The carbon footprint: what it means and what it can do

That means a company’s or a person’s carbon footprint can be directly compared with that of other companies or people, providing a clear measure of their contribution to global warming. For a company, the carbon footprint comprises the emissions from its buildings, plants and vehicles, and also the emissions resulting from the production of the electricity and heat it uses. It also includes the emissions from upstream and downstream processes, e.g. resource extraction, purchased services, or the disposal of sold products.

Particularly for manufacturing companies, these upstream and downstream processes make up a significant portion of their carbon footprint. Calculating it is an elaborate process. “Knowing its size, however, helps companies raise awareness at all levels in their organizations and take targeted action to reduce it,” says Wolfgang Berger of the DFGE – Institute for Energy, Ecology and Economy. The DFGE was founded in 1999 as a spin-off of the Technical University of Munich. Its mission is to help businesses assess and improve their carbon footprints and sustainability ratings.

DFGE’s calculations show companies where most of their emissions are generated and thus which processes they most urgently need to change, and they provide motivation to choose suppliers who also produce with minimum emissions. Knowing the carbon footprint’s many small components in detail also provides for financial transparency, according to Berger. “For every idea they consider, the companies can determine exactly how much it will cost them to replace one process or input with another,” he says.

From a legal perspective, the carbon footprint is relevant for companies’ non-financial reporting. An EU directive obligates large listed companies to report on the sustainability of their business activities. “Their efforts to reduce CO₂ emissions all along their supply chains are putting pressure on their suppliers,” Berger says.  In the years ahead, ever smaller companies will gradually be required to publish sustainability reports. “As this reporting requirement spreads, the pressure will grow. Even suppliers outside the EU will not be able to resist it easily.”

The carbon footprint is not only of interest for transactions between companies. In the Netherlands, companies bidding for public construction contracts have to specify the carbon footprints of their projects in their proposals. In France, bids for photovoltaic systems submitted in response to public tenders must specify the size of the carbon footprint. Such requirements make CO₂ emissions a clear selection criterion along with the financial price. A company’s carbon footprint is also relevant for the EU taxonomy that classifies sustainable investments. “All these things raise the pressure at all levels of the global economic system and bring the issue of greenhouse gas emissions increasingly into focus,” Berger says.

A carbon footprint can be calculated for a photovoltaic system just as for any other product. The calculation takes the entire life cycle into account: How much is emitted during its production and transport, including that of the raw materials and individual components, how many emissions were generated during its use and for its disposal? “Determining a product’s carbon footprint is about as difficult as doing determining that of an entire company,” Berger says. Every step in the value chain has to be specified as precisely as possible. “A lot of allocation problems come up. Which truck delivered the raw materials? What share of this product can be assigned to research and development, marketing and sales?” Berger says in explaining the challenges. “In addition, there might be coupling effects, like when waste heat from production is used. That has to be offset.” Another problem for European companies is that the values for company or product footprints provided by non-European suppliers are very difficult to verify according to European standards. “The effort involved in such verification would be just as great as for determining a footprint, and we already have too few specialists for that in this country,” Berger says.  

Consumers are mainly interested in the carbon footprints of everyday items. The average for a bicycle is less than 200 kilograms, for a car several tons. Regional and seasonal food products often have relatively small carbon footprints, while a pineapple brought to Germany by air has a much larger footprint. For clothing, washing the item during its usage phase is responsible for a substantial part of its footprint. However, the carbon footprint is not always the only or the most significant indication of how environmentally or climate friendly a product is. For example, textiles require large amounts of land and water for the production of their raw material – cotton.