What a Corporate Carbon Footprint Is and Why It Matters

A corporate carbon footprint, usually shortened to CFO, is the quantity of greenhouse gases an organization emits and removes through its own operations over a defined period, expressed in tonnes of carbon dioxide equivalent. In Thailand the reference document is the TGO publication Requirements for Calculating and Reporting the Carbon Footprint of an Organization, now in its eighth printing and sixth revision (July 2022). This article walks through what that document says a CFO is, why it exists, and what it asks of an organization.

#Where the idea comes from

The requirements open by placing the CFO in an international context. Global warming is described as a threat to economies and livelihoods caused by economic activity and consumption that continuously releases greenhouse gases, and the international response is the UN Framework Convention on Climate Change, with its aim of keeping the rise in global temperature below 2 degrees Celsius, or carbon dioxide concentration below 450 parts per million relative to the pre-industrial era (TGO CFO Requirements, 2022, p.5). The document notes that such targets tend to flow down into national reduction or limitation targets, and that this led, from 2021, to measures for measuring, reporting and verifying emissions at every level, particularly at the organizational level, which is what a corporate carbon footprint is (TGO CFO Requirements, 2022, p.5).

The document defines CFO as a tool that shows the quantity of greenhouse gas emissions and removals arising from an organization's operating activities, so that industry can measure the gases from activities within its operational boundary in carbon dioxide equivalent and use the result to manage energy use and reduce emissions efficiently at the significant sources (TGO CFO Requirements, 2022, p.5). It also states that the requirements are aligned with international standards, being based on ISO 14064-1 (2018), the GHG Protocol (2001, 2004) and partly on ISO/TR 14069 (2013), adapted to the Thai context (TGO CFO Requirements, 2022, p.5).

#The five principles

Everything else in the requirements rests on five principles, listed in section 4 (TGO CFO Requirements, 2022, p.15):

• Relevance: select the sources, sinks, reservoirs, data and methods that fit the needs of the intended users.
• Completeness: include all relevant greenhouse gas emissions and removals.
• Consistency: make it possible to compare greenhouse gas data without contradiction, so figures are coherent, linked and comparable.
• Accuracy: reduce bias and uncertainty as far as practicable.
• Transparency: disclose enough appropriate greenhouse gas information for the intended users to make sound decisions.

These are not slogans. Later sections use them as tests. For example, the guidance on identifying significant indirect emissions asks the organization to apply Relevance by asking which indirect emissions must be assessed to meet the needs of the people who will use the data, whether customers, suppliers, investors, government or independent bodies (TGO CFO Requirements, 2022, p.81).

#Setting the organizational boundary

Section 5 describes designing an inventory in three main steps: define the organizational boundary, define the operational boundary, and calculate emissions and removals (TGO CFO Requirements, 2022, p.16). The organizational boundary decides which facilities count as yours. The requirements offer two approaches (TGO CFO Requirements, 2022, p.16):

• Control approach: the organization accounts for emissions and removals from systems it controls, either operationally (operational control) or financially (financial control).
• Equity share approach: the organization accounts for emissions and removals in proportion to its share of the joint venture or investment in the equipment or production unit.

An organization must pick one. The choice matters because it determines whether a jointly owned plant, a leased warehouse or a subsidiary appears in your inventory in full, in part, or not at all.

#Setting the reporting boundary

Within the organizational boundary, the reporting boundary decides which emissions are counted. The organization must define and document it, and identify sources and sinks that are direct (category 1), indirect from energy use (category 2) and other indirect (category 3) (TGO CFO Requirements, 2022, p.16).

Category 1, direct emissions and removals, is subdivided into stationary combustion, mobile combustion, direct process emissions, fugitive emissions and other releases, and direct emissions and removals from biomass such as soil and forests (TGO CFO Requirements, 2022, p.16). Category 2 covers electricity imported from outside for use within the organization and other imported energy such as steam, heat, cooling and compressed air (TGO CFO Requirements, 2022, p.17). Category 3 is everything else that results from the organization's activities but occurs outside its operational boundary; the organization may follow ISO 14064-1:2018 or the GHG Protocol, which divides these into 15 categories, from purchased goods and services through business travel and employee commuting to franchises and investments (TGO CFO Requirements, 2022, p.17).

There is an important nuance for category 3. The organization must identify all category 3 sources, but reports only those that are significant, and it must write its own criteria for significance following Appendix 12 (TGO CFO Requirements, 2022, p.19). Screening criteria the requirements suggest include whether the source is presumed large, whether the organization can monitor and reduce it, whether it exposes the organization to risk, whether the industry's own guidance treats it as significant, whether it comes from outsourcing a core activity, and whether it can motivate employees to take part in reductions (TGO CFO Requirements, 2022, p.20). If the organization chooses not to report a source, it must give reasons (TGO CFO Requirements, 2022, p.20).

For category 1 the requirements are explicit that emissions must be calculated by gas, naming carbon dioxide, methane, nitrous oxide, nitrogen trifluoride, sulphur hexafluoride and groups such as HFCs and PFCs, and reported in tonnes (or kilograms) of CO2 equivalent, with figures shown as whole numbers rounded as TGO specifies (TGO CFO Requirements, 2022, p.19).

#Why an organization does this

The introduction sets out the benefits from the organization's point of view. A footprint lets a business measure its greenhouse gases in carbon dioxide equivalent and use the result to set management approaches, reduce energy use and reduce emissions efficiently at significant sources. It also strengthens the capability of Thai operators to compete in global trade, and prepares them for the case where the state requires greenhouse gas reporting (TGO CFO Requirements, 2022, p.5). The document says its intended beneficiaries are private companies, public agencies, organizations applying to use the CFO label, and stakeholders who need clarity and consistency in quantification, monitoring, reporting and verification so that the inventory is credible and widely accepted (TGO CFO Requirements, 2022, p.5).

There is a further reason that becomes clear from section 10. An organization may decide to have its footprint verified, and verification exists to confirm that the reported emissions and removals are correct according to the five principles: relevance, completeness, consistency, accuracy and transparency (TGO CFO Requirements, 2022, p.34). In other words, a footprint done to the requirements is one that can be checked by an outsider, which is what turns an internal number into a claim others can rely on.

#What this means in practice

If you are starting a corporate footprint, the document's structure is a useful checklist. Decide the organizational boundary and record why. Map every facility's sources into categories 1, 2 and 3, and write down the significance criteria you used for category 3. Calculate by gas, convert with GWP, and keep the evidence. Then read the five principles again and ask whether an intended user could follow what you did. That is the standard a verifier will apply.

CarbonBiz is built around this structure: activities are recorded by scope with a seven-gas breakdown, significance can be scored per activity, and the TGO forms are generated from the same records, so the inventory and the report never drift apart.