Why inventory boundaries?
Carbon footprint calculation: Why inventory boundaries?
Carbon footprint is nowadays a well-known sustainability tool, accounting for the total carbon emissions of a specific organisation, product or activity. Nevertheless, for many companies the added value of analysing their carbon emissions is not yet clear. However more and more examples of large businesses able to reduce both emissions and operational costs are becoming available. Cost reduction and optimisation of resources can also take place at small and medium organisations (office-based), but rather focused on their energy and resource consumption patterns.
For organisations, it is essential to identify how a carbon footprint inventory can help not only to reduce our environmental impact but also to optimise internal resources, depending on the type of activity conducted.
When deciding to perform an organisation carbon footprint, the first step is to define the scope by setting inventory boundaries adjusted to the structure of the company and the potential impact of the activities
Why inventory boundaries?
In an ideal situation, companies should always include the measurement of CO2 emissions derived from all activities and processes, applying a holistic approach. However, in practice this might be very complex and costly, due to lack of appropriate data or the difficulty to quantify almost negligible emissions associated to secondary activities. Therefore, the aim on a first stage should be to identify and target reductions from the company main CO2-emitting sources. In order to do this, we need to consider two sets of boundaries: organisational and operational.
This set of boundaries is strictly related to the structure of the company or organisation, in terms of ownership and financial/operational control. Frequently, large companies are divided in different business units, in diverse locations (different countries) or count with subsidiaries or other entities in which they have shares but do not have financial control over. In this case, managers need to decide the organisational scope of the carbon footprint measurement, by asking questions such as:
Are CO2 emissions to be calculated only in 100% owned entities or also when holding 30% share in a third entity, with no financial or operational control over it? For a small business, the steps of defining the organisational boundaries do not imply such complexity, and generally require of less time and resources.
The GreenHouse Gases (GHG) protocol defines 3 types of scope, depending on the nature of the considered emissions. Direct emissions are considered in Scope 1, accounting for all stationary emissions, internal fuel combustion, over which the organisation has full control. In Scope 2 we deal with indirect emissions derived from the use of electricity used by the organisation, but over which it does not have operational control. Generally, Scope 3 is not included in most carbon footprint measurements, since it is an optional addition, including other indirect emissions further than those derived from our energy use. Depending on the type of organisation involved, the main focus will be in one or other set of emissions.
Scope 1. Direct emissions: Especially relevant for large manufacturers (chemicals, iron, aluminium, paper) producing significant amounts of CO2 and other greenhouse gases via their own production processes.
Scope 2. Indirect emissions derived from energy use: In the case of office-based businesses, which normally will not have direct emission-activity, Scope 2 emissions generally account for the majority of total CO2 emissions.
Scope 3. Indirect emissions derived from other activities further than energy use: Even though the use of this set of emissions is currently optional, for certain types of companies is relevant and cannot be underestimated, e.g. companies offering courier-services might partner with local companies to distribute packages at specific locations. In this case, the emissions associated with transport activities of the local partner are relevant and should be accounted for.
The diagram below illustrates different combinations of Scopes 1, 2 and 3, going from the ideal situation of being able to include all of them in the calculation of the carbon footprint (holistic carbon footprint), to sector specific combinations, in which 1 or 2 of the spheres will cover most of the CO2 emissions of the company.
Figure 1. Diagram showing different emission scenarios and operational scopes
The calculation of the carbon footprint can be applied to different types of organisations, leading all of them to tangible benefits, but as we have seen, the scope of the measurements and the targets to be reached can differ significantly among companies and their business needs.
At Eicia we understand the importance of providing case-by-case advice, adjusted to any company or organisation. Our Carbon Footprint and Project Management training program offers the opportunity to managers and other responsible members of calculating their organisation’s Carbon Footprint and be able to implement changes according to internationally recognised project management practices (PMI). Contact us at email@example.com for more information.