reporting services.
Get in touch with a member of our team regarding Carbon Reporting here