Carbon footprint reports: what your customers will check

More customers now ask suppliers for a carbon footprint, and more of them read it properly when it arrives. This guide covers what a report needs to include to stand up, and how to put it to work once you have one.

Not long ago, a customer asking about carbon wanted to know whether you measured it. Now they want to see the figures, and often more than one year of them. Our co-founder Jon Wragg saw a tender recently where sustainability made up 63% of the marks. The questions weren't about the product at all. They were "are you calculating carbon? Can you show me your calculations for two years?"

A carbon footprint report is how you answer that. Done well, it's one of the most useful documents a supplier can have, because it feeds tender answers, EcoVadis submissions, a carbon reduction plan and your own cost savings. Done badly, it's a number and a badge on your website.

What a carbon footprint report is

A carbon footprint report sets out the greenhouse gas emissions your business is responsible for over a set period, usually 12 months, in tonnes of carbon dioxide equivalent (tCO2e).

Carbon accounting is the process behind it. You collect activity data, such as energy use, fuel, travel and waste, and convert it into emissions using published conversion factors. The report is what you hand over at the end.

In the UK the usual method is the Greenhouse Gas Protocol's Corporate Standard, using the conversion factors the UK Government publishes each year. The government's own standard for carbon reduction plans on central government contracts asks for both.

Emissions are split into three scopes:

• Scope 1 covers emissions from sources you own or control, such as gas boilers, company vehicles and refrigerant leaks.
• Scope 2 covers the electricity, heat or steam you buy.
• Scope 3 covers everything else in your value chain, from the goods you buy to the transport, waste, business travel and commuting your business causes.

The point that catches a lot of suppliers out is that your footprint sits inside your customer's Scope 3. As Jon puts it, large businesses are "under increased legislation to reduce their footprint and you are their footprint if you're a supplier." Many smaller businesses have never been told that, so the first request comes as a surprise.

Why customers are asking now

Large organisations have been working on their own emissions for years. Jon was a chief sustainability officer before he set up Ltt, and in his experience big businesses have usually made good progress on Scope 1 and 2. The harder part is what they buy, and they can only reduce that with better information from suppliers than a questionnaire provides. When he was the one sending questionnaires out, a 15% response rate "would be seen as exceptional."

So buyers have moved from asking to scoring. Sustainability questions carry more weight in tenders, and the answers now need evidence behind them. Supply chain portals increasingly screen suppliers on the same basis.

Public sector contracts have their own rules on top. Suppliers bidding for central government contracts worth more than £5m a year need a carbon reduction plan under PPN 006, and that plan is built on a footprint. NHS suppliers have a separate set of requirements. Our guides to carbon reduction plans and PPN 006 cover both in more detail.

What a report needs to stand up

A buyer who knows what they're looking at will check more than the total. These are the things that make a report credible.

A clear boundary and period

Say which sites and which companies in the group are included, and which 12 months the report covers. Use the same period throughout. If a site or a subsidiary is left out, say so and explain why.

Scope 1 and 2 from real data

Gas, fuel and electricity figures should come from meter readings, invoices and fuel card records rather than estimates. They're the easiest numbers for a buyer to question and the easiest for you to evidence.

For electricity, the Greenhouse Gas Protocol asks for two figures. The location-based figure uses the average emissions of the grid you draw from. The market-based figure reflects the tariff you've bought. If you're on a renewable tariff, the market-based figure is where that shows.

The Scope 3 categories that matter

The Greenhouse Gas Protocol splits Scope 3 into 15 categories, and few suppliers need all of them in their first year. Start with the ones that are material to your business and the ones your customers ask about.

For central government contracts, PPN 006 names five: upstream transport and distribution, waste generated in operations, business travel, employee commuting, and downstream transport and distribution. For a manufacturer, purchased goods and services is often the largest category of all, even though it isn't on that list.

Where you've had to estimate, for example by using spend data rather than quantities, say so. A clearly labelled estimate is far more credible than a precise-looking number with nothing behind it.

A method someone else could follow

State the standard you used, which year's conversion factors you applied, where each dataset came from and any assumptions you made. The test is whether someone else could reproduce your figures from your records. If they couldn't, next year's report won't be comparable with this one.

A baseline year

Your baseline is the year everything else gets measured against, so choose one with reliable data that reflects normal trading. Set a rule for when you'll recalculate it, for example if you buy another business or improve your method, so that later comparisons stay fair.

An intensity figure

Your total emissions can rise simply because you've grown. An intensity figure, such as tonnes per £1m of turnover or per unit produced, shows whether the business is becoming more efficient as it grows. Jon makes the point that "as a business, you're expected to grow and continue to grow", so a buyer needs a way to tell growth apart from going backwards.

Two years side by side

Once you have a second year, show the two together and explain what moved. A buyer asking for two years of calculations wants the trend and the reasons behind it.

What you're doing about it

A footprint on its own tells a buyer where you are. Your actions tell them where you're heading. List what you've done, such as changing energy supplier or replacing an old compressor, and what each change saved.

This is what Jon calls the "which means what". Buyers score the outcome of an action far more readily than the fact that you took it.

Sign-off

Say who is responsible for the figures and who approved the report. PPN 006 requires a director to sign off a carbon reduction plan, and it's good practice for a footprint report too.

Why a badge isn't a report

Plenty of online calculators will take some data and give you back a figure and a badge for your website. Jon has seen what that looks like when a buyer examines it: a number in tonnes of CO2e and what "very much looks like an AI written report", with nothing traceable behind them. It showed no reductions and gave no guidance, and nobody from the provider had spoken to the business.

A report is unlikely to hold up if it has:

• one total with no breakdown by scope or source
• no data sources or conversion factors stated
• no baseline year
• figures that don't match your energy bills
• no actions and no results
• a method you couldn't repeat next year

A badge looks fine on a website, but a buyer assessing risk in their supply chain needs to see the working.

Putting the report to work

In tenders and questionnaires

When a question asks how you're reducing energy or emissions, answer with your figures and show where they are. Jon describes a tender a client of ours received from a customer they'd supplied for years. The sustainability section had gone from 3 to 5% of the marks to 30%, and under pretty much every question the buyer now asked "can you prove it?", including the site's energy use from 18 months earlier set against today's.

Our client could answer because their carbon report showed the same figures year on year. They could also tell the scorer which page and section to look at, which matters more than it sounds. "No scorer is ultimately going to read a 50, 60 page document," Jon says. "Guide them in the right place to where it is."

In your carbon reduction plan

A carbon reduction plan sets out your baseline and current emissions, your commitment to net zero and the measures you're taking to get there. The footprint is its foundation. If you already have a good footprint report, most of the hard work for the plan is done.

With your sales and marketing teams

Once you have real figures, make sure the people talking to customers know what they are and what they mean. Jon's advice is to brief sales properly rather than hand them a fact sheet. They'll answer customer questions better, and you cut the risk of someone making a claim the figures don't support.

To find savings

Your energy data shows where the money goes as well as the carbon. Jon warns against leaping to the obvious fix, though. Before pushing for solar panels or a renewable tariff, check whether you're tied into an energy contract and whether you can afford the investment. There may also be local grants you can use. What makes sense depends on the business. If you rent your premises, you may not control your energy supply at all.

Done sensibly, it pays back. "If you do it right, you'll always create an ROI from sustainability," Jon says.

Doing it yourself or getting help

Many smaller businesses can run their own footprint with the right software and some training. That's how we work with Vizibli, the SME carbon accounting platform we partner with. We set it up with you, then train your team to use it, so you're in charge of your own figures rather than relying on a consultant every year.

A spreadsheet can work too, provided it's traceable and it isn't one person's third job. The risk is continuity more than the tool. If the person who built it leaves, can anyone else produce next year's figures the same way?

Specialist help is worth having at a few points:

• your first baseline, when decisions about boundary and method will follow you for years
• working out how to handle Scope 3
• when a large contract or an EcoVadis rating depends on the figures
• when a customer asks for something you're not sure how to produce

Larger companies may also have legal duties to report energy and carbon, such as Streamlined Energy and Carbon Reporting (SECR) in the annual report. Those come with their own rules. This guide covers the report your customers ask you for.

If a customer has asked for your carbon figures and you're not sure where to start, book a call with us or see how we measure carbon with Vizibli.

Watch the full sessions: Is sustainability off the agenda or more commercially important than ever? with Alex Thornton, and Sustainability as a growth strategy with Go Green Now.