How to Reduce Your Carbon Footprint in Business

What Is a Carbon Footprint?

The Nature Conservancy defined carbon footprint as "the total amount of greenhouse gases (including carbon dioxide and methane) that are generated by our actions." Greenhouse gas emissions come from wide-ranging sources, including the cars we drive, the food we eat, and the energy used to power our homes.

United Nations data shows fossil fuels like gasoline and coal are the biggest drivers of climate change, accounting for 90 percent of carbon dioxide emissions. While individuals are responsible for many of those emissions, organizations make a detrimental impact. For instance, the Environmental Protection Agency (EPA) noted that, when counting electricity use, industry and agriculture generated 40 percent of U.S. emissions in 2022.

If action isn't taken, greenhouse gas emissions will further exacerbate climate change and its downstream effects — rising sea levels, intense heat, and raging wildfires, to name a few. The insurance firm Zurich outlined how those challenges will affect businesses, with extreme weather jeopardizing organizational infrastructure and severe drought damaging crops throughout the agricultural sector.

Addressing climate change requires business leaders to consider not just profits, but also how their operations impact people and the environment. Reducing their carbon footprints will play a role — but first, they must measure the size and scope of their emissions.
 

How to Measure Your Business's Carbon Footprint

So many factors go into an organization's carbon footprint that measuring it can seem like a tall task. To simplify this process, the EPA provides a calculator for analyzing greenhouse gas emissions, with metrics divided into three categories:

• Scope 1 emissions are produced by organizations directly. They include fuels burned on-site, fleet vehicles, and air conditioning systems.
• Scope 2 emissions come from third-party energy sources, such as electricity and natural gas purchased from power companies.
• Scope 3 emissions are generated by indirect sources like business travel, daily commutes, and materials purchased from suppliers.

The EPA's emissions calculator also considers carbon offsets and other actions that reduce carbon footprints. According to TechTarget, common offsets include planting trees, using renewable energy, and sequestration — or removing carbon from the atmosphere and storing it in physical locations.
 

Ways to Reduce the Carbon Footprint of Your Business

By analyzing their direct and indirect emissions, businesses can create a plan for reducing their carbon footprints. Here are four opportunities for doing just that:
 

1. Prioritize Energy Efficiency Throughout Your Business

Businesses wanting to limit their greenhouse gas emissions can start by making energy efficiency part of the company culture. Energy Star offers guides for organizations in various economic sectors wanting to take common-sense steps toward efficiency, such as these ideas for small and medium manufacturing firms:

• Continually maintain manufacturing and HVAC systems to operate at peak performance.
• Limit the amount of time that machinery idles to eliminate energy waste.
• Ensure pipes and machinery are free of leaks causing unnecessary energy use.

Organizations can also employ environmental, social, and governance (ESG) reporting tools to develop and monitor eco-friendly strategies. According to Sustainability Magazine, these systems provide data needed to optimize supply chains, measure carbon emissions, devise plans for transitioning from fossil fuels, and more.
 

2. Use Sustainable Energy Sources

Solar panels are becoming increasingly affordable, making them an ideal option for businesses wanting to reduce their carbon footprints and monthly energy bills. In fact, a CNET article highlighted how solar panel costs have been cut in half during the last 10 years. Moreover, organizations don't have to go it alone when switching to renewables — the EPA offers Green Power Partnerships to organizations wanting to limit their environmental impacts by using wind, geothermal, and other clean energy sources.

Adding renewable energy sources to a structure isn't the only opportunity to reduce greenhouse gas emissions. Rare, a videogame studio owned by Microsoft, recently constructed a facility using environmentally friendly materials and design principles that curtail energy use, according to VGC. All energy comes from solar power generated on-site, contributing to its LEED certification as a "healthy, highly efficient, and cost-saving" facility.
 

3. Choose Suppliers Committed to Sustainability

Comprehensive strategies for reducing carbon footprints include partnering with suppliers who share an organization's vision for sustainability. So, it's important to verify each link in the supply chain follows environmentally friendly practices when sourcing, producing, and disposing of materials.

Toward that end, SAP identified three keys for developing sustainable supply chains:

• Green supply chains minimize waste found in each production point, from designing and manufacturing products to winding down a product's lifecycle.
• Transparent supply chains emphasize clarity and honesty with the public about ethical material sourcing, supplier selection, and manufacturing processes.
• Circular supply chains avoid waste by ensuring old and unused products are "disassembled or reduced to their raw material form" to make new products.

Circular supply chains help businesses achieve more than sustainable practices, as they also open doors to overlooked market opportunities. For instance, the World Economic Forum reported that Philips has made circular processes central to its electronics brand, with these products and services expected to account for 25 percent of its revenue by 2025.
 

4. Keep Business Travel to a Minimum

While the EPA outlined three scopes for carbon emissions, the Financial Times has covered the emergence of scope 4, where companies report emissions they have avoided. This scope includes the actions taken to reduce carbon footprints, such as limiting business air travel.

Our World in Data reported that air travel has caused 4 percent of post-industrial warming, and that percentage will likely increase due to rising demand among travelers and the airline industry's lagging adoption of low-carbon fuel. Reversing this trend requires organizations to reconsider their approach to business travel. Solutions from Fast Company include instituting a "virtual-first policy" for meetings to avoid unnecessary flights and traveling by rail instead of air whenever possible.
 

Expand Your Eco-Friendly Business Knowledge

While each tactic presented here can help with reducing carbon footprints, developing an overarching ESG strategy can maximize your impact. Employers use these strategies to commit to environmental and social justice, and they're becoming commonplace, as a 2022 survey indicated that 90 percent of companies are creating or already have them.

If you're interested in overseeing ESG improvements, consider pursuing your Sustainable Environmental, Social, and Governance Leadership Graduate Certificate at the University of Minnesota. The in-person program imparts expertise at the intersection of public policy, sustainability, and business, preparing you to lead initiatives that promote environmental and social justice during your career.

Developed through a collaboration between the Carlson School of Management, Humphrey School of Public Affairs, and Institute on the Environment, this program includes multidisciplinary courses that provide skills valued across job sectors. During each course, our expert faculty members teach proven strategies for addressing the climate challenges faced by local and global organizations. Request information today to learn more.