Climate change is no longer a problem we can ignore or leave for future generations. The extreme weather events and natural disasters linked to rising global temperatures have already cost companies billions in damage and lost revenue. Alongside this, regulators, investors, employees and consumers are ramping up the pressure on corporations to dramatically reduce their greenhouse gas (GHG) emissions.
In fact, a Deloitte survey found a staggering 97% of executives reported their businesses have already been negatively impacted by climate change.
So how can companies contribute towards urgent climate action while remaining profitable? Measuring and reducing their carbon footprint is a critical first step.
What Exactly is Carbon Footprint?
Your carbon footprint represents the total amount of greenhouse gases emitted directly and indirectly to support your company‘s operations and activities. This includes:
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Scope 1 – Direct emissions from sources you own and control e.g. company vehicles
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Scope 2 – Indirect emissions from purchased energy e.g. electricity usage
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Scope 3 – All other indirect emissions across your value chain e.g. business travel, waste disposal, transportation of goods
Studies have shown the vast majority of emissions for most companies arise from Scope 3 activities. So accurately tracking carbon impacts beyond your own four walls is vital.
Carbon Footprint = Activity Data x Emission Factor
The basic formula for determining carbon footprint is:
Carbon Footprint = Activity Data x Emission Factor
Some examples:
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Gallons of diesel consumed x KgCO2e per gallon
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Electricity used (kWh) x kgCO2e per kWh
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Miles flown x emissions per passenger mile
So if your organization uses 10,000 kWh of electricity, you would multiply this by the emissions factor for your local energy grid to estimate carbon footprint.
Emissions factors vary significantly by region and electricity mix. For instance, 1 kWh in California produces half the emissions as electricity from an Ohio coal plant. Robust carbon accounting platforms contain updated emissions factors databases to enable automated reporting.
Methodologies for Carbon Accounting
Companies can take different approaches to determine emission factors for purchased electricity:
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Location-based: Uses average grid factors based on where energy is consumed
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Market-based: Accounts for renewable energy purchases through PPAs and RECs
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Hybrid: Incorporates both grid factors and market instruments
Each methodology has pros and cons in terms of accuracy and ability to drive further emission reductions. Sophisticated software solutions allow configuring footprint calculations to align with your chosen methodology.
Tracking Scope 3 emissions across complex supply chains creates further data challenges. Let‘s examine solutions.
Automating Carbon Management
Sophisticated carbon accounting platforms automate data collection, emission factor lookup, calculation and reporting. Built-in emissions factors databases remove the need for messy manual lookups. Integration with company operating systems also eliminates painful data gathering and inputs.
These carbon calculators deliver several key advantages:
1. Holistic Visibility of Emissions Hotspots
Cloud-based carbon management systems crunch enormous volumes of data to provide detailed visibility into emission sources. Powerful analytics and dashboards allow you to instantly identify “hotspots” to prioritize for carbon reduction projects.
You gain full visibility into Scope 3 emissions from suppliers and product delivery so can engage partners on decarbonization.
2. Tracking Carbon Performance Over Time
Consistent methodology and automatic data inputs enable precise tracking of emissions volumes over time. You can assess the impact of various carbon reduction activities and ensure overall progress towards science-based climate targets.
3. Streamlined Regulatory Reporting
As climate disclosure regulations ramp up globally, carbon accounting tools prepared standardized reports aligned to major reporting frameworks like CDP, GRI, and SASB. This removes a massive compliance burden from sustainability teams.
Some carbon footprint solutions even file emissions reports directly with regulators on your behalf.
4. Enhanced Visibility Across Value Chains
Leading solutions enable companies to map sustainability hotspots across multi-tier supply chains. They combine emissions data from various partners onto a single platform – supporting collaboration on carbon reduction projects.
This is invaluable in working towards ambitious Scope 3 emission goals.
Real-World Results from Carbon Analytics
Let‘s examine specific examples of enterprises using carbon management platforms to accelerate their climate strategies:
Unilever – Mapped a complex, global supply chain spanning over 55,000 suppliers to identify Scope 3 emission hotspots and engage partners on targeted reduction initiatives.
"By partnering with suppliers and using data, we were able to reduce CO2 emissions by over 1 million tons in 2020. Our carbon cloud platform was critical in driving these savings" – Alan Jope, CEO Unilever
Maersk – Leveraged granular visibility into operational emissions to accelerate progress towards net zero targets. Improved data quality led the company to reduce its 2020 baseline by 7%.
"Our carbon accounting platform has given us the granular data needed to maximize emission reductions while keeping cargo moving to societies that depend on it." – Søren Toft, COO, Maersk
Lafarge Holcim – The cement giant utilizes carbon management software to track emissions against 2030 and 2050 science-based targets. The improved data transparency has also strengthened climate risk analysis and disclosure to investors.
Coca Cola Europacific Partners (CCEP) – CCEP consolidated emissions data from 23 bottling plants onto a single cloud platform, eliminating 25,000 manual hours per year previously spent on carbon accounting!
Let‘s examine some of the popular carbon footprint solutions enabling such remarkable outcomes.
Top Carbon Accounting Software Platforms
| Software | Description | Scope 3 | Custom Reporting | AI-Powered |
|---|---|---|---|---|
| SAP Carbon Footprint Analytics | Analyzes emissions across operations and supply chain. Integrates with SAP analytics and ERP systems. | Yes | Yes | Yes |
| BCG CO2 AI | Simulates impact of carbon reduction plans before implementation to pick optimal path | Yes | Yes | Yes |
| CarbonTrust | Maps out hotspots across scopes 1, 2 and 3. Models reduction opportunities | Yes | Yes | |
| Sphera | Calculations, reporting and supply chain modules with emissions factors database | Yes | Yes |
While capabilities vary across solutions, core functionality includes:
- User-friendly dashboard — See emissions volumes by source, over time and against targets
- Scope 1, 2 & 3 calculations — Built-in emissions factors database for automated reporting
- Data imports & APIs — Seamless connections to existing company data sources
- Supply chain integration — Map and collect data from partners across your value chain
- Report builder — Construct customized reports e.g. for CDP, DJSI, SEC filings
Some also utilize artificial intelligence to model the impact of hundreds of potential carbon reduction levers and instantly identify the most effective options.
Carbon Management Market Overview
With sustainability rising on the corporate agenda, the market for enterprise carbon accounting tools continue to achieve stellar growth:
- Carbon accounting software expected to be $14.9B market by 2030 – growing at 17% CAGR (ResearchAndMarkets)
- 89% of US small businesses plan to buy carbon accounting software by 2025 (Carbon Hub)
- 67% of Fortune 500 companies already use an environmental management platform (Forbes)
This trajectory aligns with tightening climate policies across the globe – companies simply have no choice but to quantify their carbon impacts.
Investing in capabilities to accurately measure emissions delivers compelling ROI in the form of:
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Reduced compliance costs and risks
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Increased supply chain visibility and collaboration
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Enhanced climate resilience, future-proofing your business
However, carbon accounting still carries inherent challenges…
Limitations of Carbon Measurement
While enterprise carbon accounting tools have advanced tremendously, some constraints persist:
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Incomplete supplier emission volumes – Even the most sophisticated platforms rely on partners across the value chain to provide quality emissions data. Real-world data gaps are common.
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Uncertainty in emissions factors – While default factors enable standardized calculations, real-world conditions introduce variability. Regular sensitivity analysis is required.
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Manual data inputs – Some business divisions may lack digital connectivity, requiring sustainability teams to collect and input data manually – inefficient and risky.
Addressing these constraints is an ongoing journey as technology capabilities evolve. But the business imperative of understanding carbon impacts significantly outweighs the limitations.
The Bottom Line – Corporations can no longer hide from their carbon footprints. But thanks to easy-to-use software, they also don‘t need to fear tackling this vital undertaking. Automated data collection and centralized reporting ensure emission quantities stay visible as they (hopefully) trend downwards.
Now is the time to assess carbon accounting solutions for your organization – before regulators force your hand! Reach out below to explore options tailored to your needs.
