The Importance of Carbon Footprint Estimation Boundaries

Abstract

Because of increasing concern about global climate change and carbon emissions as a causal factor, many companies and organizations are pursuing "carbon footprint" projects to estimate their own contributions to global climate change. Protocol definitions from carbon registries help organizations analyze their footprints. The scope of these protocols varies but generally suggests estimating only direct emissions and emissions from purchased energy, with less focus on supply chain emissions. In contrast approaches based on comprehensive environmental life-cycle assessment methods are available to track total emissions across the entire supply chain, and experience suggests that following narrowly defined estimation protocols will generally lead to large underestimates of carbon emissions for providing products and services. Direct emissions from an industry are, on average, only 14% of the total supply chain carbon emissions (often called Tier 1 emissions), and direct emissions plus industry energy inputs are, on average, only 26% of the total supply chain emissions (often called Tier 1 and 2 emissions). Without a full knowledge of their footprints, firms will be unable to pursue the most cost-effective carbon mitigation strategies. We suggest that firms use the screening-level analysis described here to set the bounds of their footprinting strategy to ensure that they do not ignore large sources of environmental effects across their supply chains. Such information can help firms pursue carbon and environmental emission mitigation projects not only within their own plants but also across their supply chain.