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Why a CO2 balance sheet is important

Climate change is the biggest issue of our time, impacting all areas of life and requiring a holistic shift towards sustainability. Companies and organizations in particular face the challenge of operating sustainably and integrating sustainability as an integral part of their business model.

Finding the right entry point for this can be overwhelming and prevent companies from becoming active at all. With existing standards and guidelines, politicians are trying to provide companies with guidelines. Other regulations are being added on a permanent basis, such as the Corporate Sustainability Reporting Directive. But how to start?

Thecarbon footprint is the entry point to the sustainability strategy

In order to become sustainably active, it is first and foremost important to get an overview of one's own emissions. This is what thecarbon footprint, a method of quantifying a company's greenhouse gas emissions, is for. The corporate carbon footprint, as theCO2 balance is also known, is the inventory of all activities that cause carbon emissions and helps a company understand the impact of its activities on climate change. As such, thecarbon footprint is the first step in building a holistic sustainability strategy and the foundation for all subsequent reduction measures.

ACO2 balance sheet normally comprises three areas - the so-called scopes - of emissions. With the help of this subdivision, the different sources of greenhouse gas emissions of a company can be distinguished and evaluated separately.

What are Scope 1, 2 and 3 emissions in thecarbon footprint?

Scope 1 emissions are direct emissions caused by the combustion of fossil fuels in production or by processes within the company itself. Examples include emissions from energy sources at the site, the combustion of fuels in vehicles (own vehicle fleet) or the operation of ovens, boilers or machines. 

Since control of these emissions lies within the company, they can be measured and controlled relatively easily.

Scope 2 emissions are indirect emissions caused by the purchase of energy or electricity. An example of Scope 2 emissions are emissions caused by the combustion of coal or gas in power plants that the company uses to generate electricity. Emissions can be reduced by purchasing renewable energy. If a company has its own facilities for generating electricity, the associated emissions fall under Scope 1.

Scope 3 emissions are indirect emissions caused by processes that take place outside the company but are related to the company's production and operations. Compared to Scope 1 and 2, emissions are often more difficult to measure and control. Examples include emissions caused by the production of materials or the use of products or services purchased by the company. 

Scope 3 distinguishes between upstream and downstream emissions:

  • Upstream emissions include all emissions within the value chain related to services and purchased goods
  • Downstream emissions are indirect emissions within the value chain that occur in the goods or services sold by the company once they have left the company

How can theCO2 balance be used? 

  1. Identify sources of emissions: Thecarbon footprint reveals the areas in which emissions occur and what the biggest emissions hotspots are.
  2. Set targets: The next step should be to set clear goals on how to reduce emissions. These targets should be measurable, achievable and given a deadline.
  3. Develop strategies: To be able to achieve the goals, strategies should be set up. These include energy efficiency measures, alternative means of transport, sustainable supply chains or renewable energies.
  4. CO2 reductionEmissions must be actively reduced. 
  5. Monitor and measure: Companies should regularly monitor and measure their progress in reducing theirCO2 emissions so that strategies can be optimized and targets achieved. This also applies to theCO2 balance itself, which must be recorded anew every year. This is the only way to ensure that the company is on the right track.
  6. Report and communicate: When a company makes public and communicates its progress inreducing CO2, it can benefit in many ways: Internally, it raises employee awareness of sustainable practices and increases employee loyalty to the company. Externally, a company benefits from reputational gains, a competitive advantage, cost reduction, customer loyalty and risk reduction. In addition, guidelines such as the CSRD will make it mandatory for large companies to report on their commitment as early as 2024.

It becomes clear that thecarbon footprint is an important measure for companies to actively reduce their own emissions and act more sustainably. Building on the balance, companies can identify and analyze their emission sources, strategically build up savings potential and measure, monitor and communicate their progress.

With Planted, we take companies by the hand in all these steps and offer a holistic sustainability solution individually tailored to each company. From thecarbon footprint and analysis ofCO2 emissions to active reduction, offsetting unavoidable emissions through global climate protection projects and local climate protection in Germany by planting trees. We also provide advice on communication and ESG reporting and support with guidelines, content advice and high-quality marketing material.

Get started today with a no-obligationcarbon footprint demo within the Planted sustainability platform.

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How-to: CO₂ balance sheet of companies