Solutions Guide: Carbon Measurement
The purpose of a carbon measurement assessment is to establish the baseline understanding of an organisation’s impact on climate. Some companies have to do it for regulatory or compliance reasons, but most do it as part of their overall sustainability and climate strategies.
High-level, the assessment will enable the organisation to:
- Gain a better understanding of their impact and how emissions are distributed across areas of the business.
- Share that understanding with customers, stakeholders and business partners
- Use this shared understanding to take action and empower customers and partners to reduce their own emissions.
How does a carbon footprint assessment work?
Though it’s commonly called a carbon footprint audit, the assessment typically measures all greenhouse gas emissions generated by the company’s activities, and breaks them down by categories - how granular it goes depends on the intended outcomes.
The audit results are usually measured in tCO2e:
tCO2e = tonnes of CO₂ equivalent, to account for all greenhouse gases that contribute to climate change (methane and nitrous oxide are two other greenhouse pollutants).
To make sure the calculations are consistent and comparable from one company to another, carbon accounting standards have been created. There are several standards around, the GHG Protocol is most widely used in the corporate sector. Their guidelines are robust and recognised internationally.
Since carbon emissions cannot be measured with any device, it has to be done using estimates. Estimates are calculated with a simple equation:
Activity Data x Emission Factors = tCO2e
- Activity Data is the raw data that expresses every aspect of the company’s operations: from heating and cooling offices, to employee commuting, to product purchases. This raw data uses metrics that are specific each activity (KWh electricity for cooling, km driven by car for employee commuting, number of products bought etc)
- Emission Factors measure greenhouse gas emissions for each business activity. There are emission factors for just about everything, and companies build comprehensive databases of emissions factors to be able to match each line of activity data with its most relevant emission factor.
Let’s take business travel for example.
A company based in the UK reports that in 2021, its staff travelled a total of 3,600,000 km by plane. One third of these trips were international long haul, (half business class, half-economy), one third was short haul and one third domestic. All short haul and domestic flights were economy.
Steps of a carbon measurement project
Step 1 - Define the boundaries
First, the company needs to define the boundaries for the calculations. Company emissions are categorised into 3 scopes:
- Scope 1 = All direct emissions from sources owned or controlled by the company
- Scope 2 = Indirect emissions from energy consumption (electricity, heating, cooling, steam)
- Scope 3 = All other indirect emissions from “upstream” (production and transportation of products and services purchased) and “downstream” the value chain
Companies sometimes choose to exclude Scope 3 from their calculations, on the basis that it represents emissions they have no control over, or that accurate data is not available. However, scope 3 can represent up to 90% of a company’s emissions, so the expectation is for companies to include those scope 3 emissions, and work with their suppliers and customers to reduce associated emissions.
For example, a bank will have a small footprint from their Scope 1 & 2 emissions, because their own operations are relatively small (some offices and their electricity usage). However, their scope 3 is massive if they take into account the emissions generated by the projects they invest in or help finance. These are called financed emissions and few banks today are even reporting on them.
Recommendation: Be ambitious and comprehensive in this step - it’s best to know your baseline, then get to work to reduce your footprint. Your impact will only be more meaningful.
Step 2 - Collect data
Here you and your partner will need to map your entire organisation and list all activities. This part used to be cumbersome but most parts can now be automated and technology is here to help (more on this later).
Step 3 - Get results and take action
Once you have all activity data and emission factors, you will get your carbon assessment, for a given year. The final output can be a shareable report, with insights and powerful visualisations. The objective is to make this data as actionable as possible.
Doing the assessment is the first step. Once you have the picture of how big your impact is and where emissions come from, it’s time to act on it.
First, tackle the low-hanging fruit. What sources of emissions are easily addressed without having a major impact on the business? Create short-term initiatives and build on the momentum created by the assessment project. Then, get everyone on-board. It should not be the job of the sustainability team to figure out how to reduce emissions. It should be the job of everyone in the company, and they should be equipped with the knowledge and tools to know where they can contribute.
And finally, set your targets and long-term strategy. How will the business transform long-term to be compatible with a low-carbon world?
Solutions: Consultant vs Technology-led approaches
Until recently, carbon footprinting was a typically labour-intensive process that required pulling information from multiple sources and suppliers, compiling all this data into large excel spreadsheets and hoping that the inaccuracies and data gaps were not large enough to make the whole task irrelevant !
Carbon footprinting was mainly done by freelance consultants trained on carbon accounting standards, or consulting firms. Then, technology stepped in and made carbon footprinting more accessible, comprehensive, granular and accurate.
Several B2B carbon intelligence startups have launched in the last couple of years to tackle this problem, and they have grown very quickly. In addition to these newcomers, some established tech players have developed their own solutions, such as SAP’s Product Carbon Footprint Analytics (SAP PCFA) or Microsoft’s Cloud for Sustainability, aiming to launch mid-2022.
Let’s take a closer look at these 2 approaches.
To run your carbon footprint assessment, you can engage with a freelance consultant trained on accounting standards, or a consulting firm. The consultants will run surveys at your company and work with you to gather all the information needed for the audit. Consulting firms have developed in-house methodologies and tools to do this effectively.
Pros and cons of consulting solutions
- You don’t need to have all the business activity data already well organised
- You get tailored strategic support specific to your industry
- You deal with humans
- Potentially more costly
- Not dynamic ; you usually get a yearly assessment, and you have to do it every year
Consulting firms also tend to provide a full suite of services beyond basic carbon accounting: detailed life cycle assessments, strategic mitigation plans and target setting, energy productivity analysis, supply chain risk through to the purchase of renewables, carbon credits as well as auditing and assurance.
How much does it cost?
This is a hard one to answer, as the costs tend to vary significantly depending on a range of variables from the industry, size of the organisation, quality and quantity of data required and scope of the project.
For an assessment conducted by a consulting firm in Australia, the charges would range generally between $4k-10k for a small-medium business. For a large business wanting to undertake a more comprehensive Life Cycle Assessment, prices could range anywhere from $10k - $50k.
Startups have emerged in recent years to tackle this problem with technology. Their promise is to streamline the process and minimise the time, effort and resources involved in the data collection and cleaning process, thanks to automation and AI. Platforms come packed with helpful features such as benchmarking against industry peers, setting targets and suggesting initiatives to reduce emissions from most prominent sources.
Most tech platforms are now taking a hybrid approach and as part of some of their offerings will make consultants / carbon success managers available to you for more personalised support.
Pros and cons of software solutions
- Usually less expensive than hiring consultants
- Most of the process can be automated, provided you have relatively clean data
- You get an on-going, dynamic carbon view of your business, so you can react accordingly
- Less personalised
- Less human support
How much does it cost?
The pricing model of carbon measurement platforms is usually different from the one of consulting firms, because the idea is that organisations would use their solution on an on-going basis.
Again the charges will vary considerably depending on the size of the business and requirements. For a small business, the cost of the platform will be a few hundred dollars per month.
I’m a small business, what can I do?
It all sounds wonderful, but what if you're a small business and you don’t have the financial resources to engage with consultants or pay for software?
The good news is, there are some free tools out there that can help you understand your emissions. Software provider Normative recently announced they partnered with Google.org and SME Climate Hub to develop a tool enabling SMEs to calculate their footprint. It’s making this tool available for free to businesses that commit to net zero through SME Climate Hub.
Industry CO₂ Insights gathers hard-to-find data specific to SMEs and presents it in an intuitive dashboard. Source: Normative
Another solution to consider in Australia is Trace ; this platform makes it easy for businesses to get an overview of their footprint, and spot opportunities for reduction. It then helps you bring your team, customers and community on the journey.
Software Solutions - Who are the top players?
Path Zero 🇦🇺
If you're looking for an Australian-based carbon measurement platform, look no further than Pathzero.
Global players - Carbon Accounting Software
Here are the main global players providing software-based carbon measurement:
Sustainability & ESG Platforms
These platforms go beyond carbon accounting and integrate ESG components into their platforms.
- Plan A - Carbon and ESG reporting for businesses
- Provenance - Sustainability communications with proof
- Metrio - Seamless ESG analytics and reporting
- Worldfavor - Global platform for sustainability and compliance information and management
- Nossa Data - We make ESG Easy for Companies
These platforms are focused on a specific industry or are taking a nice approach to carbon measurement:
- Food companies: CarbonCloud
- Real estate: Measurabl
- Finance: Ecolytiq
- Carbonchain: Commodity Supply Chains:
- CarbonFact - Product-level carbon footprint
- Climatiq - (Germany) Free API-powered emissions calculations
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We created a template to fast-track your RFP process when engaging a provider for your carbon assessment. To access the template, create a copy of this document ; customise it as needed to get information and a proposal from your prospective suppliers.