Carbon footprint and it’s benefits for businesses

The 2020 Law on Environmental Protection, together with the Government Decree 06/2022/ND-CP, and Decision 01/2022/QD-TTg have identified 1,912 greenhouse gas (GHG) emitters, who must carry out a greenhouse gas inventory from 2025 (for the base year 2024 onwards) in Viet Nam. Since 2006, there have been 13 countries and territories around the world implementing voluntary carbon footprint labeling programs on consumer products[1]. On 14 July 2021, the European Commission adopted the Carbon Border Adjustment Mechanism (CBAM), which requires EU businesses, who is importing goods, to disclose their imported product’s emissions, as well as purchase and deliver the corresponding amount of CBAM certificates each year[2]. Therefore, it is necessary to adapt and implement carbon footprinting, which brings many benefits to businesses as well as consumers in Vietnam.

Carbon footprint describes the total emissions of carbon dioxide (CO2) and other GHGs of an individual, product, or organization (in tonnes of CO2 equivalent). However, carbon footprint has different definitions and calculation methodologies for each scale.

For an individual, carbon footprint includes all emissions from daily activities, for example, from product usage, electricity usage, transport, and diet. There are many online tools for individuals to calculate their footprint by answering a simple survey (such as the WWF tool[3]). The average carbon footprint of a person in the world is about over 4 tons of CO2 equivalent per year[4]. The results from such tools will help users determine their impact on the environment and change their lifestyle to be more environmentally friendly. Some tools even offer an option for users to offset their footprint by investing in GHG reduction or absorption projects.

For a product, the carbon footprint will include all of the product’s emissions, starting from raw materials, manufacturing, transportation, usage, and disposal, also known as cradle to grave[5]. To calculate a product’s footprint, experts will often use the Life Cycle Assessment (LCA) approach, which estimates the amount of emission in each process of the product’s life cycle, based on international standards such as ISO 14040: 2006. Businesses globally are heading toward publicizing their carbon footprints on the product packaging, to increase transparency, competition and help consumers to choose products with low environmental impact. In addition, the carbon footprint is a standard that can be easily compared between different products, so it will help combat the “Greenwashing”[6] phenomena.

On a large scale, such as corporate or national, the carbon footprint is equal to GHG inventory/ identifying and quantifying key emissions sources. For corporate, the methodology often used for calculating carbon footprint is The Greenhouse Gas Protocol’s Corporate Standard[7], while the country can use the Intergovernmental Panel on Climate Change (IPCC)’s GHG Inventory Guideline[8]. For businesses, emissions will include scope 1 (direct emissions from the entity’s activities), scope 2 (emissions from the use of electricity and heat purchased from other sources), and scope 3 (other emissions, not directly owned or controlled by the entity). The purpose of this classification of scope is to avoid double counting of emissions when preparing national and sectoral GHG inventories.

Carbon footprint calculation can have many benefits for businesses. The identification and quantification of emission sources will help businesses manage and decide the most effective and economical emission reduction measures. Disclosing carbon footprint data will also improve the image, competitiveness, and transparency of businesses. With the market trend favoring environmentally friendly products/businesses, the demand for information on carbon footprint will gradually increase from both consumers and from investors. In addition, carbon footprint will become a requirement for entering international markets.

According to The Law on Environmental Protection 2020, the GHG inventory will become mandatory for nearly 2,000 businesses in Viet Nam. Moreover, Article 139 provides the promotion of the organization and development of the domestic carbon market. Businesses that have adopted and/or implemented carbon footprints or GHG inventories will be ready for these regulations and will have an advantage when participating in the new national carbon market.

In addition to a rigorous methodology, carbon-footprint assessment, especially for businesses, requires data that is certain, complete, accurate, consistent, and transparent. The collected data then requires experts, who have a deep understanding of the product, supply chain, and operations of the entity to analyze and evaluate. Then, recommendations on improving the process and data can be made, and corresponding measures and targets to reduce GHG emissions can be provided. Currently, VNEEC has carried out carbon footprint calculations for many organizations, businesses, and investment portfolios with highly respected results.

Duong Anh Dung_VNEEC

Sources:

[1] Data from Asian carbon footprint network report (2017)

[2] https://www.euronews.com/green/2021/07/20/france-s-new-climate-law-has-just-been-approved-so-why-are-activists-so-unimpressed

[3] https://footprint.wwf.org . uk / # /

[4] https://www.nature.org/en-us/get-involved/how-to-help/carbon-footprint-calculator/

[5] https://ghgprotocol.org/product-standard

[6] Greenwashing” is when a company spends most of its resources on green advertising rather than doing actual activities that help reduce its environmental impact.

[7] https://ghgprotocol.org/corporate-standard

[8] https://www.ipcc.ch/report/2006-ipcc-guidelines-for-national-greenhouse-gas-inventories/