In today's fast-paced business world, understanding and managing environmental impact has become a critical concern worldwide, especially for growing companies.

With the Earth's carbon dioxide levels hitting a 4.5 million-year high in 2021, governments, investors, employees, and consumers are demanding more aggressive sustainability measures – particularly from the corporate sector.

So, how should businesses respond to the increasing call for climate action? The answer lies in identifying your ‘emission hotspots.’ These are the specific areas of your operations that contribute most to your total environmental footprint. 

But, what exactly are classified as hotspots? How does identifying them benefit growing businesses? And most importantly, how can you go about spotting these hotspots within your own operations? Read on for everything you need to know.

What do we mean by emission hotspots, exactly?

Emission hotspots are the areas or processes within your business where a large portion of greenhouse gas (GHG) emissions are generated.

These hotspots can take various forms – from physical sites controlled by your business to energy-intensive processes that contribute heavily to your company's environmental impact. For instance, a manufacturing plant or a logistics hub could be an emission hotspot due to high energy use or emissions from transportation.

Looking at the broader picture, emission hotspots can also extend to entire industries, cities, or countries. 

In 2022, for instance, China, the United States, India, the EU27, Russia, and Brazil were identified as the six largest GHG emitters globally. Despite being top emitters, the EU27, Russia, and Brazil actually made notable progress in reducing their emissions in 2022. 

The EU27 saw a 0.8% decrease in emissions from 2021, keeping emissions below pre-COVID-19 levels and continuing their decades-long decreasing trend. Notably, the EU27’s emissions were 27% lower than in 1990, representing only 6.7% of global emissions as opposed to 14.8% in 1990.

Bringing the focus back to businesses, the global scenario highlights the importance of identifying and addressing emissions hotspots. By embracing new technologies, refining processes, or altering materials used in production, we can reduce our carbon footprints and contribute towards combating climate change more effectively.

Why identifying emissions hotspots is important

Besides the obvious environmental responsibility, identifying emission hotspots is also a strategic business move. Here's how it can benefit your business:

Reduce operational costs

High emissions often indicate areas of high inefficiency. By reducing your energy use or reducing waste, for instance, you can lessen your environmental impact and cut down on unnecessary expenses leading to cost savings.

Despite high upfront costs, investing in renewable energy sources or eco-friendly technologies can also lead to long-term savings and efficiencies.

Meet regulatory requirements

Governments around the world are implementing more stringent climate regulations. The EU’s new Corporate Sustainability Reporting Directive (CSRD), for instance, now requires over 71,000 companies to report their social and environmental impacts as early as this year!

Companies that address their emissions hotspots can stay compliant and avoid potential penalties. By taking proactive steps today, your business will be better prepared for upcoming regulations and avoid scrambling to comply last minute.

Boost your brand reputation

Consumer and investor preferences are shifting. According to the 2023 Business of Sustainability Index, a whopping 66% of US consumers surveyed are willing to pay more for sustainable products versus less sustainable competitors. 

By addressing emission hotspots, your business can align with modern values and stand out in the market. This can help you build a stronger, more appealing brand in a market that increasingly values sustainability.

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Examples of common carbon emission types for growing businesses

Mid-sized businesses typically encounter three types of emissions outlined below.

Scope 1, 2, and 3 emissions

Established in 1998, the Greenhouse Gas Protocol (GHG Protocol) is widely known as the standardized framework for companies and countries to measure and report their GHG emissions. It categorizes GHG emissions into three 'scopes’:

Scope 1: Direct emissions

These are emissions that occur directly from your own business operations, under your business's control. Think your company vehicles or facilities.

Scope 2: Indirect emissions

These include indirect emissions from purchased electricity, steam, heating, and, cooling. 

Scope 3: Other indirect emissions

These include all other emissions associated with your company’s activities. For example, when your company buys, uses, and disposes of products from suppliers.

Each scope has its own impact and requires different strategies for management. Scope 1 and 2 are often easier to measure and manage, while Scope 3 can be more challenging due to its expansive nature.

Carbon emissions that have the highest impact

Scope 3 emissions usually make up the bulk of your company’s carbon footprint. According to the Carbon Disclosure Project (CDP), Scope 3 emissions can be up to 11.4 times greater than emissions generated by your own operations.

This is because they encompass the entire environmental impact of your value chain – business travel and commuting, purchased goods and services, supply-chain distribution, and waste sent to landfills, for instance. In other words, a lot of things that are out of your control. 

So, paying attention to Scope 3 gives you a more realistic view of your environmental influence and helps you make more impactful sustainability decisions.

3 steps to identify emission hotspots for your business

Here are 3 straightforward steps how to identify emission hotspots within your business:

1. Assess business operations to find sources of emissions

The first step to identifying emission hotspots within your business is to conduct an in-depth review of all your business operations and processes. You should pay special attention to areas of your business where energy use and waste production are high. Think heavy machinery operations, logistics, or company travel for instance.

Make sure to talk to employees at all levels to collect insights into daily business operations that may produce high emissions. Often it’s the employees on the frontline who have the clearest idea of where inefficiencies exist and can provide the most valuable input.

2. Collect and measure emissions data

Once you understand your business processes in detail, the next step is to collect and measure your emissions data. This gives you the hard numbers and facts to make informed business decisions. 

Tools to retrieve emissions data

While effectively gathering emissions data from multiple sources on your own can seem overwhelming, thankfully, there are plenty of specialized tools available that can give you accurate insights into the various aspects of your emissions profile.

Carbon accounting software

Carbon accounting tools are digital platforms that help you to accurately quantify, analyze, and manage your company’s carbon footprint. 

From detailed emissions breakdowns to automated reports that comply with the latest climate regulations, these platforms are a must-have for companies looking to pinpoint and act upon their specific ‘hotspots.’

When selecting a tool, you should opt for something that prioritizes scalability, integration capabilities, user-friendliness, and security features like Coolset.

Energy audit services

Professional energy auditors can assess your energy usage and efficiency. They conduct thorough audits of your facilities and operations, identifying not just the high-emission areas but also suggesting potential areas of improvement. 

Their reports can guide you in making strategic decisions to enhance energy efficiency.

Employee surveys and feedback

Surveys or feedback systems can allow employees to share any daily practices that could lead to higher emissions. Aside from tapping into a valuable internal resource – your employees – it can also foster a culture of environmental responsibility.

3. Identify key emission sources

The final step in identifying emission hotspots involves conducting a thorough analysis of your collected emissions data.

Tools like Coolset use advanced data analytics techniques to help you uncover patterns, trends, and correlations that may indicate emission hotspots. Organizing data into segments like departments, processes or locations can make it easier to understand where emissions are highest.

How to read and report on emissions data

To effectively read and report on your emissions data, you must understand your data points and what they signify. Key aspects to focus on include:

• Analyzing trends over time: Are emissions increasing or decreasing? This can help you figure out if your current practices are working and guide future strategies.
• Benchmark your data against industry standards: Compare your emissions data against that of similar businesses in your industry. Where do you stand in terms of environmental performance relative to others in your sector?
• Assess wider environmental and social impact: It’s also important to evaluate the broader effects of your emissions. What are the environmental and social impacts such as community health or the well-being of ecosystems?

Respond to your emission data with a carbon reduction plan

Once you’ve identified your emission hotspots, and interpreted your data points, now it’s time to act. Building a carbon reduction plan can help you to translate your findings into practical measures to achieve your goals.

This could involve rethinking processes, investing in energy-efficient solutions, or even switching to more sustainable materials or suppliers.

Make sure to set realistic and measurable goals and involve stakeholders at all levels. And remember, carbon reduction is not a one-off task but a continuous journey of improvement.

Follow our simple five-step process for a step-by-step guide to building your first carbon reduction plan today.