ESG

Your Corporate Footprint: How Can You Understand It and Reduce Its Impact?

You’ll probably have noticed that the term “corporate footprint” is becoming increasingly prevalent. As environmental issues grow in importance for businesses in all sectors, your corporate footprint has become an essential consideration.

Increasing recognition and corporate accountability around environmental, social and governance (ESG) issues have put environmental concerns firmly on the board agenda. Commercial concerns about long-term viability, coupled with altruistic desires to manage their societal impact, are among the issues motivating boards to prioritise environmental sustainability.

And while tackling climate change is imperative — and can deliver significant opportunities for businesses — it’s not without its challenges. Even getting a clear picture of your company footprint can be difficult if you don’t have a comprehensive overview of your organisation’s operations.

 

What Is a Corporate Footprint?

Your corporate footprint relates to the impact your organisation has on the environment. It is sometimes termed a company carbon footprint, environmental footprint, ecological footprint or business footprint, although there are subtle differences between them.

It is not surprising that companies are often bemused by the varying terms; What is meant by environmental footprint, for instance, and how does it differ from a company’s carbon footprint?

A company’s carbon footprint is explicitly concerned with the greenhouse gases a person or organisation is responsible for. Carbon Trust states that “A carbon footprint measures the total greenhouse gas emissions caused directly and indirectly by a person, organisation, event or product.”

An ecological footprint tends to refer to the total resources people or entities consume, compared to the land and water area needed to replace those resources. A company footprint can relate to all these matters, looking at the overall impact an organisation has on its environment.

 

Why Are Corporate Carbon Footprints Becoming Increasingly Important?

growing number of corporates are vocal about their commitment to cutting their carbon footprints. What is driving this? There are several motivating factors.

Reporting around sustainability and other environmental issues are increasingly mandated.

Investors are becoming ever more vocal about their expectations on environmental, social and governance (ESG) factors. And with growing numbers of third parties publishing ESG scores and ratings, your performance is transparent and accessible, making it easier for shareholders to consider environmental concerns when making decisions.

When it comes to ecological and other corporate social responsibility (CSR) matters, consumers vote with their wallets. A JP Morgan report from March 2021 found evidence of a “rising collective consciousness of sustainability among consumers” that is “influencing more forceful strategic choices by companies.”

The negative reputational implications of poor environmental performance are well documented — companies behind some of the world’s worst ecological disasters have struggled to regain their reputations after that.

While all these motivators may seem more “stick” than “carrot,” there are also positive reasons for tackling your corporate footprint. There is value in your environmental performance beyond pure regulatory requirements or potential consumer/investor action.

You can use the data obtained by calculating your corporate carbon footprint to support strategic decisions, ensuring your strategies around sustainability are based on solid intelligence. This might include decisions on your supply chain, your ESG objectives and how you plan to measure progress against them.

Your initial motivation to improve environmental performance and your corporate footprint may be to avoid the risks – but you shouldn’t ignore the opportunities.

 

How Do You Measure Your Corporate Footprint?

Once you’ve identified the need to monitor and manage your corporate footprint, what steps should you take next? A logical start point is to decide how to calculate a company’s carbon footprint for your business. What is the best practice here: how do companies measure their carbon footprint?

A footprint of a different nature is a prerequisite if you want to calculate your organisation’s carbon footprint accurately; you need a clear view of your entire organisation — all its entities and subsidiaries.

If you’re a global business, your legal entities will be geographically diverse, and without sufficient oversight, can pose a variety of risks, including risks relating to your environmental performance.

Understanding the current state of your environmental strategies across your entities is vital if you want to manage your company’s impact. But if you don’t have “feet on the ground” throughout all your operating countries, how can you achieve this?

Step 1 is to gain a comprehensive picture of your organisation: know where you operate, and any risks your operations in each location pose to your environmental goals.

Step 2: understand your energy usage – this is vital to monitoring and reducing your carbon footprint. What does your organisation use in terms of electricity, gas and water? Do you consider sustainability in your energy purchasing decisions?

Step 3 should be to review any environmental impacts of your operations. Understand the implications of your business activities; is your organisation a potential polluter? Could you reduce the amount of waste your operations generate?

Step 4 is to get a handle on business travel. Less of an issue over the last year, of course, but in usual times, travel is one of an organisation’s most significant potential pollutants. Consider both commuting to your locations and staff travel when calculating your impact here.

Gathering management information from across your organisation is the precursor to all of this activity. That is regardless of whether you are scouring finance systems for energy billing, talking to your corporate travel team about typical business travel or liaising with local teams to build an accurate snapshot of your global operations.

 

7 Ways To Reduce the Carbon Footprint of Your Business

Now you’ve calculated your corporate footprint. The results may have come as a shock — or you may have felt a sense of relief at your current performance. Whatever the findings, there’s doubtless more you can do to improve your environmental performance. Our seven suggested actions are:

  1. Use your performance measurement to determine strategic priorities around environmental performance.
  2. Take steps to reduce waste. The US EPA has calculated that 42% of greenhouse gas emissions in the US arise from business operations. A zero-waste policy may sound ambitious but setting stretch targets will focus corporate minds on tackling the challenge.
  3. Commit to renewables. While “clean energy” may be easier to achieve for some sectors than others, taking steps to source more energy via renewable means is something every organisation can get behind.
  4. Reduce energy consumption overall. Improving your energy performance isn’t just about choosing lower-emission options; you can make huge strides by prioritising a reduction in energy use, introducing low-energy lighting or increasing your data and comms room temperature.
  5. Reduce business travel. As above, getting a steer on the size of this issue for your organisation is a must for businesses implementing corporate initiatives to reduce carbon footprints.
  6. Get all your employees on board. You need to engage your employees if you want a workforce that firmly supports your environmental goals. Make colleagues at all levels accountable for contributing to the organisation’s ESG credentials.
  7. Take note of the prevailing winds. The Wall Street Journal notes that political, natural or economic events can cause companies to revisit their strategies. This is as true of your company’s carbon footprint as it is of other business strategies. Use external stimuli as ways to identify potential risks and spot opportunities to improve your environmental performance and as lessons in what to do — and not to do.

 

Overcoming the Challenges When Reducing Your Corporate Footprint

As ESG continues its evolution from corporate afterthought to strategic imperative, pressure mounts on organisations to operationalise their ESG goals.

But, as we’ve mentioned earlier,  data and the challenge of achieving a comprehensive view of your organisation’s environmental performance can be sticking points here. Never mind reducing your company’s carbon footprint; the challenges inherent in understanding it in the first place can be enough to forestall businesses’ attempts to turn environmental sustainability objectives into action.

By helping you to assess your current environmental performance, track your progress, benchmark your approach and monitor news and stakeholder sentiment, Diligent’s ESG Solutions can support your initiatives to reduce your corporate carbon footprint.

Discover how you could better comply with ESG standards and regulations, evaluate your risk controls, benchmark your environmental governance practices and use our solutions to support you in educating leadership on new frameworks and developments. If you are committed to reducing your corporate footprint, you can visit our dedicated ESG solutions web hub to discover more.

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