How to calculate your company's carbon footprint

As the saying goes, what gets measured gets managed.

And if you’re among the 52% of business leaders looking to reduce their company's carbon footprint, your first step will be understanding the current state of play. How much carbon is your company emitting? Where are these emissions coming from? What’s your goal - do you want to cut emissions or maintain them at a stable level?

If it feels difficult to know where to start, you’re not alone. While the majority of leaders wish to lessen their footprint, according to our latest Data Report, more than one fifth of entrepreneurs don’t know how to do so. And small and medium-sized businesses may not always have the resources to tackle it on their own.

We spoke with Laurent Barbezieux, co-founder of Aktio, a France-based SaaS (Software as a Service) platform that allows companies to measure and manage their carbon footprint. (N.b. the conversation with Laurent is translated here from its original French).

Read more: Qonto’s SME Data Report

Carbon footprint, carbon balance, carbon emissions, greenhouse gases. With so much jargon, it’s natural to feel a bit lost. So, let's start with some definitions.

Your company's carbon footprint is the amount of GHG (greenhouse gas) emissions it produces. We talk about ‘direct emissions’ when they are immediately linked to the manufacturing of your product or service. If you’re running a bakery, that might involve emissions from the burning of fuels to power your ovens. ‘Indirect emissions’ are related to your activity but are not directly controlled by your company. This can include emissions generated by your suppliers as they carry out work to service your company, for example.

A company often emits various gases that contribute to climate change: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O) are among the most common. To make things a little simpler, emissions are converted into carbon dioxide equivalents, which then make up your carbon footprint.

"Carbon footprint” is a generic term that refers to the amount of greenhouse gases emitted by a person, organization, event, or product. “Carbon accounting,” meanwhile, is a calculation method of GHG emissions, both direct and indirect, generated by everything a company does.

Carbon accounting incorporates three elements:

Scope 1: direct emissions.

Scope 2: indirect emissions linked to energy consumption.

Scope 3: non-energy-related indirect emissions.

To be considered compliant, any company’s carbon accounting must be performed or validated by third-party experts.

It’s simple, but powerful: measuring your company's carbon footprint is central to reducing your environmental impact. It means that you can pinpoint where emissions are happening and then take action to cut or stabilize them.

It’s also beneficial for other reasons, such as:

• Compliance with the law: environmental accounting obligations apply to certain types of businesses or sectors. This is the case, for example, in the textile, construction, finance, and tourism industries. Global and national regulations are becoming increasingly demanding regarding business’ ESG (Environmental, Social & Governance) activities.
• Cost reduction: measuring your carbon footprint allows you to identify unnecessary expenses or waste. For example, buying non-local raw materials or products can involve high transportation costs, which can be slashed by sourcing locally.
• Securing financing: in recent years, investors have become more interested than ever in companies' CSR performance (that’s Corporate Social Responsibility - which incorporates a company’s carbon footprint). They often consider it an indicator of long-term sustainability. Some banks offer loans with favorable terms based on environmental performance.
• Improving brand image: environmentally responsible companies attract a better reputation among their customers as well as prospective employees. A strong approach to sustainability is also likely to attract talent who share the company's values.

Read more: Learn about ESG reporting and regulations

Read more: Learn about CSR and what it means for your company

The benefits are well known to Laurent Barbezieux. Since co-founding Aktio in 2020, he’s been supporting companies looking to reduce their carbon footprint. As well as the ‘whys’ listed above, Laurent has noticed that measuring carbon footprint has become a commercial issue.

In short, specific regulations around carbon accounting vary according to your location, industry, and your company’s size and structure.

Recently updated EU rules require large companies and listed companies to publish regular reports on how their activities impact people and the environment - including their carbon emissions - starting in 2024 (to be reported in 2025). Even SMEs who aren’t currently covered under this regulation may be impacted, as their client networks might request their data as part of their own Scope 3 emissions.

Outside of this, the picture for non-listed and smaller companies varies.

For example:

• In France, some companies counting from just 50 employees (depending on the company structure/whether the company is based in mainland France or overseas territories) are legally obligated to carry out carbon reporting on themselves. This is known as a “Bilan réglementaire d'Émissions de Gaz à Effet de Serre” (BEGES).
• Germany follows the EU reporting laws, setting its own national cross-sector targets across the country for carbon emission reduction.
• Several of Spain's autonomous regions have developed carbon footprint registries to encourage reporting voluntarily, outside of the EU-wide requirements.
• While Italy doesn’t currently enforce compulsory reporting on top of the EU rules, Carbon Footprint Italy supports businesses in calculating and communicating around their emissions.

Although mainly mandatory for large companies, carbon accounting can be a worthwhile exercise for companies of all sizes, as part of an effective and targeted environmental approach.

💡 If you have a limited budget, there is often support available for small and medium-sized enterprises.
Across the EU, the European Commission provides various funding sources promoting energy efficiency. In Germany, funding programs are available at federal and state level to help you reduce your carbon footprint. For France-based companies, the Diag Décarbon'Action program allows you to benefit from 12 days of expert guidance at a subsidized rate.

Whether you carry out your accounting with an expert or on your own, the process will involve your whole organization. So, it's important to prepare yourself and your team in advance, following these five steps:

Step 1: Scoping

Think of this as you would any professional project - with planning the bedrock to success. For carbon accounting, this involves assigning responsibilities, defining your goals and the actions you’ll take to achieve them, allocating a budget, and setting a timeline.

Step 2: Raising employee awareness

Gain employee participation from the outset, as your teams will likely be asked to collect the necessary information from their business area. Collective awareness among colleagues will also be helpful when your company starts to make new ecologically responsible initiatives.

Raise awareness among your teams by:

• Organizing sustainability-focused workshops, such as a Climate Fresk.
• Sharing information on a regular basis: dedicated internal newsletters, posters in communal areas, intranet messages, etc.
• Setting up eco-responsible challenges within the company.
• Holding periodic team meetings to share project progress.
  
  

To carry out carbon accounting, your company needs to collect data from all its operations. This step is essential, as it will let you take concrete action later. To ensure the research work is allocated efficiently, be sure to identify the business units to be involved. You’ll need them to look at everything from fuel expenses to electricity and heating - anything and everything that can be converted to carbon emissions.

Once you've collected your data, you can calculate your emissions in-house or with an external service provider. 

Step 4: Drawing up an action plan

Once you've calculated your emissions, you’re ready to define specific, measurable reduction targets. The action plan can include initiatives such as the adoption of cleaner technologies, energy efficiency, and encouraging sustainable practices within your organization. Remember: this is about continuous improvement, not a ‘one and done’ project. Regular progress monitoring and adjustments to your action plan will keep you on a sustainable trajectory.

Find out more about Qonto's own commitment to reducing its GHG emissions here.

Step 5: Communicating

While not necessarily compulsory, communicating about your carbon accounting will enable you to highlight your efforts and meet - or exceed - your stakeholders’ expectations.

You could:

• Create a dedicated landing page on your website.
• Publish on social networks.
• Develop a dedicated section in your newsletter.
• Publish a press release.

Looking for help with your carbon accounting? You’re in luck: support is available, wherever you are in your journey:

• Free carbon calculator from the GoodPlanet Foundation 

With The GoodPlanet Foundation’s calculator you can make an initial estimate of your carbon footprint. While the calculator doesn't guarantee precise results, it will enable you to quickly identify your main sources of emissions.

• Independent consultants and experts

If you lack in-house expertise, you can call on an independent consultant to help you draw up your accounting, and give you a direct point of contact to speed up the process. You'll find many independent consultant profiles on malt.com.

• Carbon footprint and CSR consultancies

Firms often have a multidisciplinary team with a variety of skills, which can be beneficial in tackling the various elements of your carbon accounting, from the initial data collection to later in-depth analysis.

• Online platforms (SaaS)

SaaS solutions are often more cost-effective and offer users greater autonomy in managing carbon accounting. Some platforms, like Aktio, can also support you in implementing your action plan, providing users with a library of emission-reducing best practice, and a dedicated carbon expert.

Looking for a partner in your carbon assessment’s financial management? Qonto is the account that means business, complete with powerful invoicing, bookkeeping, and spend management tools.