An introduction to calculating and reducing your company’s carbon footprint

By Andy Kenworthy

Greenhouse gases
Greenhouse gases trap heat in the atmosphere and contribute to climate change. This has become a worldwide concern. Here are some basic initial steps your business can take to be part of the solution.  

A carbon footprint is the total greenhouse gases emitted by an organisation, event, product or person. ‘Carbon’ is often used as a catch-all term for all greenhouse gases. This is because carbon dioxide is the second most dominant greenhouse gas. (Water vapour is the most dominant, and magnifies temperature changes, including those associated with climate change.) But other gases may contribute to your carbon footprint.

Managing your carbon footprint contributes to stabilising the world’s climate. It’s also about saving money, addressing risks and creating new business opportunities. It identifies inefficiencies and waste in your operations. It can reduce costs.

Taking action on carbon can also create new selling points for your products and services. It can help you sell to other companies with high environmental standards. It can help attract ‘conscious consumers’. These are people whose sustainability concerns significantly affect what they buy. (34% of the participants in a 2019 study identified as conscious consumers.)

New Zealand now has the Zero Carbon Act. This commits the country to net zero greenhouse gas emissions by 2050. The Act specifically focuses on carbon dioxide (largely from the energy sector and transport), methane and nitrous oxide (largely from livestock farming). These make up a majority of NZ’s emissions.

The Act is likely to lead to a lot of changes in the way we do business in coming years. Managing your carbon footprint will prepare your business for the changes to come.

A good place to start is to check out our new Climate Action Toolbox – it’s a perfect starting point for smaller businesses.

This guide covers the basic steps to measuring and reducing your carbon footprint. For an initial measurement we recommend the Annual Carbon Emissions (ACE) calculator, created by Catalyst. It’s a simple Excel spreadsheet. It includes monthly usage sheets that populate graphs of cumulative annual emissions. The charts have pre-set destinations for air and road transport. This helps you estimate the distances travelled. Standard emissions factors are used to convert activities into emissions. Most of them include non-CO2 gases. The results are expressed as a CO2 equivalent (CO2e).

The ACE calculator is a good ‘entry level’ calculator. There are other, more comprehensive, carbon calculators. These include this one from the Ministry for the Environment, and those provided by service providers, such as Toitu Envirocare and Ekos.

Five initial steps to tackling your carbon footprint

Step One – Set your baseline

Select a typical ‘business as usual’ year from which to compare your year on year performance. Avoid years when you acquired a new business, lost big contracts or started major new product lines. Unusual events like these will skew your future targets and results.

Step Two – Gather your data

This should include emissions data on waste, energy use, refrigerant loss (if applicable) and travel by plane and car. On the ACE calculator, fill the relevant monthly boxes. The calculator will compile the results.

Step Three – Identify the key areas of emissions and how to reduce them

There is lots of advice on this throughout the Sustainable Business Network website. For example, could you reduce your use of air travel and/or increase your use of electric vehicles? We recommend you produce a simple action plan outlining the steps you intend to take. It is always good practice to involve your staff and potentially other key stakeholders in this work.

Step Four – Set annual reduction targets

This will give you clear goals to work towards, so you can see if you are on track. The two main types of targets are: emissions per FTE (full time equivalent employee) (referred to as an ‘absolute’ target) and emissions per dollar of income (referred to as a ‘relative’ target). Ideally you will include both. However, if your team is growing rapidly it may be easier and more effective to link reductions to income rather than staffing.

Step Five – Report your progress

Transparency and openness will help you achieve your goals. It’s good to tell customers, employees, suppliers and board members about your emissions, your targets and your progress. You might do this as part of a wider sustainability report. You might include it in internal or annual reports. You might display it on your website and on social media.

Beyond the basics – verification, certification and offsetting

Independent verification confirms you are measuring the right things. It checks your information. It helps identify additional ways to reduce your emissions. It can ensure your efforts align with international protocols recognised in overseas markets.

Emissions that can’t be eliminated can be ‘offset’. This is done by buying ‘carbon credits’ from accredited projects that reduce or eliminate carbon emissions elsewhere.

Some verification processes come with certifications. These allow you to use these credentials in reporting, marketing, the media and in dealing with other companies.

In New Zealand, these services are offered by companies like Toitū Envirocare and Ekos.

Find out more about Climate Action 20/25, our project to provide comprehensive guidance and training to help SMEs lower their carbon footprint.

Organisations wishing to partner with us on this should contact phil@sustainable.org.nz