Defining a Carbon Footprint

A carbon footprint measures the total greenhouse gases (GHGs) released by your activities, usually expressed in metric tons of carbon dioxide equivalent (CO2e). This includes carbon dioxide, methane, nitrous oxide, and other gases that trap heat in the atmosphere.

The Greenhouse Gas Protocol, the world’s most widely used accounting standard, breaks your footprint into three categories:

• Scope 1: Direct emissions. These come from sources your company owns or controls, such as fuel burned in company vehicles or boilers.

• Scope 2: Indirect energy emissions. These come from the electricity, steam, heating, or cooling you purchase. Even if you are not burning the fuel, your energy provider is.

• Scope 3: All other indirect emissions. This is the broadest category and includes everything from purchased goods and services, to shipping, to employee commuting, to the end-of-life treatment of products you sell.
  

For many organizations, Scope 3 makes up the majority of their footprint, often 75 to 90 percent of total emissions.

Why Measuring Matters for SMBs

At first glance, tracking a carbon footprint may sound like a task for large corporations with big budgets. In reality, SMBs are increasingly being asked to provide this data by customers, partners, and regulators.

• Supply chain requirements. Microsoft’s 2024 Environmental Sustainability Report states directly that it “has a role to play in bringing the global supply chain with us on our journey to net zero,” underscoring that suppliers must contribute emissions data. Similarly, Okta requires its strategic vendors to set science-based targets, since 99 percent of its emissions come from its value chain.

• Regulatory changes. The EU’s Corporate Sustainability Reporting Directive (CSRD) requires companies with EU operations to disclose full Scope 3 emissions. In California, SB 253 mandates companies with more than $1B in revenue to report emissions, which pulls suppliers into the process.

• Market expectations. PwC’s 2024 Voice of the Consumer Survey found that 80 percent of consumers are willing to pay more for sustainable products. Businesses without credible data risk losing contracts and trust.

Far from being “extra work,” knowing your footprint can open doors. It proves you are forward-thinking, makes your proposals more competitive, and often highlights cost-saving opportunities.

A Practical Example

Imagine a local logistics company.

• Its Scope 1 emissions include fuel from its delivery trucks.

• Its Scope 2 emissions come from the electricity used in its warehouses.

• Its Scope 3 emissions cover purchased packaging, employee commuting, and even emissions from outsourced contractors.

By running a simple greenhouse gas inventory, the company discovers its trucks account for 60 percent of emissions. That insight allows leadership to focus on upgrading routes and transitioning part of the fleet to hybrid or electric vehicles. The result: reduced emissions, lower fuel costs, and stronger positioning with clients who are under pressure to report supply chain impacts.

How to Measure Your Carbon Footprint

SMBs can take a structured approach to measurement:

1. Gather data. Collect fuel, electricity, travel, and purchasing records from the last year.

2. Apply a framework. Use the Greenhouse Gas Protocol or a tool that aligns with it.

3. Calculate emissions. Convert activity data into CO2e using recognized emission factors.

4. Set a baseline. Your first footprint becomes the benchmark for tracking progress over time.
   

Partnering with a sustainability consultant can streamline the process and ensure your calculations align with international standards.

The Bottom Line

Your carbon footprint is more than a number. It is a mirror reflecting how your business consumes resources and impacts the environment. For SMBs, measuring it is no longer optional. It is the foundation for compliance, competitiveness, and credibility.

The companies that succeed in the years ahead will not be those who ignore their footprint, but those who understand it, reduce it, and use the insights to innovate and grow.