How to calculate your business carbon footprint

Only one in 10 small businesses measure their carbon footprint, according to research published by the British Chambers of Commerce.

And yet, half surveyed said their customers were worried about the environment.

Meanwhile, the UK government’s Planet ‘Business Climate Leaders’ campaign, launched in 2021 to encourage entrepreneurs to commit to cutting their emissions in half by 2030 and to net zero by 2050, is further pushing small business owners to measure their environmental impact.

“Every step that a small business takes on their journey to net zero adds up,” said Prime Minister Boris Johnson.

“Not only in protecting the health of the planet but also in future-proofing their business and encouraging new investment, new customers and new opportunities for growth.”

In this article, we reveal how you can calculate your business carbon footprint.

Here’s what we cover:

How reducing your carbon footprint cuts business costs

What a carbon footprint means to small businesses

Organisational footprinting standards

What your carbon footprint doesn’t tell you

Calculating the carbon footprint of your business

How to use your carbon footprint calculation

FAQs on business carbon footprint​s

How reducing your carbon footprint cuts business costs

As well as saving the planet, there are practical reasons why you might want to make the effort in reducing your carbon emissions:

• To meet regulations: By 2030, you won’t be able to buy new petrol and diesel cars and vans in the UK. It will be beneficial to be ahead of changes.
• To save money: If you identify which of your business activities use a lot of energy, you can make the required changes to reduce your costs.
• To meet customer demands: Increasingly, you’ll find customers want more information on your level of greenhouse gas emissions.
• To meet procurement demands: If you’re working to provide products and services to larger businesses, they might need your greenhouse emission data before taking you on as a supplier.

“Simple changes could differentiate a business from the competition, attract new customers and investment and save them money on their running costs,” said UK business and energy secretary Kwasi Kwarteng.

So where can you start?

An excellent first step is to understand your business’s carbon footprint and why it matters.

What a carbon footprint means to small businesses

The carbon footprint of your business is a measurement of the greenhouse gases you produce.

Carbon dioxide is the most common greenhouse gas generated by burning fossil fuels such as coal, gas, petrol and diesel.

By measuring your carbon footprint regularly, you can understand the different ways your business is contributing to climate change and identify ways to reduce it.

Organisational footprinting standards

Different internationally recognised standards can help you with greenhouse gas accounting and reporting.

Pick the one that is most relevant and useful for your business.

One of these is the Green House Gas Protocol, which defines three types of emissions:

1. All direct emissions from activities under your control. This includes onsite gas boilers to heat your home or office, the petrol and diesel you use for transport and commuting, or air-conditioning leaks that could increase your electricity bills.
2. Indirect emissions from the electricity you purchase and use. The emissions you create during the production of the energy.
3. All other indirect emissions from activities, from sources you don’t own or control. These are usually the greatest share of the carbon footprint, covering emissions associated with business travel, procurement, waste and water.

What your carbon footprint doesn’t tell you

When measuring your carbon footprint, you should include direct emissions, but it may be trickier to measure indirect emissions, as they come from sources you don’t own or control.

It’s possible to measure emissions based on transportation of employees and commuting—you could record trips taken and the modes of transport.

However, measuring supply chain emissions from the transportation of products you supply and buy might be more challenging.

This would need you to measure your supplier’s trips in bringing goods to you and distributors when shipping goods to customers.

With waste emissions, you would need data on the quantities of waste used and the disposal or management method used, which isn’t easily accessible.

However, it’s something you should think about for the future.

Calculating the carbon footprint of your business

Step 1. Collect data from each of your relevant emissions-releasing activities

Choose a 12-month period to collect activity data (if reporting for the first time, choose the most recent 12-month period for which you have data).

Here are some examples of the numbers you’ll want to measure.

• Electricity use: Total kilowatt-hours used from electricity bills.
• Natural gas use: Total kilowatt-hours used from gas bills.
• Water supply: Total water supplied in cubic metres from water bill.
• Water treatment: Total water treated in cubic metres from water bill.
• Fuel used in company-owned vehicles: Litres of fuel purchased from invoices and receipts (more accurate) or vehicle mileage from vehicle logbooks/odometers (less accurate).
• Employee passenger travel: Employee receipts for details of travel and distance calculation websites to obtain flight, rail, and road distances.
• Waste disposal/recycling: Tonnes of waste-to-landfill and recycled from waste collection provider.

The better the quality of data, the more accurate the measurement of your emissions. If you record your data usage in a spreadsheet, you can record and update the data regularly.

As we’ve already mentioned, there may be data that is difficult to obtain (primarily indirect emissions). For these, you should look at making reasonable estimates.

Step 2. Convert the data

To calculate the greenhouse gas emissions associated with each business activity, you will need to convert the data you’ve collected using what’s called an ‘emission factor’.

This is a representative value that allows you to convert the activity data you’ve measured (see step one) into greenhouse gas emissions.

So:

Data x Emission Factor = Greenhouse Gas Emissions

You can convert the data in two ways:

Using DECC (Department of Energy & Climate Change) /DEFRA (Department for Environment, Food & Rural Affairs) greenhouse gas conversion factors

You can find annually updated emission factors here. Click on the relevant spreadsheet. Yours will probably be this one.

Here, you need to take each of the activity data measurements (such as electricity use) you’ve collected over the year in step one and multiply it by the relevant (emission) conversion factor. This gives an estimate of the greenhouse gas emissions for that activity.

By adding the greenhouse gas emissions for each activity, you can calculate your total greenhouse emissions for the year.

Use an online calculator

Numerous online calculators can calculate your greenhouse gas emissions, too. These include The Carbon Trust and The McKay Carbon Calculator

How to use your carbon footprint calculation

Once you’ve calculated your greenhouse gas emissions, use this data to reduce your emissions and save money.

You can set suitable targets achievable over five to 10 years that compare your emissions over time to the first year you have reliable data.

If you have the capacity, you can monitor emissions throughout the year and report monthly or quarterly.

You do not need to report your emissions legally, but you may want to disclose this information if you think it’ll benefit your business.

Let’s look at some examples of where you can reduce your emissions:

Reduce waste

Traditionally, businesses make, consume, and throw away.

To reduce your carbon emissions, you need to design out waste from every part of your business, from managing packaging and office supplies to building a sustainable supply chain.

Understanding the circular economy, where you can make, use, return, recycle, reuse and make, can provide ideas on increasing revenue, reducing costs, and using more energy-efficient practices.

You could also think about how you can change, adapt or create new business models around sustainability and decreasing your carbon footprint.

Arthur Kay is the founder of Skyroom, a business that attempts to reduce the construction industry’s carbon footprint by using a process called precision manufacturing: building houses offsite and lifting the installed home to the correct location.

He says: “Local authorities can unlock the airspace above their existing buildings to deliver homes for key workers, with a proprietary podium system to provide built offsite homes.

“They’re precision manufactured homes built in factories in the north of the UK and then installed onto the top of existing buildings.”

Typically, Skyroom looks to deliver between two and six storeys of new homes above existing buildings and rent those to London’s key workers.

Kay adds: “A vast portion of CO2 emissions and waste comes from the construction industry.

“It’s one of the most wasteful industries, both in terms of end of life, how demolition works but also in terms of when you’re onsite.

“Let’s say I was cutting a piece of wood to put up a wall. If your building is in a factory, you know exactly how long a piece of wood is to get. You’re standardising it, and you can get that ordered without wasting any wood.

“If you’re building it onsite, you usually have someone sawing it through and then throwing away the end and putting it up. There’s a tremendous amount of waste.”

Switch to renewable forms of energy

Green energy refers to emission-free natural resources such as solar, wind and hydropower, which naturally replenish (in contrast to fossil fuels).

By switching to these sources of zero-emission energy, you can avoid indirect emissions from the electricity you purchase and use.

Switch to electric vehicles

Electric vehicles are responsible for considerably lower emissions over their lifetime than conventional internal combustion engine vehicles.

Stephen Irish is the co-founder and managing director of Hyperdrive Innovation, which supplies lithium-ion battery technology to businesses working with electric vehicles and battery energy storage systems.

Lithium-ion batteries are the same technology that powers smartphones, tablets, and laptops and are much more efficient than internal combustion engines.

He says, “Regulations are driving a need for businesses to improve global emissions, efficiency and the consumption of non-renewable energy.

“And there are huge societal pressures around what it can do the people’s health. There’s a huge pressure to change.”

Travel less or use alternative forms of transport

The most carbon-efficient ways to travel are walking, bicycle or train.

As we’ve worked from home during the coronavirus pandemic, you may already have reduced your carbon footprint by reducing commuting and business travel through remote communication tools for everyday tasks and activities.

FAQs on business carbon footprint​s

What is the average business carbon footprint?

• According to the UK government, territorial carbon dioxide emissions from the business sector were estimated to be 59.4 megatonnes in 2020 and account for 18.2% of all carbon dioxide emissions.
• There has been a 46.8% increase in business sector emissions since 1990.
• Between 2019 and 2020, carbon dioxide emissions decreased by 8.7%, but that was due to nationwide lockdowns and restrictions due to the coronavirus pandemic.

What is a good carbon footprint?

The government would like your small business to commit to take climate action in three ways:

• Halve your greenhouse gas emissions before 2030.
• Achieve net zero emissions before 2050.
• Disclose your progress on a yearly basis.

Editor’s note: This article was first published in September 2021 and has been updated for relevance.