Corporate carbon footprint: measure and cut emissions

The GHG inventory or corporate carbon footprint captures the greenhouse gas emissions caused directly and indirectly by a company. In accordance with the Kyoto Protocol, seven greenhouse gases are considered: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (laughing gas, N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF₆) and nitrogen trifluoride (NF₃).

The inventory relates to the company as a whole. It is to be distinguished from the product carbon footprint (PCF), which focuses on individual products.

A GHG inventory basically distinguishes between Scope 1, 2 and 3, that is, between direct and indirect emissions. The classification comes from the Greenhouse Gas Protocol.

Direct emissions (Scope 1) arise from stationary combustion, for example when fossil fuels such as coal, oil or gas are burned on site, from mobile combustion, for example in vehicles, from fugitive gases released intentionally or unintentionally, and from process emissions.

A company causes Scope 2 emissions indirectly by purchasing energy such as electricity, heating, cooling or steam whose generation releases greenhouse gases. Scope 3 covers all other indirect emissions along the upstream and downstream value chain. The GHG Protocol distinguishes 15 categories here, which include, for example, purchased services and transport.

In 2015, the Paris Agreement was adopted at the 21st Conference of the Parties to the UN Framework Convention on Climate Change (COP21). It sets the goal of limiting global warming to well below 2 °C above pre-industrial levels and, if possible, to 1.5 °C. To this end, the parties regularly submit their climate protection plans, the Nationally Determined Contributions (NDCs).

With the European Green Deal, the EU has adopted a growth strategy that aims, among other things, to release no net greenhouse gas emissions by 2050. With the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR), it has created a regulatory framework that works towards this goal.

The CSRD aims to ensure that companies disclose how their activities affect the environment and what economic effects sustainability aspects have on the company. The European Sustainability Reporting Standards (ESRS) describe which information must be reported for this purpose and are intended to ensure the quality and comparability of the data. The EU adjusted the scope and timetable of sustainability reporting in 2025. Whether and from when a company is subject to reporting requirements should therefore be checked against the current status.

European emissions trading, the EU Emissions Trading System (EU ETS), is another EU instrument for curbing climate change. In Germany, the Greenhouse Gas Emissions Trading Act (TEHG) creates the conditions for trading in emission allowances. The idea behind it: allowances must be purchased for greenhouse gas emissions, and the number of available allowances is gradually reduced. The energy sector, energy-intensive industries and aviation are affected.

Germany has also introduced a national emissions trading system (nEHS) that goes beyond the scope of the EU ETS. With the “Fit for 55” package, the EU has decided to extend emissions trading: maritime transport is included, the number of allowances is reduced more quickly and a separate system is created for buildings, road transport and fuels. Prices, volumes and timetables change and should always be checked for the current status.

There are various standards and methods for GHG accounting. Some focus on the company level, others on products or on the certification of climate neutrality. Established standards are the Greenhouse Gas Protocol (GHG Protocol) and ISO 14064 at company level, ISO 14067 for products, and ISO 14068 and PAS 2060 for climate neutrality.

At company level, the GHG Protocol has established itself over the years as the standard for GHG accounting. European sustainability reporting also relies on this standard for the corporate carbon footprint. There, the double materiality assessment determines whether climate protection is a material sustainability aspect for a company and the corporate carbon footprint must therefore be determined and reported.

Companies without their own reporting obligation are also increasingly affected indirectly. More and more companies ask their suppliers for the product carbon footprint, for example, so that they can calculate their own Scope 3 emissions. Besides regulation, the drivers of this development are customer demands for environmentally friendly products and services and growing sensitivity to greenwashing.

ISO 14064 describes the procedure for capturing the GHG inventory at company level. Its three parts contain requirements for the quantification, monitoring and reporting of GHG emissions at organisational level, the same requirements at project level, and requirements for the validation and verification of GHG inventories.

It starts with three decisions: the objective, the consolidation approach and the choice of GHG standard according to which accounting is carried out. Then the determination of emissions begins. It is advisable to look at Scope 1 and 2 first and then Scope 3. In this way, reduction potential that can be implemented in the short term can be identified and initiated during data collection and calculation.

First, the inventory boundaries must be defined with regard to the company's structures, that is, the question of where the company begins and where it ends. For this purpose, the GHG Protocol Corporate Standard offers a choice between the equity share approach and the control approach.

Under the equity share approach, a company records and reports its GHG emissions according to its share of equity. The control approach limits the inventory to all emissions from business activities over which the company can exercise control. A distinction is made between financial control and operational control.

GHG emissions are basically calculated according to one principle: activity data multiplied by the GHG emission factor gives the GHG emissions.

In the first step, the activity data are determined, for example gas consumption for heat generation. For Scope 1 and 2, that is, for direct emissions and indirect emissions from purchased electricity, heating and cooling, this is usually quick. For Scope 3 it is often much more difficult and time-consuming.

In the second step, the appropriate emission factors are selected for all activity data, usually from emission databases. They should be stated uniformly in CO₂ equivalents. CO₂ equivalents relate the effect of the various greenhouse gases to that of carbon dioxide: their respective global warming potential is compared with that of carbon dioxide.

In the third step, the emissions are calculated and the GHG inventory prepared. The standard applied and the consolidation approach are documented, the base year is identified and the emissions are allocated to Scopes 1 to 3. The data and the individual calculation steps, the sources of the emission factors, reduction progress over time and an assessment of data quality are also recorded.

It is advisable to see GHG accounting as a learning process: every year the quality of the activity data improves and the calculation becomes more comprehensive. The principles of the GHG Protocol Corporate Standard provide orientation. The inventory should appropriately capture the company's emissions (relevance), be complete (completeness), use the same methodology over time (consistency), document the approach comprehensibly (transparency) and capture the emissions precisely (accuracy).

For data quality, the more primary data the better. However, they are not always available. The database should therefore be continuously improved, each data point assessed in terms of its quality and this assessment documented transparently.

Newcomers sensibly start with the corporate carbon footprint and use the process to set up systematic climate management. After that, it can be decided whether a product carbon footprint is strategically relevant or necessary. Accounting at company level is good preparatory work for this.

GHG accounting at organisational level provides the basis for systematic climate management. A good inventory can serve as a basis for identifying reduction potential, defining reduction targets, monitoring the actual reduction in emissions achieved through measures implemented, and communicating emissions and progress internally and externally.

Systematic climate management is at the same time an essential element of the sustainability strategy. Used correctly, it helps meet customer expectations, expand differentiation potential, implement regulatory requirements, strengthen image and employer attractiveness and improve risk management. In short, it secures the future viability of the business model.

In practice, a step-by-step approach has proven effective: clarify the objective and inventory boundaries, start with Scope 1 and 2, then tackle Scope 3 and improve the database from year to year.