1. Carbon footprint definition and measurement standards
2. Sustainable strategy ESG and CSR in enterprises
3. Navigating the regulatory landscape
4. Carbon footprint management

Carbon Footprint Definition and Measurement Standards

What is a carbon footprint?

A carbon footprint reflects the total greenhouse gas emissions generated by a given entity, individual or product. It includes the six greenhouse gases identified in the Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

How to measure a carbon footprint?

While numerous tools and calculators exist, accurate carbon footprint measurement particularly in the corporate context must be based on established international standards.

What is the Greenhouse Gas Protocol?

The most recognized and widely used international standard is the Greenhouse Gas Protocol (GHG Protocol). It presents detailed guidelines for calculating a company’s carbon footprint across various emission scopes discussed below.

Emission scopes according to the GHG Protocol

A proper understanding of emission scopes is fundamental for reliable carbon footprint assessment.

Scope 1 covers direct emissions resulting from the company’s own combustion of fossil fuels or from technological and production processes. Examples include:

• Fuel combustion in technological or innovation related processes
• Leakage of refrigerants
• Fuel combustion in stationary installations
• Fuel combustion in company owned vehicles

Because Scope 1 is internal to the company, its calculation is relatively straightforward and requires primarily fuel consumption data and information about any leakage events.

Scope 2 refers to indirect emissions generated during the production of purchased electricity and heat. Measuring Scope 2 therefore requires careful inventory of purchased energy and its sources.

Scope 3 is the broadest and most complex scope. It covers the entire value chain from the footprint of used materials to emissions generated during product use and end-of-life disposal. It also includes numerous indirect emissions tied to the broader functioning of the organization.

Activities in Scope 3 are grouped into upstream and downstream categories. Upstream emissions arise primarily from producing carbon intensive inputs. Downstream emissions occur mainly during product use for example in the automotive industry or disposal such as in the chemical sector.

Scope 3 includes factors such as:

• Commuting and business travel
• Material consumption for example paper use
• Supplier and transportation emissions
• Extraction or production of raw materials and intermediates
• Waste management

Given the multidimensional nature of Scope 3, precise calculation requires deep analysis of operational processes and cooperation with suppliers and partners. Scope 3 can account for up to three quarters of a company’s total emissions which makes its understanding crucial for building climate competitiveness.

What is the Global Reporting Initiative GRI?

The Global Reporting Initiative GRI is an independent international standard-setting body that helps companies understand and communicate their impact on issues such as climate change, human rights and corruption. Unlike the GHG Protocol which focuses on emission calculation, GRI establishes sector specific sustainability reporting standards intended for a wide audience of stakeholders.

What is ISO 14064?

ISO 14064 is part of the ISO 14000 family of environmental management standards. Its 2006 edition was updated in 2018.

• Part 1 specifies guidelines for quantifying and reporting greenhouse gas emissions and removals at the organizational level.
• Part 2 defines guidelines for quantifying, monitoring and reporting emission reductions and enhanced removals at the project level.

Sustainable Strategy ESG and CSR in Enterprises

What is sustainable development?

According to the 1987 report of the World Commission on Environment and Development sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

What is ESG?

ESG stands for environmental, social and corporate governance. These three pillars are used to conduct non-financial assessments of companies and should be considered by enterprises aiming to integrate sustainability into their strategy. ESG is now a key focus for stakeholders and strong performance can significantly enhance customer trust investor interest and overall corporate reputation.

What is CSR?

CSR Corporate Social Responsibility is a management strategy that assumes companies will consider social interests stakeholder relationships especially with employees and environmental impact when conducting their business. The ISO 26000 standard offers comprehensive guidance on CSR across seven core areas including organizational governance human rights labor practices environment fair business practices consumer relations and community involvement.

How do ESG and CSR differ?

Although ESG and CSR share similar origins they differ in purpose and application. CSR traditionally focuses on values and soft initiatives while ESG enables measurable standardized assessment of sustainability performance. In practice ESG can be viewed as the quantifiable component of CSR.

Navigating the Regulatory Landscape

Why measure the carbon footprint?

In recent years sustainability strategies have gained popularity driven largely by rising environmental awareness and societal expectations. At the same time carbon footprint reporting is becoming not just beneficial but mandatory under new EU regulations.

What is the CSRD?

The Corporate Sustainability Reporting Directive CSRD adopted in 2021 and entering into force in 2024 mandates sustainability reporting for large companies and listed entities. Although smaller enterprises are not directly obligated many form part of supply chains and therefore fall under Scope 3 reporting requirements.

What is the TCFD?

Established in 2015 by the Financial Stability Board the Task Force on Climate-related Financial Disclosures TCFD aims to improve climate related financial reporting and provide frameworks for organizations to communicate risks and opportunities associated with climate change.

EU Decarbonization Policy Green Deal Fit for 55 and EU Taxonomy

The EU aims to achieve climate neutrality by 2050.

• The European Green Deal seeks to create a resource efficient competitive economy with net zero emissions
• The EU Taxonomy sets criteria for determining environmentally sustainable economic activities
• Fit for 55 consists of legislative proposals aligned with the goal of reducing emissions by at least 55 percent by 2030 compared to 1990 levels

Consequences for enterprises

To reduce emissions they must first be measured which places carbon footprint assessment at the core of regulatory compliance. Large companies subject to EU Taxonomy reporting must disclose for example:

• the share of turnover derived from environmentally sustainable activities
• the share of capital expenditure and operational expenditure aligned with sustainable activities

These initiatives confirm that carbon footprint calculation is transitioning from a trend into an integral element of business operations.

Carbon Footprint Management

How to manage a company’s carbon footprint?

The Envirly platform guides users step by step through calculating and managing their carbon footprint. The process includes four main stages:

1. Data submission and identification of emission generating processes
   Envirly’s methodology adapts to organizational needs and offers various data collection methods with clear estimation guidelines. Calculations cover Scopes 1, 2 and 3 in accordance with the GHG Protocol and GRI standards.
2. Using personalized recommendations to reduce emissions
   Analytics and dashboard visualizations enable real-time monitoring of emission intensity. A digital twin of the company allows identification of high emission processes known as heat points.
3. Simulating reduction plans setting targets and monitoring performance
   Envirly generates tailored recommendations based on heat points and industry benchmarks. Users can set reduction targets model reduction scenarios and forecast the effects of implemented actions.
4. Generating greenhouse gas emission reports
   All emission data can be managed on a single platform enabling streamlined reporting and analysis.

Key challenges in carbon footprint management

Carbon footprint assessment is complex and still unfamiliar to many. Identifying emission sources collecting reliable data and calculating Scope 3 emissions pose significant challenges. Upstream and downstream analyses require extensive data from suppliers employees customers and more. As global awareness and regulations intensify tools such as Envirly can help businesses adapt effectively.

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