How to calculate company emissions

When aiming to calculate your emissions, the first step is deciding whether you want to do the work in-house, or rely on an external partner.

Using existing frameworks in-house

Calculating emissions requires a lot of time, work and specialist knowledge, but it is possible to carry out in-house. If your company or organisation has someone with the expertise needed, there are tools available to support you in calculating your emissions.

For instance, the GHG Protocol offers a free cross-sector Excel-based calculation tool with detailed instructions for use. There are numerous other tools available—we’ve put together a selection here.

Climate consultants

As almost all companies will need to report on carbon emissions sooner or later, there are a growing number of consultants specialised in doing so, whether you need a carbon footprint analysis or LCA.

Climate consultants tend to prefer an activity-based approach, which you can learn more about below, as this leads to more accurate calculation. Most consultants also offer strategic consulting on ways to reduce your emissions. This comes at a cost, but if you need high fidelity, it might be worth it.

Carbon accounting platforms

In recent years, there has been a flurry of activity in the carbon accounting space, and startups creating software solutions have sprung up around the world.

These platforms offer an impressive amount of automation, allowing them to calculate emissions faster and at lower cost. Many can also integrate directly into services your company uses, like your electricity meter, heating system, flight booking system, etc.

However, these platforms generally use a spend-based approach, which can lack accuracy.

What is the cost of calculating company emissions?

Now that we have a basic understanding of calculating emissions, you might anticipate the answer: It depends. In our experience, costs can range from €1,000 to more than €60,000. Below are some of the key factors that influence the cost of accounting:

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Having these numbers handy before seeking help with calculating your emissions will help you get comparable quotes.

In general, you get what you pay for. The more expensive the solution you opt for, the higher the accuracy will be, and the better the calculations will stand up to scrutiny. It is very important to consider what you will use the calculations for, and where you are in your sustainability journey.

If you are a small company looking to get a basic understanding of your emissions and how to start reducing them, it makes sense to go with a cheaper, faster solution and get started. If you are a large company, intending to reach carbon neutrality, you need to have very thorough calculations from a reputable source.

What type of calculation do you need?

In these times of regulatory uncertainty, it makes good business sense for your company to keep updated with the latest developments. Here we outline two of the main approaches for calculating your climate impact: carbon footprint analysis and life cycle assessment (LCA).

Carbon Footprint Analysis: Emissions of your entire company

Nothing in life is free, and similarly, everything has a carbon footprint. A carbon footprint analysis evaluates the greenhouse gas (GHG) emissions caused by a product, a manufacturing plant or an entire company. A range of GHG emissions are assessed and then converted into carbon dioxide equivalents (CO₂e) to allow for comparisons.

The Greenhouse Gas (GHG) Protocol provides the most widely used standard (called the Corporate Value Chain Standard and the Corporate Accounting and Reporting Standard) for measuring and reporting emissions. These are divided into Scope 1, 2, and 3 emissions, ensuring a true and fair representation of your company’s climate impact. The International Organization for Standardization (ISO) also offers a standard (ISO 14064) to quantify, monitor, report, and verify your direct and indirect GHG emissions.

Scope 1

Scope 1 emissions relate to emissions that come directly from your company’s owned or controlled operations, e.g., fuel consumed in company vehicles. These are the emissions you have the most control over, and can quickly target to start your journey to net zero.

Scope 2

Scope 2 emissions represent indirect emissions from sources purchased or acquired for use in your company, e.g., electricity, heating, cooling. Hotspots caused by Scope 2 emissions are most efficiently targeted by switching to renewable energy sources.

Scope 3

Scope 3 emissions are the trickiest. They are all other indirect emissions occurring in the value chain of your company, both upstream and downstream, e.g., employee commuting, waste, business travel, investments, and the list goes on! There are two main methods for calculating Scope 3 emissions: spend-based and activity-based.

Spend vs. Activity-Based Data

Spend-based data is obtained by multiplying the financial value of a purchased good or service by an emission factor. Emission factors are derived from an industry average of emissions levels, and so spend-based data only represents a rough estimate of actual emissions.

A more precise by time, labor, and cost intensive approach is to use activity-based data. This involves collecting detailed data, both internally and externally from all suppliers, and multiplying that data by activity-specific emission factors. A more granular overview of supply chain emissions is provided from this approach which allows for targeted GHG reductions.

Life Cycle Analysis: Understanding a specific product or service

Alternatively, a LCA can be carried out on a specific product, process or service within a defined set of boundaries (cradle-to-gate, cradle-to-grave). Notably, it encompasses multiple environmental and economic impacts beyond just GHG emissions, such as:

• Natural resource depletion
• Ecosystem degradation
• Human health
• Social fairness
• Pollution
• Water quality

Obtaining and processing raw materials, manufacturing, dissemination, usage, maintenance, repairs, selling/reusing, and disposal can all be contained within this as well.

Cradle-to-Gate vs. Cradle-to-Grave vs. Cradle-to-Cradle

Cradle-to-gate refers to the environmental and economic impact of a product, process, or service from the point of raw material extraction through the manufacturing process, up until the point of use. Alternatively, the impacts of the entire process (from raw material extraction to disposal) can be accounted for in an LCA. This is often referred to as cradle-to-grave.

Some companies or organisations may opt for a cradle-to-gate approach if they have designed a product or service that is easily reusable. However, a lot of products and services amass most of their carbon footprint after purchase, which is when the cradle-to-grave approach is most insightful.

Another more holistic school of thought is cradle-to-cradle. This design philosophy was inspired by nature, where the waste products of one process serve as the fuel for another process. In short, no materials are simply discarded at the end of their useful life; instead they are reused indefinitely in other products of greater or equal value.

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Why we don’t calculate emissions for you

At Klimate, we offer access to portfolios of thoroughly vetted high-quality carbon removal to help companies compensate for their unavoidable emissions.

A lot of companies out there are offering to calculate your emissions as well as help you offset them. However, we are going about this differently.

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We want to ensure trust and integrity

It seems logical to have one partner to take care of everything when it comes to going carbon neutral. However, there is a good reason why your accountant and auditor are not the same person.

Most companies that sell offsets, including ours, charge a commission for each credit. This means that the larger the emissions, the larger the commission. This creates a conflict of interest when making the calculation.

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We believe everyone should do one thing and do it well

Sourcing and analysing the best carbon removal solutions is a big undertaking, and we want to focus all our efforts on this.

At the same time, calculating emissions is equally complex, and we see a growing number of companies specialising in industry-specific calculations like real estate, food, e-commerce, and even furniture!

We are under no illusion that we can be as good as them, therefore we choose to collaborate instead.

Need support with calculating your emissions?

We have a strong network of partners specialised in different industries and types of calculations. You can go through our partner directory here