The Sustainability Buzz

Beyond the Carbon Footprint: What’s Next?

Carbon Footprint cartoon“So we have our first carbon footprint measurement.  What’s next?”

Coupled with wanting to know how their company compares with other companies, this is the inevitable question management teams ask when presented with their first carbon footprint number.

A carbon footprint is only a baseline, and it is difficult for companies to compare themselves to other companies because of the wide variation in how organizations calculate carbon footprint.  While the Greenhouse Gas Protocol presents guidelines for establishing organizational boundaries, it isn’t prescriptive in its advice.  As a result, Company A may choose different boundaries from Company B, making a comparison meaningless.

Therefore, a carbon footprint’s value lies in its use as a yardstick against which to measure future reductions.  Here’s how we recommend companies make use of their first carbon footprint measurement.

1.  Use it internally.

A carbon footprint is a great starting point from which to measure improvements.  It can be a useful metric for management to make decisions, especially when combined with shadow pricing, a way to ascribe financial value to something—like carbon—where no market price currently exists.  (We discussed the concept of shadow pricing more fully in our last post on the Buzz.)

By combining the two, companies can get a much better handle on the true value of executing sustainability projects that have a carbon savings component, which are many of them.  This will prove especially useful once carbon pricing emerges.  (More on that in a bit.)

2.  Use it externally.

For companies that need to communicate their environmental progress to stakeholders outside the C-suite (and who doesn’t, really?), a carbon footprint can be a great tool to do so.  Publishing a baseline carbon footprint and the progress towards lowering that number provides credible proof that a company’s sustainability initiatives are making a difference.  It’s a meaningful step towards the transparency that many external stakeholders are seeking.

3.  Make a plan.

Considering the fact that climate change and carbon dioxide reduction continue to be on the global agenda, and that six major oil companies (somewhat shockingly) threw their support behind carbon pricing in a letter to the United Nations last week, it’s likely that some sort of carbon pricing structure is on the not-so-distant horizon.  And when that happens, companies will need a plan to mitigate their carbon or face an increase in the cost of doing business.

Determining its carbon footprint is the first step a company can take towards generating a low carbon future for itself.  It’s a journey that can mean considerable cost savings and reduced risk from an uncertain carbon pricing future.

That’s what’s next.

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