Business Insider

What is a carbon footprint & why does it matter to my business?

Melissa Raby, a Ferguson author

by Kelly Thompson


Determining the impact your business has on the environment can be a complicated task, but we’re here to help. Let’s start by providing an overview of what a carbon footprint is and then explain the benefit your business can see by calculating it.

What is a carbon footprint?

Because of the technical nature of carbon footprinting, we’ll start by defining some common terms that will be used throughout:


  • Carbon footprint: The best estimate of the total amount of greenhouse gases produced to directly and indirectly build and operate a product, business, household, etc.
  • Greenhouse gases or GHG: What is measured when calculating your carbon footprint. These are gases that make the planet warmer by trapping heat in the atmosphere.
    • Carbon dioxide or CO2 occurs when fossil fuels are burned and accounts for the vast majority of U.S. emissions.
    • Methane or CH4 mainly comes from agriculture and livestock as well as landfill sites.
    • Nitrous oxide or N2O is about 300 times more potent than CO2 but is emitted in smaller quantities from farming and refrigerants.
    • Fluorinated gases such as hydrofluorocarbons or HFCs, which are used in air conditioning, and sulfur hexafluoride or SF4 are also very potent and have a high global warming potential.


According to the Environmental Protection Agency, or EPA, in 2015 the largest source of greenhouse gas emissions in the United States are from electricity production. This is due to the fact that most of our electricity comes from burning fossil fuels like coal and natural gas. The next largest contributor is transportation, which comes from planes, trains, and automobiles. And ships. The third highest producer of GHG is industry, which is from burning fossil fuels for energy and producing goods. In summary, the largest producers of GHG emissions are all things that we can directly control and reduce if we make even small changes to the way we do business.

Photo credit: The United States Environmental Protection Agency


Now that we got that out of the way, on to how to calculate your carbon footprint.

The three scopes of GHG emissions

The Greenhouse Gas Protocol categorizes GHG emissions into three scopes which represent how the gases are emitted and how much you can control each:

Scope 1 is defined as direct GHG emissions that are controlled by the company. This includes fuel consumption (heating, process equipment, and vehicles), manufacturing, refrigerant systems, on-site waste facilities and fugitive emissions.

Scope 2 is defined as indirect GHG emissions that result from purchased electricity, heat, or steam used to power the facility’s lighting, HVAC equipment, water heaters and the like.

Scope 3 is defined as indirect GHG emissions that a company can influence but does not control. Things that fall into this category are transporting raw materials to make your product, business travel, employees commuting to work in vehicles not owned by the company, and transportation of purchased fuels. It is often the largest scope and hardest to quantify.

Photo credit: Greenhouse Gas Protocol


There are many great carbon footprint calculators out there that will give you a head start on understanding your environmental impact. Before jumping in, you’ll need your monthly utility bills for natural gas, electricity, oil and/or propane as well as some general knowledge of your business’ consumption habits.

The CDP, formerly the Carbon Disclosure Project, is a comprehensive reporting tool that over 5,600 companies across the globe use to input their numbers, calculate their carbon footprint, and are then compared to like organizations. If you’re looking for a quick estimate, the offers a simplified business carbon footprint calculator that uses data that you provide to assess the footprint of the space. Once you have your carbon footprint, the EPA’s Greenhouse Gas Equivalent Calculator is a fun way to illustrate the impact you made. For example, say you bought a hybrid and it saves you 1,040 gallons of gas a year. Did you know that is equal to the CO2 emissions from swapping out 328 incandescent lamps to energy efficient LED bulbs or the carbon sequestered by 8.7 acres of U.S. forests in one year? Pretty interesting, right?

Now the big question:

Why should my business care about its carbon footprint?

  1. My favorite answer is that carbon footprinting will benchmark your current consumption and helps you put plans in place to reduce it over time. Remember the total cost of ownership article where we showed that using environmentally preferable products lower your utility bills? Reducing your carbon footprint means saving money.
  2. Carbon footprinting can help identify problems. For example, when looking at your electricity bills to perform these calculations, you see that one month your consumption skyrocketed and never returned to normal. Now you can investigate to find the culprit and correct it, again saving money.
  3. Does your company have a Corporate Social Responsibility or CSR Report or market that you are “green?” If so, understanding your carbon footprint will allow you to quantify your reduction measures and make your reporting more robust.
  4. More and more customers are requesting carbon footprint numbers from the businesses they work with. In addition to helping them calculate their own Scope 3 emissions, they use these numbers and the goals you’ve set to reduce your impact to decide who to work with.

So now that you know what a carbon footprint is, guidelines on how to calculate it, and why your business should care, it’s time to run your numbers. Good luck.

Melissa Raby, a Ferguson author
Kelly Thompson

Kelly Thompson is LEED® Green Associate accredited, has worked in sustainability since 2011, and was a former committee Chair for the San Diego USGBC. She has published numerous articles ranging from green landscaping to conservation tips for apartment communities. Kelly has managed utility rebate and lighting audit programs, as well as participated in various environmental projects such as carbon footprinting, LEED building certification, and corporate social responsibility reporting.