Impact of Inflation on Your Company’s Carbon Accounting


As the leader of a sustainability-focused manufacturing company, you’ve made conscious choices, like powering your factories with biogas from a local farm and opting for locally-produced, recycled, and organic cotton sweaters as employee Christmas gifts. However, the New Year’s wishes from your suppliers brought unwelcome news of price hikes to align with global inflation.
Yet, upon scrutinizing your carbon footprint, a puzzling trend emerges. Despite your efforts to curb emissions, they’re on the rise.

Why is that? It’s likely tied to the use of monetary emission factors in gauging your carbon impact.

If your calculations heavily rely on these monetary factors, your carbon footprint will increase, whether due to a deliberate decision or a period of inflation like the one we’re experiencing. This might discourage those with the best intentions of aligning with global carbon neutrality.

The Limitations of Monetary Emission Factors

Monetary emission factors provide an initial estimate of your carbon footprint by converting the amount spent on activities like R&D into a specific quantity of greenhouse gas emissions (e.g., kgCO2e/k€). While convenient due to the ready availability of monetary data, this approach becomes your adversary when striving to reduce your impact. Even if you take steps to cut the carbon footprint of your manufacturing activities, a carbon assessment based on monetary emission factors will consistently show an increase in emissions.

Use Real Emission Factors to Understand Your True Impact

To mitigate dependence on external factors like inflation, turn to average emission factors available in public or private databases like ADEME or Ecoinvent. These factors represent the average greenhouse gas quantity throughout a product or service’s lifecycle, offering a more accurate carbon account, such as the tCO2e generated by purchasing 200 tons of cotton for your staff’s Christmas sweaters.
The next step towards a more precise footprint involves utilizing real emission factors derived from your core business data. These include details about your company’s activities, such as the liters of gasoline consumed to transport a specific product, the weight of a cargo, or the distance it traveled. This method breaks down your carbon footprint at every stage, pinpointing emission hotspots and highlighting areas where costs, resource use, and overall impact can be optimized based on the reality of your purchases.

Real emission factors are indispensable for any company aiming to gain a clear picture of major emission sources and accurately track emission reduction. This is how businesses can effectively diminish their impact.

In summary, expenditure-based calculations work for a quick initial estimate. However, as soon as you take action, transitioning to the use of average emission factors becomes necessary. For pivotal categories like goods or services, the ultimate goal should be real and customized emission factors.

If you’re struggling to find a real emission factor aligned with your activity, Vermena´s custom emission factor feature can assist you. Talk to our expert.

Emission Factors 101

Monetary Emission Factors: Use the amount spent at each stage of your product, service, and business activities to calculate greenhouse gas emissions.
Average Emission Factors: Utilize an industrial average to calculate greenhouse gas emissions at each stage of your product, service, and business activities.

Custom/Real Emission Factors: Leverage your company’s lifecycle data to calculate greenhouse gas emissions at each stage of your product, service, and business activities.

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