The 2015 Paris Agreement marked a paradigm shift surrounding climate change – a transition from individual to corporate responsibility. Before this accord, “carbon footprint generally referred to personal emissions. Now, however, corporations are held accountable for their greenhouse gas (GHG) emissions.
Carbon footprint and GHG emissions are related but distinct concepts. GHG emissions are the gasses that trap heat in the atmosphere, including carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gasses. Meanwhile, carbon footprint is the total greenhouse gas (GHG) emissions caused directly and indirectly by an individual, organization, event, or product throughout its entire lifecycle. Both are measured in carbon dioxide equivalents (CO2e).
196 parties, including the world’s leading governments, have pledged to reduce GHG emissions, aiming to limit global temperature increase to 1.5°C. This commitment requires global emissions to be dramatically cut, by 45% in 2030 and to net zero emissions by 2050.
Balancing growth and emissions reduction
Southeast Asia is among the most vulnerable to climate extremes, with extensive coastlines and densely populated low-lying areas. The urgency is heightened because the region’s economic development plans, often centered around sprawling megacities and expanding agricultural lands, contribute significantly to GHG emissions.
The economic threat of climate change is bigger for Southeast Asia, so the region risks falling short of its massive growth potential if the countries don’t balance development plans with emission reduction efforts. This challenge is particularly pressing in 2024 as market outlooks affirm Southeast Asia is well positioned for outperformance.
Sustainability should not be treated in isolation from business growth trajectories because businesses across all industries require and benefit from economic stability, social equity, poverty eradication, and healthy ecosystems. In the face of the global economic downturn, embracing a sustainable growth strategy is paramount, not a detour.
Southeast Asia’s largest economy, Indonesia, recently took a significant step by launching IDX Carbon, a carbon exchange market, in September 2023. The market incentivizes corporations to develop effective decarbonization plans through carbon caps and trade mechanisms.
The progress in the carbon market highlights the critical role of robust emission data and reporting, often still hindered by lack of access to data and insufficient reporting infrastructure.
Companies should calculate and disclose their emissions not just for compliance but also to take high-impact actions towards their business and net-zero goals. Carbon footprint data can unveil opportunities for improvement and potential cost savings, serve as a catalyst for innovation, and increase supply chain transparency and collaboration between stakeholders.
How can companies reduce their carbon footprint?
There are several initiatives to reduce corporate emissions, such as using energy-efficient tech, eco-friendly transport, cutting waste, building sustainable supply chains, investing in carbon offset projects, and exploring innovative technologies. However, a disorganized approach to these efforts may be ineffective. Here’s how companies can reduce their carbon footprint:
1. Calculate and establish GHG baseline
The first step for companies in their carbon reduction journey is to calculate and establish a GHG baseline. This involves utilizing tools like a GHG calculator to measure and quantify the total amount of greenhouse gasses emitted as a result of their operations. This includes emissions from various activities, such as energy consumption, transportation, production processes, and others. This baseline serves as a vital reference point, providing a clear starting measurement that can be compared to future emissions.
2. Assess next steps and plan reduction efforts
With the GHG baseline established, the next step is to assess and analyze the data. Companies need to evaluate baseline emissions to pinpoint specific areas for improvement. This assessment forms the basis for informed decision-making, so companies can prioritize reduction efforts based on their potential impact.
3. Recalculate GHG emissions after a set period of time
Companies must track the effectiveness of their carbon reduction initiatives over time. Regular recalculation of GHG emissions, conducted at predetermined intervals, is essential to measure progress accurately. This systematic approach ensures transparency and accountability to established reduction targets. It also enables companies to adjust their strategies based on updated insights and changing operational landscapes.