Measuring a company’s carbon footprint is a crucial step toward sustainability and understanding its climate impact. Carbon footprint measurement, also known as a GHG inventory, allows a company to identify how its activities, products, and services impact the climate. During this process, the entire organization’s operations are assessed, from the materials used to the effects stemming from the consumption and end-of-life of finished products and services.
A GHG inventory helps a company understand where its largest emissions come from and offers a clear overview of how and where these emissions can be reduced. Below we discuss the key benefits of a GHG inventory and explore some less obvious advantages.
1. Mapping Emissions and Identifying Reduction Opportunities
The primary benefit of a GHG inventory is that it provides a detailed map of a company’s current greenhouse gas emissions. This is the first and most important step in understanding a company’s climate impact. The inventory provides a comprehensive overview of the company’s activities and emission sources (e.g., material flows, energy use, supply chain impact), highlighting areas where emissions can be most effectively reduced. It establishes a solid foundation for managing the climate impact across the entire value chain. Regular GHG inventories enable a company to track its climate goals and set specific targets for the future, supporting the continuous reduction of its CO2 footprint.
2. Input for Sustainability Strategy and Regulatory Compliance
A GHG inventory is essential for meeting various regulatory requirements and reporting obligations. For example, the Corporate Sustainability Reporting Directive (CSRD) requires public interest entities (listed companies, credit institutions, and insurance undertakings) to report on at least Scope 1 and Scope 2 emissions starting in 2024, with smaller companies gradually being included in later years. The European Union’s goal of achieving climate neutrality by 2050 imposes additional demands on companies.
GHG inventory results provide valuable input for Environmental, Social, and Governance (ESG) reports. Accurate tracking and reporting of environmental impacts are central to ESG reports, and the GHG inventory allows a company to present quantitative and reliable data on its carbon footprint—a crucial component of any ESG report.
Case Study: Amber Beverage Group’s ESG Report
A good case study example here would be the collaboration between Hendrikson DGE and Amber Beverage Group (ABG) in preparing ABG’s first ESG report in 2024. ABG used data collected according to the GRI framework and performed a GHG inventory covering Scope 1 and Scope 2 emissions. Hendrikson DGE also helped ABG assess social and health impacts, providing a strong foundation for their future reporting under CSRD requirements. This project highlights how a GHG inventory can support the development of sustainability strategies and ensure regulatory compliance. The ABG report was published in May 2024 and is available here.
Additionally, a GHG inventory can serve as a foundation for developing Science-Based Targets (SBTi), aimed at setting scientifically grounded emissions reduction targets. This supports the development of climate action plans and the implementation of effective carbon reduction measures.
3. Competitive Advantage in the Market
Measuring a company’s CO2 footprint gives it a clear competitive advantage, as more partners, customers, and investors prefer working with companies that demonstrate sustainability efforts and understand and reduce their climate impacts. Many companies now require data on carbon footprints and overall environmental impact from suppliers and partners to meet green supply chain and climate goal requirements.
A GHG inventory helps map greenhouse gas emissions and assess a company’s climate impact. If the goal is to evaluate all environmental impact categories, not only climate change impact category, a company might also consider conducting an LCA (Life Cycle Assessment) or preparing an Environmental Product Declaration (EPD).
The results of a GHG inventory help a company meet the sustainability expectations of both the value chain and customers, strengthening relationships with existing clients and partners. It can also open new market and funding opportunities, enhancing the company’s competitiveness and visibility.
4. Reputation and Communication
In addition to providing a competitive advantage, mapping and understanding a company’s climate impact also positively affects its reputation. It demonstrates that the company is committed to sustainability, understands its role in global climate change, and is prepared to take responsibility to reduce the negative impacts of its activities.
As awareness of climate change and other global environmental issues grows, many companies have begun highlighting their sustainability efforts through marketing and communication. However, it is essential to avoid giving the impression of greenwashing. A company’s carbon footprint is a qualitative indicator that can be used in marketing campaigns and stakeholder communications. The results of the GHG inventory offer excellent content for creating interactive and creative infographics, which can be used in marketing, events, or investment pitches.
5. Enhancing Management Systems
Another advantage worth mentioning is the GHG inventory’s impact on improving company management systems, particularly in drafting environmental and energy policies. It is a crucial environmental management tool that helps identify and manage energy use and climate-related processes and risks. The inventory can help a company optimize resource use and improve processes, while also laying the foundation for creating strategies to reduce climate impacts. It also improves communication with stakeholders by increasing transparency and trustworthiness.
Other Benefits of Measuring the CO2 Footprint
In addition to the main benefits, there are several other, less obvious, but still important aspects that carbon footprint measurement can offer organizations:
- Attracting investments – interest in “green” financing and environmentally conscious investors is growing, with increased attention given to companies committed to sustainability;
- Participating in carbon markets – calculating the carbon footprint allows companies to participate in global carbon markets and trade carbon credits;
- Preparing for future regulations – early CO2 footprint assessment enables a company to anticipate future stricter environmental regulations, ensuring long-term competitiveness;
- Mitigating supply chain risks – gaining an understanding of climate impacts across the supply chain helps reduce potential disruptions and improve relationships with suppliers:
- Energy savings and cost reduction – measuring the carbon footprint can identify energy efficiency opportunities, leading to cost savings.
In conclusion, a GHG inventory offers companies numerous key benefits, whether for obtaining funding, gaining a competitive edge, or identifying the most impactful categories.
A GHG inventory is a valuable tool that helps companies better understand their climate impacts and find ways to reduce them. It also enables companies to set specific climate goals and manage their sustainability strategies, supporting both environmental and business objectives.
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