Starting your journey to reduce emissions and save on energy costs

Every business, large and small, has an environmental impact. This is because most daily business activities – using electricity, disposing of waste, searching the internet, commuting to the office, sending packages – generate greenhouse gas (GHG) emissions. It can all add up fast and seem impossible to reduce. But you can start by calculating your company’s carbon footprint, or the sum of all emissions generated by your business activities. Then, with an understanding of how big your impact is, you can start taking steps to cut back and save money.

Companies of all sizes have to evaluate their environmental footprint and what they can do to reduce it. One simple strategy is to consider the four Rs:

1. Reduce energy consumption.
2. Purchase energy from renewable sources.
3. Realign business operations to save costs by installing more energy-efficient equipment, reducing waste and implementing cool roofing. These actions can also result in cost savings.
4. Remove unavoidable carbon emissions through use of offsets.

Achieving the goal of balancing carbon emissions with the amount removed, known as being carbon neutral, requires significant effort and dedication. The process however, starts the same way for any business, regardless the size: by assessing what contributes to a company’s environmental footprint.

Understanding your company’s carbon footprint

Your carbon footprint, also referred to as an “emissions footprint,” is all the carbon dioxide, methane and other greenhouse gases generated directly and indirectly by your company. The sources of emissions in your footprint fall into three categories called scopes:

• Scope 1: Includes emissions that occur directly from sources that the company owns or controls. These can result from running machinery, burning fuel to heat buildings and driving company vehicles.
• Scope 2: Includes emissions that occur through purchased electricity, steam, heat and cooling from a utility company.
• Scope 3: Includes emissions that occur up and down your value chain, such as business travel, waste disposal, employee commuting, purchased goods and services, transportation and distribution, investments, franchises, leased assets, and use of sold products. Scope 3 emissions typically makes up the largest portion of a company’s carbon footprint and is the hardest to tackle because it is affected by decisions made outside of the company.

This framework was developed by the Greenhouse Gas Protocol, the leading authority on GHG emissions accounting, and is the basis for calculating your carbon footprint.

How do you measure the size of your company’s carbon footprint?

Now that we know what makes up a company’s environmental footprint, the next question is: How do you measure it? According to a survey conducted by Bank of America, it turns out that 86% of its small business clients don’t know the answer to that question.

There are many tools to help measure your carbon footprint. The SME Climate Hub has one of them, offering a free calculator designed for small businesses to measure their direct and indirect emissions. The U.S. Environmental Protection Agency (EPA) also has a guide and calculator designed specifically for small businesses looking to take inventory of and estimate their annual emissions. Scope 1 and Scope 2 emissions tend to be more straightforward to measure than Scope 3 emissions – consider starting there and adding Scope 3 down the road.

After calculating your footprint, also consider having the data assured – meaning validated by a third party – through a vendor such as The Carbon Trust, which can then provide a statement of verification. This step is a best practice, as it helps confirm your calculations and gives investors, vendors, customers and employees confidence in the integrity of the data.

How do you reduce your emissions and energy costs?

Once you have calculated your emissions footprint, there are several ways to start reducing it.

Easy, low-cost steps include:

• Reducing energy consumption overall: Improving your energy performance isn’t just about choosing renewable energy. You can make significant strides by reducing the amount of energy your business uses. For example, you could replace lighting with low-energy alternatives like LEDs or seal any leaks causing HVAC systems to run inefficiently.
• Taking steps to reduce waste: Waste generates methane while it decays in landfills, contributing emissions that count toward your footprint. Some ways to reduce waste include removing single-use cups, plates and cutlery; defaulting to double-sided printing; starting a composting program; reusing materials; and even implementing a zero-waste policy. Although this last one may sound ambitious, minimizing waste can generate significant financial savings.² Setting stretch targets can help you focus on tackling the challenge.
• Implementing work-from-home days: Reduce emissions associated with commuting through work-from-home days. Also, encourage video meetings instead of in-person meetings when possible. Work-from-home days can also cut down on costs required to light, heat and cool your office.
• Benchmarking your performance: You can benchmark the performance of commercial buildings via the EPA’s Portfolio Manager, using a tool on the Energy Star website.

Setting goals and minimizing your carbon footprint

Setting goals and targets is the next step, helping you focus and measure progress. Determine what emissions scopes to include in your target and set a percentage reduction to work toward. You could also set short-term goals like switching to renewable energy. These targets should be milestones to bigger, longer-term goals as small businesses play an essential role in helping the US have emissions by 2030.³ According to the OECD, small and medium-sized businesses account for at least 50% of business sector GHG emissions.⁴  

With goals in place, start thinking about more systemic strategies to minimize emissions. Also, consider talking with other businesses to learn how they are approaching sustainability, or reach out to your local chamber of commerce or the U.S. Small Business Administration to see if they offer any programs or resources to help.

Systemic, higher-cost steps include:

• Transitioning to renewable energy: One of the most important strategies for reducing your carbon footprint is switching to renewable energy. You can do this in several ways, including through power purchase agreements which are long-term renewable energy contracts that can take many different forms depending on your location and business needs.
• Creating operating efficiencies: Implementing manufacturing and operational efficiency improvements can include installing low-carbon cooling, heating and ventilation systems as well as switching to electric cars and trucks. These activities also help promote the conversion to EVs.
• Taking supply chain actions: Include environmental and carbon footprint data in your supplier decisions or request that your suppliers set GHG emissions reduction targets.
• Reducing or optimizing business travel: This could involve anything from hosting a meeting virtually or over the phone instead of in person to taking a train or bus instead of flying or driving.
• Purchasing carbon offsets: Carbon offsets cancel out emissions by supporting emissions reductions elsewhere. You can buy offsets that support renewable energy projects, plant trees or distribute cleaner cooking stoves in developing countries. When buying carbon offsets, due diligence to ensure credibility is essential. One way to do this is by looking for certifications like Green-e.

How to bring employees along for the journey

To be successful in your carbon journey, employees must play a part. To help ensure they are, you can:

• Make colleagues at all levels accountable for contributing to your business’s success.
• Create a workplace incentive program that promotes the reduction of carbon emissions in employees’ everyday work lives, such as low-waste lunches and low-emissions transportation.
• Find ways to celebrate achievements along the way.
• Utilize the U.N. Climate Change Global Innovation Hub – a resource for employees to become involved in helping to create transformative innovations for a low-emissions future.

Other resources

You can find a deeper dive into the Greenhouse Gas Protocol on their website. Also, check out the SME Climate Hub and the 1.5°C Business Playbook, both of which are designed to help companies and organizations of all sizes align with a low-carbon future. These resources contain guidelines for companies to set targets, strategies and actions to help them achieve emissions reductions and associated cost savings.

¹ Deloitte, Workers of All Ages Cre Calling for Sustainability. Are You Answering?” November 28, 2023.

² National Waste Associates, “Changing Waste for Good,” 2024.

³ Reuters, “Comment: We’ll Only Beat Climate Change if We Help Small Businesses Cut Emissions ‒ and Fast,” March 16, 2023.

⁴ OECD, “Environmental Actions by Firm Size,” February 15, 2023.