Product carbon footprint vs. corporate carbon footprint

A company’s and a product’s carbon footprint are related but distinct concepts measuring different carbon emissions aspects. Both represent an essential consideration for companies seeking to mitigate climate change and adopt sustainable practices. Companies can contribute to broader environmental goals by calculating emissions and meeting the growing demand for environmentally friendly products and operations.

What is an organization's carbon footprint?

A company’s carbon footprint refers to the total amount of greenhouse gas (GHG) emissions generated by its operations, including its facilities, production processes, transportation, refrigeration, and other activities. It includes all three scopes – direct and indirect resulting from energy purchases and indirect supply chain emissions.

Factors contributing to a company’s carbon footprint include energy consumption, fuel consumption, waste management, employee commuting, business travel, and supply chain emissions. It considers emissions from all activities the company influences or controls, including the end-of-life disposal of its products.

Counting a company’s carbon footprint enables an overview of its emission sources and efficient management of its environmental impact. Knowledge of a company’s carbon footprint and continuous monitoring provides an opportunity for sustainability efforts. Companies often measure their carbon footprint to assess their environmental performance, set reduction targets, and implement strategies to minimize overall emissions.

What is a product's carbon footprint?

A product’s carbon footprint focuses specifically on what emissions a product has associated with the production, use, and disposal of a particular product. As for companies, a product’s carbon footprint is usually expressed as carbon dioxide equivalent (CO2e). It measures the amount of greenhouse gas emissions released during a product’s life cycle, including raw material extraction, production, distribution, consumer use, and final disposal or recycling.

A product’s carbon footprint provides insight into a specific product’s environmental impact and helps identify opportunities for improvement and sustainable design. Knowing it will allow selecting of appropriate energy sources for production, materials, transportation methods, and recycling or waste management practices.

Product carbon footprint vs. company carbon footprint

While a company’s carbon footprint reflects the overall environmental burden of the entire organization, a product’s carbon footprint delves into the specific emissions associated with a single product or service.

Knowing the size of the carbon footprint and analyzing and reducing the emissions of individual products will enable organizations to offer consumers more sustainable and environmentally friendly products and services.

Why calculate an organization's and product's carbon footprint?

Why do companies calculate carbon footprint? The answer is simple – because it’s worth it.

Calculating a product’s carbon footprint is worthwhile because it allows companies to measure their environmental impact to make informed decisions about sustainability and product design. It will give them a competitive edge, attract investor interest and win customers. Knowing the value of the carbon footprint will allow the company to manage its supply chain effectively.

In addition, companies will comply with European Union directives, as ESG reporting will soon become mandatory for small and large companies. By reducing CO2 emissions and ultimately achieving climate neutrality, businesses will contribute to the fight against global warming and climate change.

It only takes a little money to get information about the carbon footprint of a company’s supply chain. It is undoubtedly an investment that will pay off. Already, activities involving continuous monitoring of a company’s ESG – in terms of corporate governance, social responsibility, and environmental impact – indicate contractors’ quality of their business.

What are the benefits of carbon footprint calculation?

Calculating a product’s carbon footprint offers several benefits and is cost-effective for several reasons:

Attractiveness to contractors – companies in Western Europe, but not only these, want to know the value of the carbon footprint of their suppliers and associates to work with the best.
Investment and financial advantage – getting loans on better terms; VC funds count the carbon footprint of their portfolio, so they pay attention to ensure the companies they invest in are counted.
Monitoring emission sources enables effective carbon footprint management, which will translate into actual financial savings for the company.
Designing sustainable products – by considering the carbon footprint, companies can create more environmentally friendly products and meet the growing consumer demand for sustainability. Valuable insight into a product’s life cycle indicates areas for improvement.
Competitive advantage – consumers are becoming increasingly aware of the environmental impact of their products and are actively seeking sustainable options. By offering products with a lower carbon footprint, companies can attract environmentally conscious consumers and gain a competitive advantage.
Supply chain management – this process provides insight into the carbon intensity of various suppliers and helps identify opportunities for collaboration and improvement. It enables companies to work with suppliers to adopt sustainable practices.
Compliance and reporting are regulations and reporting requirements related to greenhouse gas emissions. Calculating the carbon footprint of products helps ensure compliance with these regulations and facilitates accurate reporting.
Consumer education and transparency – making carbon footprint information available to consumers increases transparency and allows them to make more informed choices. It also fosters trust and strengthens the relationship between the company and the consumer.
Environmental responsibility – Understanding a product’s carbon footprint helps a company take responsibility for its environmental impact. By counting the carbon footprint and identifying carbon-intensive areas, companies can take action to reduce their climate impact.

What are the methods for calculating a product's carbon footprint?

The international GHG Protocol guidelines and ISO standards strictly define the methods for calculating the carbon footprint. Depending on what the carbon footprint is counting, different recommendations will apply here:

For an enterprise

GHG Protocol (Scope 1, 2)
Corporate Value Chain (Scope 3)
ISO 14064:1:2018

For the product

Product Life Cycle Accounting and Reporting Standard
ISO 14067:1:2018
ISO 20121 (events)

How to calculate a product's carbon footprint?

To calculate a product’s carbon footprint, add the number of greenhouse gases produced at each production stage and divide the result by the number of products. Emissions for services are calculated similarly. Remember that a product’s carbon footprint refers to the greenhouse gas emissions emitted in the production process, not how the product affects the climate.

If your business sells a product made by an outside company, it’s a good idea to demand a carbon footprint from suppliers.

How to calculate an organization's carbon footprint?

Calculating a company’s carbon footprint looks a little different. You add up the emissions of all three scopes (indirect and direct emissions). In this case, the value of greenhouse gas emissions is the amount of t CO2e (a ton of carbon dioxide equivalent) delivered annually to the atmosphere during all stages of work, the company’s entire operation. Learn about legal instruments for reducing carbon emissions. Meet legal instruments to mitigate carbon emissions.

Who must calculate the carbon footprint of an organization and product?

Calculating the carbon footprint is, or will soon become, an obligation for many enterprises due to the European Union Taxonomy. It is a crucial part of achieving sustainability and reducing greenhouse gas emissions. It includes a series of criteria that help assess the environmental impact of an activity and its contribution to sustainable development goals. Its primary purpose is to provide reliable information to investors and companies on the compliance of their operations with sustainability goals.

What is the CSRD

The Corporate Sustainability Reporting Directive (CSRD), adopted at the end of 2022, requires companies to report and disclose information about their carbon footprint – the impact of a company, product, or service on the climate and the environment. Europe has pledged to achieve climate neutrality by 2050 and must undertake initiatives to reduce its carbon footprint. Reducing greenhouse gas emissions will make it possible to prevent irreversible changes to the planet.

CSRD – Key findings:

Full transparency of Scope 1,2 & 3 emissions based on actual data
The report is subject to mandatory auditing
Equalization of the non-financial report with the financial

From when the CSRD will be in effect

January 1, 2024 – Large public interest companies (>500 employees)
January 1, 2025 – Companies with >250 employees and/or €40 million in turnover and/or €20 million in total assets January 1, 2026 – SMEs and other listed companies
January 1, 2026 – SMEs and other listed companies

What is the SFDR regulation?

Sustainable Finance Disclosure Regulation – aims to provide greater transparency in how companies and financial institutions analyze their sustainability risks. The regulations cover insurance companies and financial advisors, including investment firms providing portfolio management services and credit institutions providing investment advisory services. The SFDR has already been in effect since 2021.

The idea of carbon footprint and climate change

Since the beginning of the industrial revolution, the Earth’s temperature has risen by 1.2 degrees. At the time of the Paris Agreement in 2015, 1.5 degrees was taken as the tipping point, with a maximum of 2 degrees – at which point predicting the effects of climate change around the world would be frighteningly simple – a climate catastrophe awaits us.

Since the beginning of the industrial revolution, the Earth’s temperature has risen by 1.2 degrees. At the time of the Paris Agreement in 2015, 1.5 degrees, a maximum of 2 degrees, was taken as the tipping point – then predicting the effects of climate change around the world will be frighteningly simple – we are facing a climate catastrophe.

It is by calculating the carbon footprint and reducing emissions (especially stopping the burning of fossil fuels) that we can reduce the release of greenhouse gases into the atmosphere (and that’s not just carbon dioxide, but also nitrous oxide or methane). These measures can halt climate change and lead to climate neutrality, but corporations should start reducing greenhouse gas emissions as soon as possible. Scientists are sure that humans are responsible for climate catastrophe, and only proper carbon footprint management offers a chance to heal the planet. Learn how achieving climate neutrality for your company is helping to combat the climate crisis.

Calculating the carbon footprint and reducing greenhouse gas emissions

Companies should act sustainably in their operations. Not only count the carbon footprint but also reduce greenhouse gas emissions. By calculating an organization’s carbon footprint and that of the product, it will be possible to locate the sources of the company’s most significant CO2 emissions and the product’s life cycle so that they can be upgraded/eliminated or reduced. It will have a positive impact on the company’s operations and its image in the industry.

Calculating an organization’s carbon footprint is the first step toward climate neutrality.

Is your company ready to do this? Or do you need help? Get support from Plan Be Eco and schedule an appointment!