Last updated:
May 24, 2024

Corporate Carbon Footprint

What is a Corporate Carbon Footprint?

A Corporate Carbon Footprint refers to the total amount of both direct and indirect Greenhouse Gas (GHGs) emissions by a company/organisation. It is generally measured in tons of carbon dioxide equivalent (CO2e), which factors in all GHG emissions associated with the business' operations. This includes Scope 1, Scope 2, and Scope 3 emissions.

Scope 1, 2, and 3 Emissions

  • Scope 1 Emissions: Direct emissions from sources owned or controlled by the entity.
  • Scope 2 Emissions: Indirect emissions from the generation of purchased energy sources.
  • Scope 3 Emissions: All other indirect emissions that occur in a company's value chain, including both upstream (e.g., purchased goods and services) and downstream (e.g., transportation and distribution, use of sold products) activities.

Scope 3 emissions generally make up the largest portion of a company’s emissions and are the most complex to work out. Even a large portion of companies in the DAX-40 struggle with reporting on their Scope 3 emissions, meaning that companies who manage to do this successfully really can stand out as sustainability leaders in their respective industries.

Importance of Measuring Corporate Carbon Footprint

Companies looking to fully understand their environmental impact need to begin with measuring their corporate carbon footprint. This helps uncover areas with room for emission reductions, and forms a critical step in developing an effective climate strategy. This can also inform external figures about the company's sustainability commitments, which can influence investor and consumer decisions.

Strategies for Reduction and Management

Strategies to reduce a corporate carbon footprint include activities such as optimising energy efficiency, using more renewable energy, redesigning products & processes, and investing in carbon removals. In addition to this, setting science-based targets and maintaining transparent reporting and verification practices are both important practices for effective carbon footprint management.

Regulation Around Reducing Carbon Footprint

There are several layers of regulation affecting companies, including international agreements like the Paris Agreement, national and regional policies (such as carbon taxes and cap-and-trade systems), sector-specific regulations, and voluntary standards like the Science Based Targets initiative (SBTi). These regulations and standards vary by region and industry but collectively push for lower carbon emissions in corporate operations.

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