Understanding everything about the carbon footprint

If one thing is certain, it is that the “hunt” for carbon has only just begun and will intensify in the years to come. In Europe, where the Commission is implementing the Green Deal or in the world with American or Chinese competition.

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Exceptional climate events are multiplying, the carbon constraint is increasing, consumers are taking responsibility. In short, the fight against climate change is changing the business and strategy of companies.

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How can you successfully turn away from carbon? How can you successfully transition to another business model? How can we protect ourselves from climate risks?

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For companies, one tool seems more essential than ever: the carbon footprint. It allows the company to measure its dependence on carbon and thus to measure the risks of an unanticipated transition. It is also the essential starting point for any strategy to reduce greenhouse gas (GHG) emissions. Mitigation and adaptation: these are the two major challenges of the coming years and in both cases, the carbon footprint is an essential crossing point.

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What is a carbon footprint?

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A carbon footprint is the photograph of all of a company's GHG emissions at a given point in time.

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Two international methodologies exist: the GHG Protocol and the ISO 14069 standard. The Sami platform and our consultants are in a position to manage these different methodologies and to switch from one to the other according to the needs and requests of companies.

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Why do a carbon footprint?

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There are 4 main reasons to do your carbon footprint.

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1. Regulatory

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Regulations are gradually tightening up on measuring the carbon footprint of businesses and reducing their GHG emissions.

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The European directive on CSRD integrates climate issues into the extra-financial reporting of all companies with more than 250 employees. The complete carbon footprint is among the information expected in this reporting.

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On this subject, you can consult our dedicated article.

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2. A strong competitive challenge

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Economic risks

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“Making a carbon assessment is a first step in managing the climate-related risks to which a company is exposed”

Guillaume Colin, Head of Climate Expertise at Sami.

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And these risks are numerous.

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• Stakeholder risks

More and more consumers are paying attention to the carbon and environmental footprint of the products they buy. In this study on responsible consumption published in 2021 by ObsoCo, the Society and Consumption Observatory, 61% of French people called for radical changes in order to produce and consume less but better.

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In addition, a growing number of companies are asking their suppliers to produce at least the carbon footprint of their activity. Let's mention SNCF, the French national railway company, which has been integrating a carbon ton price into its tenders since 2023 for its 55 largest suppliers in order to monetize their GHG emissions.

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• Funding risks

The investment funds are more and more likely to require the companies in their portfolio to at least calculate their carbon footprint, for others to implement a strategy to reduce emissions.

Many other financial players now exclude companies operating in high-carbon sectors. That's what announced The Bank of France which will exclude from its portfolios by 2024 any company that develops new fossil fuel extraction projects.

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• Market risks

“Carbon prices are rising. If a company wants to know its exposure to this financial carbon risk, the starting point is to know its emissions. If it does not know to what extent its value chain is carbon intensive, it risks paying much more for its raw materials or being less competitive downstream because these carbon taxes will increase margins.”

Guillaume Colin

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In addition, technological risks are added, with numerous low-carbon innovations emerging. Again, there is the risk of being late and losing market shares.

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• Physical risks

Heat waves, floods, droughts: the impacts of climate change can affect the entire business value chain. For example: BASF, the chemical giant, which had to stop the activity of one of its factories in Germany which was no longer receiving enough raw materials, as river traffic on the Rhine was slowed down by the very low level of the river.

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The opportunities

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For the same reasons that not engaging in a transition process exposes the company to numerous risks, doing so offers prospects for economic benefits: gaining market shares; access to financing; competitive advantage in tenders; etc... This also makes it possible to benefit from CSR labels or certifications, such as Ecovadis or B-Corp.

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The more global approach to eco-design of products leads to better economic performances with, according to ADEME, a systematic increase in business turnover thanks to new markets and a greater volume of sales.

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3. Employer brand and legal risk

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‍According to this study published by Unedic In April 2023, 84% of French working people want a job in line with the climate challenge and ¼ of working people plan to change their profession or company to put their professional life in line with their ecological concerns.

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The risk is also legal. Legal actions against companies accused of not implementing a realistic emissions reduction strategy are increasing. According to a study by Grantham Institute from the London School of Economics, published in 2023, filing a complaint results in an average reduction of 0.57% in the value of the company in question. And an unfavorable judgment an average drop of 1.5% in the stock price.  

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To discuss the topic of climate risks that affect businesses in more detail, to know how to identify them and how to adapt to them, you will find here a full article.

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4. An ethical issue

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At the current rate of emissions, 1.5°C will be crossed over the next decade, 2°C around 2050 to reach 3 or 4°C in 2100, causing devastating, widespread, and sometimes irreversible impacts.

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But this worst-case scenario is still avoidable. Solutions exist and companies have a key role to play.

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This role is to do your part in the face of climate change. The Science Based Targets Initiative (SBTi) thus indicates a trajectory of reduction in GHG emissions of 4.2% per year for businesses in order to meet the objective of the Paris Agreement, namely to limit the rise in temperatures to 1.5 degrees.

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To go further, you will find here the guide on why the carbon footprint is an essential tool in a company's strategy and the corresponding article.

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The main stages of the carbon footprint

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1. Define the scope of the study

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The first step is to map the flows of energy, raw materials, waste and products generated by the company.

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This step is essential in order to properly determine what will be taken into account in calculating the GHG emissions.

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Three perimeters should be distinguished:

• The time perimeter : this is the period over which the carbon balance will be calculated. Generally, it is over a full year in order to best reflect the overall activity of the company. But it can also be done over a particular period, on a project for example.
• the organizational perimeter : it is all the sites, installations and activities of the company that must be taken into account. There are two definitions of organizational scope.

1. “Share of capital”: the emissions of goods and activities are taken into account in proportion to the financial participation of the organization
2. “Control”: financial (taking into account emissions from financially controlled installations) or operational (taking into account emissions from operated installations).

• The operational perimeter : the rule is simple, the carbon footprint must take into account all the company's direct and indirect emissions.

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2. Collecting data

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The carbon footprint calculation is based on the organization's activity data. The latter must therefore be inventoried and then collected. They are then transformed into an equivalent quantity of CO2 thanks to emission factors, we will come back to this.

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So collecting data is one of the most important moments. The more accurate and comprehensive the data collected will be, the more accurate the carbon balance will be. It is therefore essential to work on effective and relevant collection, especially as this stage is the most time-consuming phase of the process.

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As has been said, these data must reflect all the company's direct and indirect emissions. This is where they come in the famous scopes 1, 2 and 3 because the GHG Protocol categorizes emissions in these 3 distinct perimeters.

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• Scope 1 : these are the company's direct emissions.

Example: emissions related to the gas heating company's offices or the fuel used for company's vehicles.

• Scope 2 : these are indirect emissions related to energy.

Example: emissions related to electricity consumption.

• Scope 3 : these are all the company's other indirect emissions. Scope 3 generally represents the vast majority of emissions from company's activity, sometimes up to 95% of total emissions.

Example: emissions related to the purchase of services or raw materials, business trips, trips between home and work, freight or even the use of products.

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The carbon footprint thus lists 23 different emission items, which you can find in the graph above. It is the data associated with these various positions that the company must collect.

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3. Consolidation

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Once collecting is complete, the next step is to consolidate the data. This is a key phase because it is a question of ensuring, for the consultants who support the company in measuring its carbon footprint or for the company that carries out it internally, that the data collected is indeed the right one, that there are no inconsistencies, obvious errors, oversights and duplications in the measurement of emissions.

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Example of a possible duplication: in the case of company's electric vehicles, emissions related to electricity consumption will be counted in trips (through the kilometers traveled for example) even though these vehicles are often recharged on company's premises. The electricity consumed is then also included in the general consumption of the premises. It must therefore be removed to avoid duplication.

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4. Analysis of the results

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Two different but complementary approaches make it possible to read and analyze carbon footprint results.

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• The first is a general approach. The carbon footprint results are presented with the total GHG emissions. These programs are divided by scope (1, 2 and 3) and by emission categories. This approach allows us to have a first vision of the distribution of these emissions according to their categories. For example, do emissions from travel or locals weigh the most?

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• However, this general approach only very partially makes it possible to effectively analyze the sources of greenhouse gas emissions. That's where the analytical approach comes in. It makes it possible to distribute the GHG emissions according to their categories of course but also according to the activities of the company and therefore to detail them much more finely. The company is then in a position to identify its dependence on carbon for example by product, by subsidiary, by supplier, by country or even by office or factory if it has several.

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For example, here, on this anonymized carbon footprint, an analytical approach with carbon intensity per employee and per company site.

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We can go even further in this analysis with, for example, below, the distribution of emissions from employee travel by company site and according to the motorization of the vehicles.

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The analytical approach thus makes it possible to effectively target actions that will make it possible to quickly and massively reduce greenhouse gas emissions. The carbon footprint then becomes a control tool to guide the company's human and financial resources towards an intelligent action plan.

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5. Action plan

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Measuring greenhouse gas emissions is not a goal. This is the starting point for a strategy to reduce emissions. Because you only reduce what you know.

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And this strategy must be materialized by an action plan.

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The action plan is an integral part of the carbon footprint.

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4 main steps are essential in the implementation of this action plan.

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Here we will focus on 2 strategic points.

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• Define numerical goals

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The aim is to set an overall objective to reduce the carbon footprint for a target year and in relation to a reference year for which the company has a measurement of its emissions. Two options for setting this goal:

• objective in absolute value: reduction in tons of CO2e
• objective in relative value: for example, reduction in emissions per euro in turnover or per number of units sold.

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To set an ambitious and science-based goal, the company can refer to the initiative ScienceBased-Targets (SBTi), created in 2015. Having become a reference since then, it sets a framework for companies to reduce their emissions at a rate that is supposed to be compatible with the objective of the Paris Climate Agreement. Thus, for absolute objectives, the reduction in emissions must reach 4.2% per year to meet the objective of limiting global warming to 1.5°C and 2.5% per year for 2°C.

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• Select actions to be implemented

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After having defined the main areas of reduction (based on carbon footprint measurement to identify the main emission items and those on which the company has the most levers) and then established a list of the possible actions to be implemented, it is necessary to select those that will actually be implemented. To do this, the company can rely on selection criteria:

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• reduction potential of each action
• creating value for the company
• economic cost
• human needs
• or even degree of feasibility

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For more details on the construction of the action plan, you can consult this ADEME guide.

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6. The advantages of a platform like Sami

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Collecting data

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As we have seen, collecting is an essential step but it can be complex and time-consuming for the company. So, to both speed up the collection and be as accurate as possible, we have several tools:

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• The Accounting File (FEC) : it makes it possible to collect information related to the purchase of services and fixed assets. We are interested in FEC class 6 accounts. We have developed a tool for automating FEC processing that allows us to collect only relevant data and calculate associated emissions.
• Data collectors : at Sami, we have created several collectors that will make it possible to integrate company data into our platform. There is a collector for premises, for inputs, freight or even digital technology with each time information to fill in which will then allow us to calculate the associated emissions. For example, for the “premises” collector, you must indicate the surface of the buildings, the energy used, the quantity of energy consumed or the quantities of fluid used for air conditioning.
• The quizzes : again, we created several questionnaires in order to collect accurate activity information. There is a questionnaire for suppliers in order to report back data related to the purchase of products and services, a visitor questionnaire to calculate the emissions related to the movements of visitors or customers on the various sites of the company (stores, factories, etc....) and an employee questionnaire in order to calculate the emissions related to the home-work or professional trips of employees, the emissions related to teleworking or even to catering.

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Automatic consolidation

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Data from collectors or questionnaires are integrated into our platform, which will automatically analyze them, consolidate them and assign them to the right emission categories. The consultant is there to perform a final treatment and ensure that the consolidation is correct.

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Analytical approach

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As we saw earlier, the platform allows automatic reporting of emissions by scopes, by emission categories but also with an analytical approach according to the company's activity. The customer can then choose to visualize his results by country, by products, by factories, by suppliers, etc...

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Action plan

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The implementation and management of the action plan are integrated into the Sami platform.

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The company can define numerical goals (in absolute or relative values) for reducing emissions for a target year and thus draw its trajectory for the coming years. Trajectory obviously visible on the platform. The company can also choose a trajectory in accordance with the Paris Agreement (SBTi).

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To achieve this, a catalog of actions is offered on the platform, with more than 130 measures in all program categories (travel, local, digital, etc.). For each of them, the platform calculates the potential for reducing emissions based on the objective set by the company and the results of its last carbon footprint. Each action added is included in the company's plan and automatically adjusts the total emissions reduction projection. The company is in a position to compare the reduction target it has set with the emission reduction projection calculated with the action plan. In addition, the company also has the option of adding a specific action to its action plan if it does not find it in the catalog of measures.

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Here is a quick overview of some of the features enabled by the platform:

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How do you measure emissions?

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Here we get to the heart of carbon footprint measurement. Once data on the activities of the company, community or association has been collected, it must be transformed into CO2 equivalent (CO2e).

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To do this, an emission factor must be associated with the activity data.

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1. Monetary or physical approach?

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Two types of data can be used and this then changes how associated emissions are calculated:

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• Financial data : we are talking about an invoice or a monetary amount. In this case, the monetary amount is converted into CO2e emissions. We're talking about Monetary approach.
• Physical data : it can be distances traveled (km), quantities used (kWh, kg, tons, etc...). These physical data are converted into CO2e emissions. We're talking about Physical approach.

What approach was used? The two are complementary even if the physical approach remains essential to gain in precision and stick to the reality of the company's activities.

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In particular, the monetary approach makes it possible to quickly and simply calculate emissions related to service expenses, mainly. We think of the purchases of intellectual services or studies, marketing or communication expenses, marketing or communication expenses, banking services, fees, etc. All these expenses lend themselves quite poorly to a physical approach when they are quite simple to integrate into the carbon footprint thanks to a monetary approach. You can in fact collect and add these expenses automatically thanks to the FEC, the Accounting File. The monetary approach is also suitable for the financial sector, for example in order to assess the associated emissions of an investment portfolio.

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On the other hand, the monetary approach is not suitable for all other issues. This is the case in particular for emissions over the entire life cycle of a product: raw materials, manufacturing, packaging, freight, use, etc. Company energy consumption, home-work trips or business trips are also to be considered from a physical approach. It is essential in these cases in order to obtain accurate emissions that reflect the physical reality of the company's activities.

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An example: on trips between home and work, using a monetary ratio with fuel expenses would significantly vary the associated emissions because of the very significant variation in the price per liter of gas even though the real emissions would have remained the same. It is the same case for energy consumption with the volatility of energy prices. The physical approach is therefore often essential. And because it makes it possible to better identify the organization's real emissions, it makes it possible to better assess its dependence on carbon and therefore then to build a more relevant and more effective low-carbon strategy.

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2. Emission Factors (EF)

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It is the essential tool for calculating the carbon footprint, the cog that makes it possible to pass from collected activity data to associated emissions.

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Each activity data is thus converted using emission factors, monetary emission factor (or monetary ratio) when the activity data is expressed as a monetary amount or physical emission factor when the data is expressed in physical activity (distance, quantity, etc.).

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These EFs, physical and monetary, are found in various databases, public and private. Each of these databases has different characteristics, with different data sets.

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Finding the right emission factor to associate with each activity data is often time-consuming. This is why, in order to simplify the work of consultants or companies while increasing the accuracy of carbon footprint, Sami has been developing a consolidated base of emission factors for years.

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Now we can find over 100,000 emission factors, from more than 25 reference source databases. Here are the main ones:

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Multi-criteria bases

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• The Empreinte® Base : it is the official public base in France. It now includes historical data from Base Carbone® and Base IMPACTS®. There are currently more than 10,000 EFs from the Empreinte® Base on our Sami database.
• Ecoinvent : private database, more than 21,000 emission factors. Please note, this database is only accessible if you also have an ecoinvent license.

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Sectoral bases

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• Agribalysis : public database, developed by ADEME, of more than 2500 emission factors in the agri-food sector.
• Inies : private base for the construction and building sector. Over 9000 EFs.
• PCAF : more than 23,000 EFs for the financial sector.
• EEA Passenger cars: more than 10,000 EFs in the automotive sector.
• AIB: database in the electricity sector with more than 700 emission factors.
• NegaOctet : database in the digital sector.

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Monetary ratio base

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• Exiobase : built by a consortium of European actors, more than 15,000 EFs, only monetary ratios (kgCO2e/k€).

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Geographic bases

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• DEFRA for the United Kingdom: over 5600 EFs.

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Internal source

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• Sami: more than 750 EFs from our previous carbon balances and the work of our experts and consultants.

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This consolidated database is updated continuously by our experts and all emission factors are validated one by one before integrating the platform.

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To find out more about this consolidated EF base, how it was built and how it is updated, you can go to the article that is dedicated to emission factors.

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You then have to “play” between the emission factors to find the ones that will be the most relevant based on activity data. Various criteria must be taken into account:

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• The source of EF: from what base does it come from? Is this data specific or generic?
• The unit of EF: kg, ton, kWh, k€, etc...
• the location of the EF: what geographical area does it cover?
• The timeframe of the EF: what year are the data based on? Is it still valid?
• the scope of the EF: do the emissions cover the entire life cycle, from the extraction of raw materials to leaving the factory or leaving the store?
• EF metadata: quality/uncertainty, EF construction, description

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Once the right emission factors are associated with the data collected, all this data must be summed up to obtain the total carbon footprint of the company.

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3. The differences in calculation between the methodologies

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Several methods exist in order to measure your carbon footprint. There are some methodological differences between them but they are minor.

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Scope 2 accounting

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Scope 2 includes emissions related in particular to electricity consumption (see below for details of the scopes). On these programs, two different approaches exist:

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• the so-called Market-based approach: the emissions taken into account are linked to the generation of electricity, the supplier's production methods or the electricity contract, or to the residual mix if the origin of the electricity cannot be traced. For example, in the case of a contract with electricity from wind energy, the associated FE will be 0 gCO2e/kWh.
• the so-called Location-based approach: the emissions taken into account are linked to the generation of electricity from the average electricity mix in the country of consumption. The mode of production of the supplier or the contract is not taken into account.

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The GHG Protocol and ISO methodologies accept both approaches;

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Taking fixed assets into account

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• GHG Protocol: the fixed assets acquired during the year under study are the only ones to be taken into account, without depreciation. Thus, a company that has purchased a machine (10 years of life) the reporting year will have to count all the emissions associated with the manufacture of the machine. But not those of another machine (8 years of life) purchased two years ago for example.
• French Bilan Carbone®: emissions related to fixed assets are amortized over the life of the goods. In our example, the company will thus have to account for 1/10th of the emissions of the machine purchased in the reporting year and 1/8th of the other machine purchased two years earlier.
• The ISO methodology accepts both methods.

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How do you classify emissions?

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The two main methodologies, Bilan Carbone® and GHG Protocol, distribute emissions into scopes 1, 2 and 3. For the Bilan Carbone®, as we saw earlier, there are a total of 23 emission items. In the GHG Protocol methodology, the categorization of emissions is a bit different. As for regulatory BEGES, it offers 6 different categories to classify CO2e emissions. Here is a summary table of differences in show rankings.