Hidden Internal Benefits of Your Carbon Footprint Project

Knowledge

Jun 14

The proliferation of corporate carbon footprints is steadily growing. Companies (mostly larger, mostly public) share their emissions footprint (usually focused on Scopes 1 and 2) and share their pledges for limited environmental degradation (net-zero goals, reduction efforts). The external benefits of these are clear. Namely, sharing environmental commitments, setting goals, and competitive advantage. But what are the other benefits for companies completing a carbon footprint?

SEC requirements and disclosures, net-zero commitments and climate change realities are all external symbols of how and why companies choose to disclose. Carbon emissions and a company’s carbon footprint mitigate climate risk, but companies need to understand that benefits come from the process to develop the footprint, as much as the final product or external benefits.

Carbon Footprint Benefits

As a consultant who’s completed footprints (I’m interchanging GHG emissions inventory, carbon footprint and GHG calculations throughout this post) for public and private companies, the realities of external indicators are all there. Companies want to be in the market talking about what they’re doing. Additionally, it’s certainly helpful from an ESG perspective to have completed a GHG emissions calculation. But there are also multiple benefits to a company’s internal strategy. I know you’re probably thinking, “well, duh,” and yes, “duh,” but for companies that are in the process of considering carbon footprint or environmental strategy, let’s walk through the internal benefits.

Part of companies' excitement and movement around carbon footprints are pushed by the SEC's proposed rule on climate risk disclosures. Here is what the SEC’s proposed rule says:

“The proposed rules would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.”

A carbon footprint is an excellent internal and external indicator of climate risk exposure. And certainly, the main benefits of reporting are to a company’s ESG program. But the other internal benefits should be highlighted as well.

Carbon Footprints Matter Outside of ESG

Completing a carbon footprint gives you an inside look at your company. This internal peek is one that most companies haven’t completed in this way or haven’t been forced to examine. This is usually because of the quantity and quality of data uncovered. When else do companies fully examine locations, utility bills, vehicles, electricity, and other categories?

The process to develop and calculate emissions for a company involves more data gathering than most companies feel comfortable with. That’s the point! Digging in and uncovering what’s being calculated, what’s not and why can all help develop the emissions calculation, but also identify other company processes that should be addressed.

Here are some examples of data found in full carbon footprint and GHG emissions calculations:

Total square footage of operations
Listing of all capital goods purchased in the past year
Where your employees live and how they get to work
What do your customers do with your product after it leaves your facility

These are relevant for climate risk thinking, yes, but they’re also critical pieces of strategic value that your company can use. Understanding how your products are used, what vendors you’re engaging with and how employees are getting to the office are crucial pieces of information that can help inform strategic decisions apart from climate risk.

Using Carbon Footprints for ESG Strategy

Companies are becoming more aware of how ESG affects all areas of the company and a GHG emissions inventory is no exception. Of course, most companies use their emissions calculations to inform reduction measures and initiatives, but it can also be useful in stakeholder engagements, including those with clients, vendors and employees.

To engage with vendors, share carbon footprint calculations and ask directly about their ESG strategy. Scope 3 emissions calculations include diving into purchased goods and services for the year. Identifying high spend and material items can help reduce your footprint while giving ample opportunity to strengthen relationships.

Employees want to work at companies with active, robust sustainability strategies. Sharing data on carbon footprint with employees and asking for acting engagement in reduction is another way to boost employee engagement.

Customers of all types of businesses are becoming more curious about ESG. I’m seeing a notable inbound ESG boost among clients that respond to RFPs and that are in the active sales process for B2B clients. Potential clients have questions about ESG and sharing a carbon footprint and how your emissions impact them puts you ahead of the curve.

There are so many benefits to completing a carbon footprint. I hope that companies will become more aware of and excited by the internal benefits of carbon footprint calculations, not just the external markers.

Interested in a carbon footprint? Reach out to us to schedule time to chat.

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