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Companies’ and organizations’ daily activities and the residues they generate have a high environmental impact. Thus, in addition to ESG policies, which are a constant and inevitable concern in the life of managers and leaders of contemporary companies, new challenges appear on the horizon of the corporate world. 

 

After decades of debating climate issues, governments all over the world are imposing tough actions toward net-zero emissions. For this reason, leaders and managers must pay special attention to this issue to be able to design and implement a strategic plan to reduce their environmental footprint, develop regular reporting on the topic, and understand the metrics that assess the risk and financial impact of these issues. In this sense, here are four tips on how to evaluate your company’s carbon risk.

 

 

1 | Select a method

As well as in the case of building certification programs, there are various rules for greenhouse gas (GHG) reporting and it is up to you, the leader or manager, to determine which one your company should use. 

 

You might consider, for example, the Greenhouse Gas Protocol – built on a 20-year partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) – which establishes global, comprehensive standardized frameworks aimed at measuring and managing greenhouse gas (GHG) emissions from private and public sector operations.

 

If you want to start with simpler steps, start assessing and calculating your emissions with certain online calculators that can help with the process, such as the CoolClimate Network, or the Nature Conservancy.

 

 

2 | Select a range of emissions

Regardless of which formula you use to calculate emissions, you should also know what your domain is. This allows you to set a limit on what you should include in your data collection and categorize it. 

Taking the example of the Greenhouse Gas Protocol, emissions are categorized into three domains based on the proximity and control of emissions:

 

Scope 1: the highest level of control, in which the release of emissions through smoke from a chimney is considered. That is, the emitter owns the source and has full control over whether it creates emissions. 

 

Scope 2: in this domain, users can control the amount of energy they consume, however, they do not control how it’s produced, and therefore they don’t know the intensity of its emissions. An example is electricity from the grid.

 

Scope 3: the area where there is less control or ownership over emissions. Employee travel or commuting, the supplier’s supply chain, or even the energy spent building new products are some of the elements to be considered in this scope. 

 

So regardless of the method used, consistency and transparency are key. Collecting and analyzing data over time on a regular basis will help your company identify which areas it needs to improve and what are the results of the actions it implements towards carbon neutrality.

 

 

3 | Making advantage of the data 

The selection and analysis of data on GHG emissions can be a key step for your organization, considering it can give you a competitive advantage. 

 

Furthermore, by exploring the most important data you can also understand the company’s overall performance regarding everything that is directly linked to energy and sustainability, and, thus, act on the data collected to achieve greater efficiency and cost reduction.

 

 

4 | Request for help

You might not have the time and resources to calculate your company’s carbon footprint, and this is not a problem as several organizations can help you with this task. For example, accounting and auditing firms are now focusing on these tools, because investors consider carbon emissions as a risk factor. 

 

You can also use online software solutions such as the one developed by SAP Product Footprint Management or the Nature Conservancy.