Corporate carbon footprint and product carbon footprint
- Sustainability Solutions
- carbon accouting, carbon footprint
- 5 min reading time
Dea Marovic
What is the Corporate Carbon Footprint and what is the Product Carbon Footprint? What is the role of the three-pillar model, Scope 1, Scope 2 and Scope 3 as well as ISO 14064-1 and the GHG Protocol? This knowledge article answers these questions.
- 1. why is it important to know the corporate/product carbon footprint?
- 2. basics of the corporate carbon footprint
- 2.1 Three-pillar model
- 2.2 Greenhouse gases, CO₂ and CO₂ equivalents
- 2.3 Definition of Product Carbon Footprint and Corporate Carbon Footprint
- 2.4 Benchmarks Corporate Carbon Footprint
- 2.5 Scope 1, Scope 2 and Scope 3
- 2.6 Primary and secondary GHG data and their targets
- 2.7 Standards & regulations for product / corporate carbon footprinting
- List of sources
1. why is it important to know the corporate/product carbon footprint?
An important role for a more sustainable future is played above all by the instruments of sustainability reporting, which help companies to act and do business more sustainably. The Corporate Carbon Footprint and the Product Carbon Footprint are considered to be such instruments.
The basic prerequisite for reducing CO₂ emissions is measuring them. Many companies, including SAP, offer software solutions for this important task. These software solutions are designed to enable companies to calculate and measure the CO₂ footprint of the entire plant or company, but above all also the CO₂ footprint of individual products. But in order to be able to offer such holistic solutions, it is important to know where which challenges lie. The foundation of a software solution for reducing the CO₂ footprint is the data relevant to the measurement. The following graphic illustrates the consequences of not having the necessary data.
The graphic shows that without the required data, no calculations or control measures can be carried out. If the required KPIs are not defined and no data is available, it is not possible to calculate the carbon footprint correctly and thus to derive sustainability measures and insights. The biggest challenge and most important task is therefore to collect and evaluate a large amount of suitable data.
2. basics of the corporate carbon footprint
2.1 Three-pillar model
The carbon footprint can be assigned to the area of sustainability reporting. This consists of the following three pillars of sustainability reporting :
- Economics,
- Ecology and
- Social.
This concept is also known as the so-called triple bottom line.
Since all of these dimensions can be linked to excessive carbon dioxide levels and the resulting global warming, each one is relevant for sustainability reporting. If we now add the dimension of the CO₂ footprint, the previous model can be expanded to include the central point: the CO₂ value, which acts as the intersection of all three pillars of sustainability(openSAP, 2020, p. 12).
2.2 Greenhouse gases, CO₂ and CO₂ equivalents
A distinction is made between Greenhouse G ases (GHG¦ German: Treibhausgase (THG)) and carbon dioxide. All gases in the atmosphere that are responsible for global warming and thus climate change, as they absorb infrared radiation from the sun, are referred to as greenhouse gases. Carbon dioxide (CO2) is the most important greenhouse gas, followed by methane (CH4).
All greenhouse gases can be converted and expressed in CO₂ equivalents according to their global warming potential (GWP), abbreviated as "CO₂e"(openSAP, 2020, p. 12).
2.3 Definition of Product Carbon Footprint and Corporate Carbon Footprint
As already indicated by the respective names, the Product Carbon Footprint measures the CO₂ footprint of a product and the Corporate Carbon Footprint measures the CO₂ footprint of an organization.
The Product Carbon Fooprint measures how much CO₂ equivalents were generated in the life cycle of a product.
The corporate carbon footprint is then the sum of all product carbon footprints and the additional CO₂ emissions of an organization.
2.4 Benchmarks Corporate Carbon Footprint
According to a report by the non-profit climate protection organization Carbon Disclosure Project (CDP) in collaboration with the Climate Accountability Institute, around 100 companies are responsible for 71% of global emissions (Paul Griffin, 2017, p. 8). This underscores the urgency of tracking and monitoring CO₂e emissions, especially for businesses.
2.5 Scope 1, Scope 2 and Scope 3
To understand how the CO₂ footprint can be calculated, it is first necessary to analyze where CO2 is emitted in the value chain.
The following graphic provides an overview of the greenhouse gases along the value chain(openSAP, 2020, p. 16):
The CO₂ footprint of a product includes in ...
... Scope 1: the direct GHG emissions from the company's own resources (such as combustion of fuels in boilers, furnaces and vehicles that take place in the production of the product).
... Scope 2: the indirect emissions such as electricity and raw material supplies.
... Scope 3: all other indirect emissions generated in a company's value chain, such as emissions after product purchase: the processing, use and recycling end of the product life cycle.
Optimally, scope 3 emissions are also included, even if the CO2e mostly consists of assumptions only, as emissions during use cannot be calculated precisely.
2.6 Primary and secondary GHG data and their targets
If you imagine the amount of data needed to calculate the CO₂ footprint, the data of a small production company may be manageable. However, if one thinks of a large international company with several subsidiaries and suppliers, data generation is very time-consuming. For this purpose, two types of data need to be generated: Primary and secondary data.
Primary data is generated and transmitted directly by the company and suppliers. Secondary data is generated based on scientific data and assumptions.
In terms of data quality, the main part of the data collected should consist of primary data(ClimatePartner, 2021, p. 20). This data can then be used to calculate either the corporate carbon foot print or the product-specific CO₂ footprint.
For example, if the goals are to achieve climate neutrality for the entire product range and to determine the CO₂ savings potential at the level of the entire company, it is advisable to calculate the corporate carbon footprint taking Scope 1 to 3 into account (Figure 8). If, on the other hand, a company is interested in achieving climate neutrality at the product level , the product carbon footprint should be calculated(ClimatePartner, 2021, p. 18).
2.7 Standards & regulations for product / corporate carbon footprinting
There are already various standards and norms that prescribe how environmental impacts and greenhouse gas emissions should be calculated.
2.7.1 Corporate Carbon Footprinting
The methodological requirements for corporate carbon footprints are set out, for example, in ISO 14064-1 and the Corporate Accounting and Reporting Standard. The GHG Protocol provides more detailed methodological papers describing how the calculations for individual sectors can be carried out in concrete terms. In contrast to the standards mentioned above, it is not possible to verify compliance with the GHG Protocol.
2.7.2 Product Carbon Footprinting
In contrast to the corporate carbon footprint, the only rules for calculating the CO₂ emissions of products along the entire value chain are set out in the British standard "PAS 2050". However, this standard is not binding for Germany. ISO 14040 can serve as a guide for calculating the product carbon footprint.
In summary, it can be stated that there are currently no concrete standards for calculating product carbon footprints, which is why the following knowledge article "How do I calculate a carbon footprint?" presents a simplified and condensed approach to calculating product carbon footprints(Hottenroth et al., 2013; Öko-Institut e.V. & IFEU-Institut e.V., 2012, pp. 4-7).
List of sources
ClimatePartner (2021). Deep Dive: Product Carbon Footprint: How to measure, reduce and offset the emissions of your products. https://www.climatepart-ner.com/sites/default/files/2021-08/ClimatePart-ner%20Deep%20Dive%20PCF%20EN.pdf
Hottenroth, H., Joa, B., Schmidt, M., & Institute for Industrial Ecology (2013). Carbon Footprint for Products: Handbook for the operational practice of small and medium-sized enterprises. https://www.hs-pforzheim.de/fileadmin/user_upload/uploads_re-dakteur/Forschung/INEC/Dokumente/Hottenroth_et_al_Carbon_Foot-prints_fuer_Produkte_web.pdf
openSAP (2020). SAP as an Enabler for Climate Action. https://s3. xopic.de/opensap-public/courses/5CEI321bEUzrwK-erEcsblf/rtfiles/6YFvJ5be5jTP4OTdZ7VALa/open-SAP_clim1_Week_2_All_Slides.pdf
Öko-Institut e.V. & IFEU-Institut e.V. (2012). Carbon Footprint - Teilgutachten "Moni-toring für den CO2-Ausstoß in der Logistikkette ". https://www.umweltbundes-amt.de/sites/default/files/medien/461/publikationen/4306.pdf
Paul Griffin (2017). The Carbon Majors Database: CDP Carbon Majors Report 2017. CDP Driving Sustainable Economies. https://b8f65cb373b1b7b15feb-XIIc70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/docu-ments/000/002/327/original/Carbon-Majors-Report-2017.pdf
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More information on the topic of sustainability can also be found in other Wiki articles.
