Step Change

Difficult at the best of times, measuring a company's carbon footprint is about to get even more so.

Whatever the motivation, measuring a company’s carbon footprint remains an inexact science. “You can drive a bus through many of the numbers that are reported,” says Richard Sharman, lead partner in the carbon advisory group at KPMG in London. “Many companies, at best, try to measure their footprints too quickly and, at worst, use very poor data.”

Because the exercise is largely voluntary, a host of competing standards and protocols for drawing up greenhouse-gas inventories makes the differences between IFRS and US GAAP seem quaint by comparison. From measurement methodologies such as the GHG Protocol to ISO 14064, “the term ‘standard’ is used very loosely,” according to Michael Gillenwater, executive director of Greenhouse Gas Experts Network, a Washington, DC-based non-profit membership organisation. “Most of what’s out there now — what people call standards or protocols — are either vague or non-prescriptive, or both.” That said, the Carbon Disclosure Project advises respondents to use the GHG Protocol, giving it the most traction for businesses today.

Scope Creep

Despite the difficulty that firms have measuring their own carbon footprints, there is a growing consensus that emissions from any single company reveal only part of the story. When considering the overall carbon impact of a company, “direct emissions are often utterly trivial,” asserts David Symons, director of corporate services at consultancy WSP Environmental in London.

Consider UK-based consumer goods group Reckitt Benckiser. In November, it announced an initiative to cut its “total” carbon footprint, including its upstream supply chain and the lifecycle emissions of its products. But the company reckons that its collective carbon footprint was 15m tonnes of CO2 in 2006, with the direct emissions from Reckitt Benckiser’s own manufacturing processes accounting for less than 5% of the total.

Thus, if consumers become more carbon conscious or new regulations push up the cost of pollution, the effect on the cost and demand for Reckitt Benckiser’s products will dwarf the measures that the company alone can take. In a similar vein, no matter how much Anglian Water reduces its own carbon footprint, if it can’t also persuade key suppliers around it to cut their emissions, the resulting change to the climate may still leave its buildings under water.

Last year, a number of supply chain footprint programmes were launched. One group convened by the Carbon Disclosure Project — including Unilever, Tesco and Nestlé — will develop a standardised, centralised process for collecting carbon footprint data from suppliers. Another project, sponsored by the UK government and involving companies such as Cadbury and Coca-Cola, will draft standards to measure the lifecycle emissions of certain products.

These programmes represent the two main “philosophical approaches” to measuring supply chain emissions, says Gill Hall, director of climate change programmes at IBM in London. The former considers the environmental performance of supplier companies as a whole — a “gigantic task,” in Hall’s words — while the latter attempts to quantify the discrete emissions generated by individual products, merely a “staggering amount of work.”

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