Group-level carbon footprint calculation can sometimes be challenging and time-consuming. However, its importance for companies should not be underestimated – in addition to meeting tightening reporting requirements, measuring and reducing climate impacts also provides a valuable indicator for numerous stakeholders, such as customers, investors, and consumers.
We at UseLess Company have carried out carbon footprint calculations for several corporate groups, including those with complex structures, from planning the reporting process to its implementation and assurance. In this blog, we describe with practical examples how group-level carbon footprint calculation can be successfully carried out and what aspects should be considered in the calculation and reporting. In addition, you will hear about the experiences of our partner, Relais Group Plc, in preparing a successful group-level carbon footprint assessment.
How to prepare a group-level carbon footprint calculation?
Although group-level carbon footprint calculation is in many ways similar to that of an individual company, group-level reporting has its own specific features. The following ten-point list should be kept in mind when planning and implementing the project (together with an external consultancy):
- Organization of calculation and reporting – subsidiary-led or group-led?
- Execution of calculation and reporting – at subsidiary or group level?
- Organizational boundaries – which companies are considered with detailed data, and which with average data?
- Operational boundaries – which emission sources are significant for the group companies?
- Resourcing of the project and data collection – how much time should be allocated to each phase, and how should this be considered in the calculation boundaries?
- Differences in data and readiness between group companies – how to ensure comparability of calculations across companies?
- Consideration of intra-group purchases – how to avoid double counting?
- Consolidation of greenhouse gas emissions from subsidiary level to group level – which consolidation method to choose and how to implement it?
- Verification process – what should be anticipated?
- Learning process – how to ensure that the lessons learned during the project are put to use?
1. Organization of calculation and reporting
When planning group-level carbon footprint calculation, the first step is to decide how the calculation and reporting will be organized. Will the parent company manage the entire project, or will responsibility be handed over to the subsidiaries?
The decision on how the calculation and reporting will be carried out almost always needs to come from the parent company in order to ensure that all subsidiaries are committed to the project. Whether to run one or multiple calculation projects depends largely on the group’s structure and the business sectors of its subsidiaries (see point 2).
2. Execution of calculation and reporting
The next step is to decide how the carbon footprint calculation and reporting will be carried out. Would it make more sense to conduct a single group-level calculation, or separate calculations for each subsidiary?
If the group companies all operate in the same industry, it may be most efficient to perform the calculation as one consolidated, group-level project. Companies in the same sector can benefit from synergies, for example in the choice of emission factors and the design of calculation methods. However, if the subsidiaries operate in different industries, a group-level project may not provide the same synergies, making subsidiary-level calculations consolidated later to a group-level (see point 8) both the most effective and logical approach.
3. Organizational boundaries
In carbon footprint calculations carried out in accordance with the CSRD¹ and the ESRS E1 standard², a group’s carbon footprint must include all companies that are also reflected in the group’s consolidated financial statements. In practice, however, the majority of a group’s emissions may originate from only a small subset of its companies. If the subsidiaries operate in the same industry, it may be most resource-efficient to define, for example, a revenue-based threshold that determines which subsidiaries are assessed using precise, actual data. The climate impacts of the remaining subsidiaries can then be estimated using a carbon intensity figure derived from the more detailed calculations of the selected companies.
4. Operational boundaries
If the carbon footprint calculation is carried out in accordance with the GHG Protocol standards³ and/or the ESRS E1 standard², the calculation must include not only scopes 1 and 2, but also all significant scope 3 categories. In addition, any exclusions from the calculation must be justified.
If the group companies operate within the same industry, it may be most practical to define the operational boundaries at the group level. However, if the subsidiaries’ business activities differ significantly from one another, defining the operational boundaries should be made at the company level. This ensures that all relevant emission sources are included while avoiding having to calculate categories that are irrelevant to some companies.
5. Resourcing the project and data collection
If the calculation is carried out with an external consultancy, the company commissioning the calculation must allocate the largest time resources to data collection, potentially taking several months. Especially during the first calculation, data collection can be challenging as it is not yet clear where and how all the necessary information can be obtained. In addition, data validation can take surprisingly long, particularly if the people collecting the data are not yet familiar with carbon footprint calculations.
If there is a strict deadline for completing the calculation and the reporting needs to be finalized immediately after the reporting year ends, forecast models can be used for the last months of the reporting year. This approach ensures sufficient time for both the calculation and its validation.
6. Differences in data and readiness between group companies
Comparing carbon footprints of different companies is generally not suggested, due to
- differing operational boundaries,
- variations in source data,
- different choices of emission factors,
- varying calculation methods, and
- expert-specific choices in the modeling.
Therefore, it is important to remember that companies should compare their climate impacts only with their own previous carbon footprints. However, comparability between group companies can be improved by keeping operational boundaries as similar as possible (especially if the companies operate in the same industry), by aiming to use data from shared systems, and by having the calculations carried out by the same expert (partner). In addition, it should be ensured that each company has sufficient resources for data collection. This way, comparability does not suffer, for example, due to some companies not having the time to collect data from the same time period or categories.
7. Consideration of intra-group purchases
In group-level carbon footprint calculations, it is important to note that the same purchases may appear in several group companies during the same year if intra-group purchases are made. To avoid double counting the emissions, internal purchases should be eliminated. Greenhouse gas emissions from purchases should only be allocated to the group company that initially acquires the products. In interpreting the results, it is also important to remember that if one of the group companies purchases and distributes products within the group, its carbon footprint may appear comparatively larger than that of the other group companies.
8. Consolidation of greenhouse gas emissions from subsidiary level to group level
Once the calculation has been completed for the group companies, the results must be consolidated at the group level to assess the overall climate impact of the entire group. The current ESRS E1 standard2 is unclear regarding how the required consolidation method should be applied, for example in defining operational boundaries and categorizing the carbon footprint. However, the draft ESRS E1 standard4 updated last July clarified the definition of organizational boundaries by stipulating that the required consolidation method corresponds to the financial control–based approach of the GHG Protocol standards.
9. Verification process
If the calculation is carried out in accordance with the ESRS requirements, assurance of the sustainability report — and therefore also of the carbon footprint calculation — by a third party is mandatory. Many companies also choose to have their calculations assured voluntarily. It is important to allocate sufficient time for the assurance process, as even the verification of the calculation alone may involve initial interviews, a detailed review of the calculation with the assurer, submission of evidence, and the implementation of any necessary corrections.
An external consultant can support in documenting the calculation process and presenting it to the assurers. Furthermore, they can assist the reporting company in interpreting the assurer’s comments and prioritizing recommendations for adjustments. A calculation conducted by a consultancy specialized in carbon footprint assessments may also be perceived as more reliable by the assurers, which can make the assurance process smoother.
10. Learning process
Carbon footprint calculation is always an iterative learning process, both for the reporting company and for any expert partner carrying out the calculation. It is therefore particularly important that both parties record potential areas for improvement each year, so that the process can be streamlined and refined in the future.
However, the carbon footprint calculation itself is not the only aspect that can be improved based on the lessons learned. The calculation requires the collection of a large amount of data that is not necessarily available in a consolidated form in other contexts. Through carbon footprint assessment, it is therefore possible to identify, for example, inefficiencies in company processes. When addressed, it can lead to both cost savings and reduced climate impacts.
Group-level carbon footprint calculation in practice – Case Relais Group Plc
Relais Group is a leading consolidator and acquisition platform on the commercial vehicle aftermarket in Northern Europe. Through its business operations, the company seeks to extend the lifecycle of vehicles and enable the transition toward low-emission mobility. The Group consists of numerous subsidiaries, with business activities focused on two sectors: wholesale of spare parts and accessories, and maintenance and repair of commercial vehicles and trailers.
Relais carried out its first group-level carbon footprint calculation for the year 2024 in accordance with CSRD1 requirements, together with UseLess. The 2024 calculation established a baseline for monitoring the Group’s climate impacts and for setting climate targets. The monitoring and development of climate work will continue jointly also for 2025.
UseLess Company prepared a plan for our Group’s carbon footprint calculation in accordance with CSRD and ESRS requirements and carried out the calculation excellently within the agreed schedule, with a customer-oriented approach.
– Tapio Nelimarkka, Financial Director, Relais Group Plc
Environmental responsibility is emphasized in Raskone’s business as a provider of lifecycle services for heavy-duty vehicles. We ensure that utility vehicles operate as long, low-emission, and safely as possible – enabling the sustainability of transport and keeping society running. Carbon footprint calculation, and based on it the implementation of measures to reduce our footprint, is a natural step in increasing the transparency of our business.
Collaboration with UseLess was very smooth throughout the calculation project. Due to our industry and diverse procurement channels, data collection for our carbon footprint calculation was at times challenging, but we received abundant guidance and tips from UseLess for every problem we encountered. Clear instructions, a practical approach, and quick responses to our questions made the calculation project as straightforward as possible for us. The expertise and support we received from UseLess was easy to trust throughout the project, and we are very pleased to continue our cooperation also in the coming years for our carbon footprint calculations.
— Joakim Pihlajamaa, CFO, Raskone Oy
We are very pleased to continue our collaboration with Relais! You can read more about Relais’ climate work in the Group’s 2024 Annual Report.
If group-level carbon footprint calculation is also a current topic for your company, contact us – you can book a free 30-minute consultation directly or leave us a contact request. You can also learn more about carbon footprint calculation with the help of our free guide (currently only available in Finnish).
References
(3) GHG Protocol Corporate Accounting and Reporting Standard Revised Edition (2004) & GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011)