Carbon management represents a strategic and systematic approach aimed at managing carbon emissions within organizations.
In response to growing global concerns related to climate change, environmental regulations and international protocols have introduced the concept of carbon management as an integral part of sustainability-oriented business strategies.
This approach focuses on measuring, reducing and offsetting greenhouse gas emissions in order to mitigate the environmental impact of business activities.
Agreements and initiatives such as Agenda 2030 and the European Green Deal have among their main goals the reduction of Green House Gases (GHG) emissions and the achievement of carbon neutrality by 2050.
Carbon management strategies are a practical response to this institutional desire, educate companies to constantly monitor and continuously improve their climate footprint, and are an important competitive differentiator.
What actions does the carbon management strategy include?
Carbon management, as anticipated, consists of a set of practices and strategies to measure, monitor, reduce and offset greenhouse gas emissions from business activities.
Typical carbon management actions include:
- The measurement and monitoring of emissions: this stage involves the accurate assessment of GHG emissions generated by all business activities.
This can include direct emissions (such as from industrial production) and indirect emissions (such as those associated with the supply chain); - emission reduction: companies implement measures to actively reduce the carbon emissions they produce.
This involves the adoption of low-impact technologies, actions to limit emissions related to the transportation of materials and products, employee travel, etc.; - emission offsetting: when direct emission reductions are difficult to achieve, companies can engage in carbon offset projects.
These projects involve financing environmental initiatives, such as reforestation or renewable energy production.
Carbon footprint calculation and relevant ISO standards
The carbon footprint study is the cornerstone tool of carbon management, aimed at measuring and analyzing greenhouse gas emissions:
- related to activities attributable to a business organization, in the case of organization carbon footprint (CFO);
- related to all product life stages, in the case of product carbon footprint (CFP).
For carbon footprint measurement, it is necessary to follow the guidance of the subject-specific ISO standards.
The adoption of these standards serves to ensure accuracy, consistency and comparability of carbon footprint information at both the organization and product levels.
The ISO standards governing carbon footprint analysis and measurement are:
- ISO 14064-1:2018, a standard that provides guidelines for the organization in quantifying and reporting company-wide GHG emissions and removals;
- ISO 14064-2:2019, which provides project-level specifications and guidance for quantifying, monitoring, and reporting GHG emission reductions or removal improvements.
It is relevant to specific projects that aim to reduce or offset GHG emissions;
- ISO 14067:2018, which focuses on quantifying the carbon footprint of products.
It provides requirements and guidelines for accurately measuring and reporting the environmental impact related to greenhouse gas emissions associated with a product throughout its life cycle;
- ISO 14021:2016, although not specifically focused on carbon footprint, this standard provides guidelines on the use of stand-alone environmental claims, enabling organizations to clearly and transparently communicate the environmental performance of their products.
Carbon footprint of organization and carbon accounting
Organization carbon footprint, or corporate carbon footprint, represents the total amount of greenhouse gases (GHGs) emitted directly or indirectly by an organization during a specific period, usually measured in tons of carbon dioxide equivalent (CO2e).
This measure provides an overall picture of the greenhouse gas emissions associated with the organization’s activities, considering the entire life cycle of its operations.
To conduct a proper analysis of an organization’s carbon footprint, it is necessary to integrate carbon accounting processes: methodologies to account for and quantify emissions, based on the international GHG protocol, which divides greenhouse gases produced by an organization into three categories:
- Scope 1, or direct emissions, from sources owned or controlled by the company.
An example of direct emissions is natural gas, fuel, or emissions from combustion in boilers that the company produces during its business cycle;
- Scope 2, includes all indirect emissions from energy sources purchased or acquired by the company.
An example of an indirect emission is electricity purchased from an external utility company.
This second type of emission is very relevant to the design of a good carbon management strategy because it accounts for one-third of all global greenhouse gas emissions;
- Scope 3, includes all emissions resulting from activities from assets not owned or controlled by the organization but indirectly impacting its value chain.
This type of emission also makes up a large portion of global greenhouse gas emissions.
The EPA, the U.S. Environmental Protection Agency, has classified this type of emission into two categories:
- Upstream emissions, including all indirect emissions from activities pertaining to a so-called cradle-to-gate phase (E.g., purchased goods, upstream distribution of products, employee travel);
- Downstream emissions, i.e., all indirect emissions related to the stage at which products leave the company (E.g., downstream distribution of products, end-of-life treatment, processing).
Carbon management: what benefits does it hold for businesses?
Implementing carbon management strategies brings a number of benefits to businesses, including:
- Improved brand reputation: companies that adopt sustainable practices and demonstrate a real commitment to reducing carbon emissions often enjoy an improved corporate reputation.
This can attract customers, investors, and consumers who are sensitive to environmental issues;
- Regulatory compliance: adherence to environmental regulations, including disclosure required by CSRD, which not only avoids legal penalties, but can also contribute to the company’s positioning as a leader in environmental compliance;
- Operational efficiency: well-designed carbon management strategies can lead to improvements in energy efficiency and resource management, reducing long-term operating costs;
- Market Access: as ESG compliance becomes an increasingly relevant criterion for consumers and investors, companies engaged in carbon management can access new markets and business opportunities.
Implementing a carbon management strategy means not only carrying out and certifying the carbon footprint study, setting new reduction targets and intervening with offsets where it is not possible to reduce the emissions produced, but also communicating and thus sharing with the outside world all the efforts the company has made to limit its carbon footprint.
An additional opportunity that allows:
- Access dedicated calls and funding;
- Participate in certified carbon neutrality projects;
- Improve reputation and trustworthiness in the eyes of consumers and stakeholders.
