Businesses of all sizes can make an impact through climate action. As climate change continues to dominate global agendas, businesses are called to address their environmental impact through strategy development and reporting and transparency. While today’s regulations call for larger businesses to report their sustainability performance and their greenhouse gas (GHG) emissions, small businesses may also be affected by current and future reporting requirements. Small businesses that may be suppliers or customers to larger companies may also be impacted by regulations calling for transparency across the entire supply chain.
For small businesses, measuring GHG emissions can not only ease compliance and stakeholder relationships, but it can also be a critical first step in understanding and reducing their carbon footprint. Although small businesses may be limited in resources and tools compared to larger corporations, effective GHG measurement is still feasible and attainable.
Measuring GHG emissions is essential for sustainability and compliance with emerging regulations. Starting early allows small businesses to stay ahead of regulatory changes as sustainability reporting requirements begin to increase their scope and disclosures related to GHG emissions. Measurement also supports transparency and builds trust with stakeholders, including customers and investors who increasingly prefer sustainable brands and companies. This gives small businesses a competitive advantage in a business landscape that is increasingly pressured by demands from consumers and governments for more sustainable business practices.
Beyond compliance and transparency, measuring GHG emissions helps pave the way for effective sustainable strategy development and implementation. GHG accounting allows small businesses to quantify their contributions to climate change and improve their sustainability performance. By identifying sources of emissions, businesses can prioritize reduction efforts and minimize any harmful impact made on the environment and to society. Embracing a low-emissions way of doing business can even lower operational costs through energy efficient practices and technology.
Though individually small, small businesses, as a collective, can have a substantial impact on the environment, leading nations and industries closer to net-zero.
Before a small business can start measuring their emissions, it is important to first understand a foundational concept of GHG emissions accounting: Scope 1, Scope 2, and Scope 3.
Emissions are structured under three categories. Scope 1 consists of direct emissions from owned or controlled sources such as company vehicles or onsite fuel combustion. Indirect emissions on the other hand fall under Scope 2 and Scope 3. Scope 2 emissions are indirect emissions from purchased heat, electricity, or steam. And lastly, Scope 3 includes the rest of the indirect emissions from the company’s value chain, both upstream and downstream, such as supplier activities, employee commute and travel, and the transportation, distribution, and use of sold products.
For small businesses, measuring Scope 1 and Scope 2 first is often manageable, with Scope 3 added in the mix as capacity and expertise grow. By knowing the different kinds of emissions, small businesses will find it easier to sort their data and make the right calculations.
Measuring GHG emissions is a multi-step process that enables small businesses to understand their environmental impact and identify actionable ways to reduce it. When performing this activity, it is important to first define a scope and continuously improve and strengthen climate action as the years progress. There are also numerous tools and frameworks that exist to help small businesses measure emissions. The Greenhouse Gas Protocol is the most widely used standard, offering clear guidelines for accounting and reporting for each category.
The first step in measuring GHG emissions is determining which activities or processes to include in the assessment. Defining the scope ensures focus and clarity, especially for small businesses with limited resources. As mentioned before, starting with Scopes 1 and 2 provides a manageable entry point as the data can be easily accessible and measured. For Scope 3, this can be added as the business grows and builds more expertise or if regulations require. Yet to ease future reports and decarbonization initiatives, it is already good to start noting which categories under Scope 3 are most material to the business.
Once the scope is defined, the next step is to gather data from relevant sources. This data forms the foundation for calculating emissions. Use digital tools or spreadsheets to organize and store data. Keep records consistent and up to date for accuracy. Data can be sourced from utility bills, fuel receipts, and receipts and logs on purchases for different goods and services. Depending on the methodology used and the emission factors, units can be in the form of kilowatt-hours, quantity, miles, or even the amount spent on certain items.
Gathering data also entails engaging with different stakeholders. For example, interviews could be conducted with employees to learn more about commuting habits or work-from-home setups if in a remote or hybrid work environment. Asking suppliers as well about their emissions data can also help accurately measure the business’ own emissions.
In cases where precise data is unavailable, reasonable estimates based on industry benchmarks or past trends can be used.
After gathering and sorting data under their respective scopes and categories, it is time to convert these data into their emissions equivalent through using emission factors. These are standardized values that estimate the GHG impact of specific activities. For instance, the emissions factor for electricity depends on the energy mix in the region.
With data in hand, businesses can calculate their GHG emissions by multiplying their data with the right emission factor, converting activity data like kilowatt-hours of electricity or liters of fuel into its respective carbon dioxide equivalent (CO2e).
For example, a small café uses 10,000 kWh of electricity annually, and the local emission factor is 0.5 kg CO2e per kWh. The café’s Scope 2 emissions would then be calculated by multiplying 10,000kWh to 0.5 kg CO2e/kWh, resulting in 5,000 kg CO2e or 5 metric tons CO2e.
Once calculations are complete, small businesses should evaluate their emissions profile to understand where the most significant impacts lie. It is good to pinpoint the processes or operations contributing the most emissions. For example, is office energy use driving emissions, or are transportation and logistics the main culprits?
Businesses can also compare results against industry standards or similar businesses to assess how their business measures up. Through in-depth analysis, small businesses are able to prioritize areas for improvement and establish strategies such as switching to renewable energy, optimizing delivery routes, or reducing waste.
Transparency is key in sustainability efforts, and reporting GHG emissions allows businesses to demonstrate accountability to stakeholders. This also can support small businesses when complying with requirements asked from customers. Findings should be communicated to both external and internal stakeholders through sustainability reports, website disclosures, or marketing material. Sharing results with employees and management helps build awareness and foster a culture of sustainability.
Beyond compliance, sharing emissions data can enhance brand reputation, attract eco-conscious customers, and build trust with stakeholders. Even if reductions are still a work in progress, transparency demonstrates commitment.
Measuring GHG emissions is not a one-time activity but an ongoing process. Small businesses should revisit their emissions profiles regularly, especially as they adopt new practices, expand operations, or refine their measurement methods. By embedding GHG accounting into their operations, small businesses can effectively contribute to global climate goals while achieving long-term resilience and success.
Small businesses often face challenges in measuring emissions, such as limited expertise, lack of data, or time constraints. To overcome these hurdles, businesses can focus on the most significant emissions sources first and expand over time. Digital tools or working with sustainability experts and consultants can also simplify data collection and calculations while providing helpful insights on where they can make the most impact.
GHG emissions measurement is a practical and impactful step for small businesses striving to align with sustainability priorities. By adopting simple tools, leveraging available resources, and embedding environmental accountability into their operations, small businesses can play a pivotal role in the transition to a low-carbon economy.
At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization in its sustainability journey, reach out to us here or through hello@keslio.com
