Watch this video for a quick introduction to building a carbon foundation and why it’s essential for reducing your emissions.

Did you know that for many organisations, up to 90% of emissions come from indirect sources? To effectively reduce your carbon footprint, you need to know exactly where those emissions are coming from. That’s where a carbon foundation comes in.

A carbon foundation gives you a clear picture of your greenhouse gas (GHG) emissions across three key categories—Scopes 1, 2, and 3. By identifying key sources, upskilling your internal team and board, and setting a baseline to track your progress, you gain the direction and clarity needed to move forward. Strong governance ensures that this foundation is robust, with clear roles, responsibilities, and policies in place to maintain data accuracy and accountability. With leadership actively engaged and informed, your organisation can better understand its emissions profile, pinpoint the biggest reduction opportunities, and integrate sustainability into strategic decision-making.

Whether you’re managing infrastructure projects, transport systems, or public services, establishing a carbon foundation is the first step in your net zero journey. Without it, it’s impossible to know where to focus your efforts or measure your success.

The three scopes of emissions

Emissions can come from a variety of sources, and categorising them helps create a clearer picture of your overall footprint. These categories are known as the three scopes of emissions.

Scope 1: Direct emissions

• These are emissions from sources that your organisation owns or controls directly.

• Examples include:
  • Fleet operations: Fuel combustion in trucks, buses, trains, construction vehicles, and service cars.
  • Onsite equipment and machinery: Diesel generators, cranes, excavators, and other heavy machinery used in construction or maintenance.
  • Stationary combustion: Natural gas or LP Gas used for heating/cooling buildings, depots, warehouses, or facilities.
  • Refrigerant emissions: Leakage from air conditioning systems, cold storage facilities, or refrigerated transport vehicles.
  • Fugitive emissions: Leaks from gas pipelines, fuel tanks, or other other sources.

Scope 2: Indirect emissions from purchased energy

• These are emissions associated with the electricity, heating, or cooling that your organisation purchases. In Australia, Scope 2 is mostly the consumption of electricity.
• Examples include:
  • Facility operations: Electricity used to power offices, warehouses, depots, and maintenance facilities.
  • Public infrastructure: Energy used for streetlights, traffic signals, public charging stations, and transit hubs.
  • Operational equipment: Electricity consumption by equipment.
  • Electric Vehicle (EV) charging: Electricity used to charge electric fleets or public EV charging stations.

Scope 3: Other indirect emissions

• These are emissions that occur across your value chain, both upstream and downstream.
• Scope 3 emissions are often the most challenging to calculate but can represent up to 90% of your total emissions.
• For a comprehensive net zero strategy, you need to accurately capture Scope 3 data.

• • • Purchased goods and services: Emissions from producing construction materials like asphalt, concrete, and steel. Emissions from office supplies, IT equipment, and maintenance services.

• • • Capital goods: Manufacturing of vehicles, machinery, and infrastructure assets such as bridges, roads, rail lines and buildings. Capital goods are long-term assets you purchase or invest in to produce goods or services.

• • • Fuel and energy-related activities: Extraction, production, and transportation of fuels and energy used in operations.

• • • Upstream transportation and distribution: Emissions from transporting raw materials, equipment, or supplies to your organisation or operations.

• • • Waste generated in operations: Emissions from landfilling, recycling, or incinerating operational waste.

• • • Business travel: Flights, train journeys, and car travel for employees attending conferences, meetings, or site visits.

• • • Employee commuting: Emissions from staff commuting by car, public transport, or other modes.

• • • Upstream leased assets: Emissions from assets leased by your organisation for its own operations, such as rented office spaces, vehicles, or equipment.

• • • Downstream transportation and distribution. Emissions from transporting and distributing products to customers or end users.

• • • Use of sold products: Emissions from customers using vehicles, infrastructure, or equipment sold by your organisation.

• • • End-of-life treatment of sold products: Emissions from recycling, disposal, or processing of products at the end of their life cycle.

• • • Downstream leased assets: Emissions from buildings, vehicles, equipment, or infrastructure that your organisation owns but leases out to other entities. Examples include energy use in office buildings, warehouses, or fuel consumption by fleet vehicles or machinery leased to third parties.

In summary, Scope 1 covers emissions from your direct operations, Scope 2 covers emissions from purchased energy, and Scope 3 encompasses emissions throughout your entire value chain.

Practical steps to calculate your emissions

Building your carbon foundation involves several key steps:

1. Upskill your internal team and board
   • Train your staff, senior leadership, and board members on emissions calculation methodologies, data collection processes, and reporting frameworks like the GHG Protocol. Ensuring your board understands climate-related risks and opportunities allows for better strategic decision-making and governance. An informed leadership team can drive the net zero agenda more effectively and embed sustainability into your organisation’s core strategy.
2. Identify emission sources
   • Create a comprehensive list of activities and operations that produce emissions. Include direct activities (fleet vehicles, machinery) and indirect activities (purchased electricity, supplier emissions, etc.).
3. Collect data
   • Gather data on fuel consumption, energy use, travel, and materials. Engage with suppliers to collect Scope 3 data where possible.
   • Data like energy bills, fuel receipts, online platforms, and procurement records can help provide the information you need.
4. Use emissions factors
   • Apply appropriate emissions factors to convert your data into tonnes of CO₂ equivalent (t CO₂-e). Use recognised sources like the National Greenhouse and Energy Reporting (NGER) scheme or GHG Protocol .
5. Calculate your baseline
   • Establish a baseline year for your emissions. This will serve as the reference point for tracking progress and setting targets.
6. Verify and refine data
   • Ensure your data is accurate and complete. Consider third-party verification to enhance credibility and confidence in your numbers.

The role of governance in carbon foundations

Building a solid carbon foundation isn’t just about calculating emissions—it’s also about having the right governance structures and skills in place.

Governance is the backbone of a reliable carbon foundation. It ensures your emissions data is accurate, credible, and integrated into your organisation’s strategy. Strong governance involves:

• Assigning clear roles: Ensure senior leadership and dedicated teams are responsible for emissions measurement and management.
• Formalising policies: Create policies and procedures for data collection, verification, and reporting.
• Ensuring compliance: Align your processes with regulatory standards like AASB S2/ASRS  and reporting frameworks such as the GHG Protocol .
• Reviewing regularly: Establish regular audits and reviews to maintain data accuracy and improve processes over time.

With strong governance, your carbon foundation will not only support accurate emissions measurement but also help your organisation demonstrate accountability, transparency, and strategic alignment.

Challenges in emissions calculation

Calculating emissions can be challenging, particularly for Scope 3 emissions. Here are some common challenges and tips to overcome them:

1. Data availability
   • Challenge: Lack of accurate data from suppliers or partners.
   • Solution: Start with industry averages or spend-based data and gradually improve accuracy by engaging suppliers.
2. Complex supply chains
   • Challenge: Emissions come from multiple sources across the value chain.
   • Solution: Focus on the largest contributors first and work on refining data for smaller sources over time.
3. Internal systems
   • Challenge: Existing systems may not be set up to track emissions data.
   • Solution: Adapt internal processes to capture emissions-related information more effectively. Consider implementing data management platforms.

Why a solid carbon foundation matters

Establishing a carbon foundation is a strategic advantage. Here’s why it matters:

• Informed risk assessment and decision-making: Accurate emissions data helps you identify the most effective ways to reduce emissions and focus your resources and transition risk assessment on high-impact areas.
• Target setting: A clear baseline enables you to set realistic, science-based targets and track progress toward net zero.
• Compliance and reporting: Meet regulatory requirements like AASB S2 (Australian Sustainability Reporting Standards) and enhance transparency with stakeholders.
• Credibility and trust: Demonstrating a thorough understanding of your emissions builds trust with the public, customers, investors, and partners.
• Cost savings: Identifying inefficiencies in energy and resource use can lead to cost reductions over time.

More on AASB S2/ASRS

For those interested in learning more about AASB S2, we offer a free course covering everything you need to know about these standards and how they apply to your organisation. Understanding AASB S2 is crucial for aligning your net zero efforts with emerging regulations and avoiding greenwashing.

Next up: Managing climate risks

Now that you understand how to establish your carbon foundation, the next step is to consider the climate risks and opportunities that could impact your organisation. In the next post, we’ll explore how to identify and manage these risks to build resilience into your net zero strategy.

Need expert guidance?

If you’re ready to take the first steps in establishing your carbon foundation and need expert guidance, 100% Renewables is here to help. We can support you in calculating your emissions accurately, setting ambitious targets, and developing a net zero strategy tailored to your organisation’s needs.

Contact us today to learn more about how we can assist you in achieving a resilient, sustainable future.