Carbon footprint: monetary approach
Definition of the monetary approach to the carbon footprint
The monetary approach to carbon balance consists of estimating greenhouse gas (GHG) emissions using the company’s financial data and cash flows. this method is based on the expenses and costs related to the organization’s activities in order to deduct the associated emissions. it uses average emission factors for each type of expenditure to convert financial amounts into co2 equivalents.
Carbon footprint: methodology of the monetary approach
The methodology of the monetary approach to the carbon footprint is based on the use of the company’s financial cash flows. the main steps are as follows:
- Financial data collection: collect information on expenses and costs related to the company's activities
- Categorization of expenses: classify expenses by type (energy, transportation, purchases of goods and services, etc.).
- Application of emission factors: use average emission factors for each expenditure category to convert financial amounts to co2 equivalents.
- Calculation of total emissions: add the calculated emissions to obtain the total GHG emissions.
Carbon footprint: advantages and limitations of the monetary approach
The monetary approach to carrying out a carbon footprint offers several advantages:
- Ease of application: uses financial data and cash flows that are already available.
- Timeliness: allows for rapid assessment of emissions.
- Comparability: facilitates comparison across companies or industries by using standardized monetary values
This approach also has some limitations, such as:
- Limited accuracy: this method is less accurate than the physical approach because it relies on averages and estimates.
- Variability in emission factors: the factors may vary depending on the source and do not always reflect local or sectoral specificities.
- Lack of detail: the monetary approach does not allow for the precise identification of specific sources of emissions.
What is the physical approach to carbon footprint?
Carbon footprint: definition of the physical approach
The physical approach to the carbon footprint consists of directly measuring the quantities of resources consumed and waste produced by a company. this method includes the precise quantification of greenhouse gas (GHG) emissions generated by each activity, process, or product. the physical approach uses specific data such as fuel consumption, electricity use, miles driven, and the amount of raw materials used to determine the carbon footprint in a detailed and accurate way
Methodology of the physical approach to the carbon footprint
The physical approach to the carbon footprint follows a multi-step methodology. first of all, it is necessary to define the scopes of the analysis, including the sources of direct and indirect emissions (scopes 1, 2 and 3). next, it is necessary to collect precise data on the consumption of resources (energy, raw materials) and the company’s activities (transport, production). this data is then converted into GHG emissions using specific emission factors. finally, the results are analysed to identify the main sources of emissions and develop appropriate reduction strategies.
Carbon footprint: advantages and limitations of the physical approach
The physical approach to carbon footprint offers several advantages. it provides an accurate and detailed assessment of greenhouse gas emissions based on real, measurable data. this methodology makes it possible to clearly identify the sources of emissions and to implement specific actions to reduce them. however, this approach can be complex and time-consuming, requiring significant resources for data collection and analysis. finally, it may lack flexibility for companies with diversified activities or working in changing contexts.
How to choose the best approach for your business?
Choosing between the monetary and physical approaches to carbon footprint depends on the specific factors of each company. for businesses with limited resources and looking for a quick solution, the monetary approach may be more appropriate due to its simplicity and the use of existing financial data.
However, if a company needs a detailed and accurate analysis of emission sources to implement specific reduction actions, the physical approach is recommended.
This approach is more suitable for complex industrial sectors where the sources of emissions are varied. it is also essential to consider the company’s sustainability goals and regulatory requirements . a consultation with a carbon consultant can also help determine the most suitable approach for each organization.
Choosing between the monetary and physical approaches to carry out a carbon footprint depends on the specific needs of your company. the monetary approach is fast and uses existing financial data, while the physical approach offers an accurate and detailed analysis of emissions. by understanding these differences, you can select the most effective method to reduce your carbon footprint and achieve your sustainability goals.
