Utkarsh Gaur ,
Assistant Manager(Sustainability Audits),
KPMG,
Climate change has taken the center stage and has become an ever-pressing global concern. Businesses worldwide are recognizing the importance of adopting sustainable practices. One of the most crucial aspects in the journey towards sustainability is achieving carbon neutrality or net-zero emissions. It is when a company balances/reduces its carbon emissions with carbon removal or offsetting efforts. However, what needs to be reduced is something that is required to be measured first. This is where carbon footprinting comes in, a process that quantifies the amount of greenhouse gases (GHGs) emitted by a company’s activities. By understanding their carbon footprint, businesses can create effective strategies to reduce emissions, offset unavoidable carbon, and, ultimately, achieve carbon neutrality or net-zero emissions.
What is Carbon Footprinting?
Carbon footprinting involves measuring the total greenhouse gas emissions caused by an organization’s operations, products, or services, typically measured in carbon dioxide equivalent (CO₂e) units. This measurement encompasses several types of GHGs, including CO₂, methane (CH₄), and nitrous oxide (N₂O), and can be broken down into three scopes:
An easier way to understand the three scopes is by mapping where the carbon is produced. Produced directly in the company premises becomes scope 1, produced elsewhere for a company’s energy needs become scope 2 and produced by the value chain for the company become scope 3. By understanding these scopes, businesses can identify the most significant sources of emissions and create targeted strategies to reduce them.
The Roadmap to Achieving Carbon Neutrality
The first step towards carbon neutrality is measuring your company’s carbon footprint. Conducting a thorough carbon audit allows you to understand where emissions are coming from and prioritize areas for reduction. Accurate data collection and reporting tools are essential for this step, including tools like the Greenhouse Gas (GHG) Protocol and ISO 14064 standards, which provide guidance for emissions accounting.
This data-driven approach ensures a clear starting point for reduction efforts and provides a baseline to measure progress over time.
Once a carbon footprint has been established, the next step is to set concrete emissions reduction targets. These goals should align with global standards, one of the most prominent and reputed one being the Science Based Target Initiative (SBTi). It aims to limit global warming to well below 2°C above pre-industrial levels, ideally to 1.5°C through scientific and logic backed achievable targets for companies. Through SBTi companies can ensure that their emissions reduction goals are consistent with climate science and international efforts.
With clear goals in place, the focus should be on implementing emission reduction initiatives. These initiatives may vary depending on the business sector and type of emissions, but common strategies include:
Energy Efficiency: Investing in energy-efficient technologies, such as LED lighting, smart energy management systems, and upgrading machinery, can lead to significant reductions in energy consumption.
Renewable Energy: Transitioning to renewable energy sources, such as wind, solar, and hydropower, can greatly reduce Scope 2 emissions.
Sustainable Supply Chains: Working with suppliers to reduce their carbon footprints can have a substantial impact on Scope 3 emissions. This may involve sourcing materials from sustainable suppliers, optimizing transportation logistics, or investing in circular economy practices.
Innovating products: Companies can work towards developing eco-labeled products that incorporate aspects of reduced climate footprint in their overall production and consumption to tackle a products embedded emissions.
Employee Engagement: Encouraging employees to adopt more sustainable practices, such as remote working, eco-friendly commuting, or waste reduction initiatives, can reduce indirect emissions.
Even after implementing reduction strategies, some emissions may remain unavoidable. To achieve carbon neutrality, businesses can offset these emissions by investing in carbon offset projects. These projects aim to reduce or remove an equivalent amount of CO₂ from the atmosphere. Common types of carbon offset initiatives include:
Reforestation and Afforestation: Planting trees to absorb CO₂.
Carbon Capture and Storage (CCS): Technologies that capture carbon emissions and store them underground.
Carbon Credits: Organizations can purchase equivalent amounts of carbon credits from verified projects registered on international forums such as the GOLD Standard or Verra.
It’s important for businesses to choose credible offset projects, certified by recognized standards such as the Verified Carbon Standard (VCS), to ensure the integrity and impact of their efforts.
Transparency is essential to building trust with stakeholders, including customers, investors, and regulators. Businesses should regularly report their carbon emissions, reduction efforts, and progress towards carbon neutrality. Many companies now include sustainability reports as part of their annual financial statements, aligning with frameworks such as the IFRS 1 and IFRS 2 under the aegis of ISSB.
Effective communication of sustainability efforts can also enhance a company’s reputation, attract environmentally-conscious customers, and boost employee morale.
Achieving carbon neutrality is not a one-time event, but an ongoing process. As technologies evolve and new sustainability solutions emerge, businesses should remain committed to innovation and continuous improvement.
In addition, businesses should periodically review and adjust their emissions reduction goals to reflect the latest scientific insights and industry best practices.
The Benefits of Carbon Neutrality
While achieving carbon neutrality requires investment and long-term commitment, the benefits far outweigh the costs. Some of the key advantages include:
Enhanced Brand Reputation: As consumers become more environmentally conscious, businesses that demonstrate leadership in sustainability will likely attract more customers and foster brand loyalty.
Regulatory Compliance: Governments around the world are increasingly enacting stricter environmental regulations. Achieving carbon neutrality positions businesses ahead of regulatory changes and reduces the risk of future fines or penalties.
Cost Savings: Energy efficiency measures and waste reduction initiatives often result in cost savings over time, providing a financial return on sustainability investments.
Resilience to Climate Risks: By reducing carbon emissions and innovating products, businesses can mitigate their impact on climate change and enhance their resilience to its potential disruptions, such as supply chain interruptions and resource scarcity.
Conclusion
Harnessing the power of carbon footprinting is essential for businesses that aim to achieve carbon neutrality and contribute to a sustainable future. By accurately measuring emissions, setting ambitious reduction targets, implementing effective strategies, and investing in carbon offsets, companies can not only reduce their environmental impact but also position themselves as leaders in the green economy. As climate awareness grows, the pursuit of carbon neutrality will become not just a responsibility, but a competitive advantage for businesses worldwide.
The Journey Into Industry
Utkarsh Gaur is a skilled sustainability professional specializing in ESG strategy, climate risk assessment, and corporate sustainability reporting. Currently, he leads sustainability audits for German companies as a subject matter expert with KPMG. He has previously worked on various sustainability initiatives at Sterlite Technologies Limited, where he managed carbon and energy portfolios, developed eco-label methodologies, and built GHG inventories. He has extensive experience in ESG due diligence, stakeholder engagement, and sustainability audits.
Previously, Utkarsh worked at CRISIL on ESG scoring and at Ernst & Young (EY), where he developed sustainability roadmaps and conducted GHG accounting. He holds an MBA in Sustainability from TERI School of Advanced Studies and a B.Sc. in Economics from Symbiosis International.
With a strong foundation in global sustainability frameworks (GRI, SASB, TCFD), Utkarsh is passionate about driving sustainable business practices and fostering resilient strategies for organizations. He is based in New Delhi, India.
