A company’s carbon footprint is an estimate of the amount of greenhouse gases generated as a result of its business operations. This includes emissions associated with electricity and fuel consumption, as well as those arising from the production of materials, transportation of goods, business travel and waste disposal.
For small and medium-sized enterprises, calculating a carbon footprint may seem complicated and expensive. However, an initial assessment does not require specialised software or a large team of experts. Data from energy bills, fuel consumption records and transport information can already indicate where most emissions originate and where opportunities exist to reduce costs.
What Does a Carbon Footprint Actually Measure?
Business activities can generate emissions of various greenhouse gases. In addition to carbon dioxide, these include methane, nitrous oxide and other gases that affect atmospheric warming in different ways.
To make it possible to aggregate and compare their impact, emissions are expressed in kilograms or tonnes of carbon dioxide equivalent, or CO₂e.
A company’s carbon footprint therefore represents the total estimated emissions associated with its operations over a specific period, usually one year. The result does not only indicate the company’s impact on the climate. It can also show which business processes use the most energy and resources and where the greatest opportunities for improvement exist.
Scope 1, Scope 2 and Scope 3
Emissions are usually divided into three groups. This classification helps a company identify where its emissions originate and the extent to which it can influence them directly.
Scope 1 – Direct Emissions
Scope 1 covers emissions from sources owned or controlled by the company.
These may include fuel consumed by company vehicles, gas or heating oil used for heating, fuel used by production machinery and generators, and leaks of refrigerant gases from air-conditioning and cooling systems.
If a company operates its own delivery vehicles, emissions from fuel combustion in those vehicles fall under Scope 1. The same applies to a gas boiler used to heat business premises.
Scope 2 – Emissions Associated with Purchased Energy
Scope 2 covers indirect emissions arising from the production of energy that a company purchases and uses.
The most common example is electricity. The emissions are not generated directly in the office, shop or production facility, but at the power plant where the electricity is produced. Nevertheless, because the company consumes that electricity, the corresponding share of emissions is attributed to it.
For an initial assessment of Scope 2 emissions, electricity and district heating bills are usually sufficient.
Scope 3 – Other Indirect Emissions
Scope 3 covers emissions generated throughout a company’s value chain from sources that the company neither owns nor directly controls.
These may include:
- production of purchased raw materials and other materials;
- transport provided by external carriers;
- business travel;
- employee commuting;
- production of packaging
- waste management;
- use and disposal of sold products.
or a manufacturing company, the largest share of its total carbon footprint may arise from the production of the raw materials it purchases. For a trading company, transport and distribution may account for a significant share, while electricity, business travel and digital infrastructure may be more important for a service company.
Scope 3 is the most difficult to calculate because it requires data from suppliers, customers and other partners. A small or medium-sized enterprise therefore does not need to cover every category immediately. It is more important to identify which categories are likely to be the most significant and begin with the data that is available.
Why Is a Carbon Footprint Important for SMEs?
A small business may not have a legal obligation to publish data about its emissions. However, such requirements are increasingly being passed down through supply chains.
Large companies that monitor their own carbon footprints need information about their suppliers, the products they purchase and the services they use. As a result, a supplier from Bosnia and Herzegovina may be asked to provide information about energy consumption, the origin of materials or product emissions even when it is not directly subject to European reporting rules.
A company with reliable data can respond more easily to customer requests and demonstrate that it manages its resources responsibly. Measuring its carbon footprint can help it:
- reduce energy and fuel costs;
- identify inefficient processes;
- plan investments;
- prepare project proposals;
- engage in discussions with banks and investors;
- respond to requests from business partners;
- set measurable environmental targets.
A carbon footprint is therefore more than a figure included in a report. It can become a tool for managing the business.
How Can a Small Business Get Started?
The basic calculation principle is straightforward. Data on a particular activity is multiplied by the corresponding emission factor.
If a company knows how many litres of fuel it consumed during the year, this quantity can be multiplied by a factor indicating the emissions generated by burning one litre of that fuel. Emissions associated with electricity consumption, natural gas, transport or generated waste can be estimated in a similar way.
The first calculation does not need to cover every possible source. A company can begin with data it already has:
- electricity and district heating bills;
- fuel consumption records;
- data on company vehicles and business travel;
- basic information on goods transport;
- data on the most important raw materials and other materials;
- information on the quantities and types of waste generated.
It is best to collect data for one full year to account for seasonal changes in production, heating, cooling and transport.
A Simple Example
Imagine a small business with an office, a warehouse and three delivery vehicles.
Its initial calculation could include fuel consumed by the delivery vehicles and gas used for heating under Scope 1, electricity used in the office and warehouse under Scope 2, and outsourced transport, business travel, packaging and waste under Scope 3.
The calculation may show that the largest share of emissions does not come from electricity consumption but from delivery vehicles and outsourced transport.
In this case, replacing the lighting would not significantly change the company’s overall carbon footprint. Optimising delivery routes, reducing the number of partially loaded journeys, maintaining vehicles regularly or gradually replacing the least efficient vehicle could deliver better results.
The data therefore directs the company towards measures capable of producing a tangible impact.
The First Calculation Does Not Have to Be Perfect
A lack of complete data should not be a reason to give up. The first calculation will probably not cover every source of emissions, nor will all the data be equally precise.
It is important to record what has been included, which data has been used, where estimates have been made and which categories have not yet been covered. The methodology can then be improved from year to year.
Calculating a carbon footprint does not in itself reduce emissions. It shows where emissions originate, which sources the company can influence and which changes could deliver the greatest results.
For a small or medium-sized enterprise, the value of the first calculation therefore does not lie in obtaining a perfectly precise figure. Its value lies in transforming the carbon footprint from an abstract environmental topic into a concrete business indicator.
The Sustainable Economic Development and Employment Promotion Programme in Bosnia and Herzegovina (SEDEP), which supports vocational education and training, private sector development, and the digital and green transformation, is jointly funded by the German Federal Ministry for Economic Cooperation and Development (BMZ), the European Union (EU) and the Swiss Agency for Development and Cooperation (SDC).
