Corporate Greenhouse Gas Accounting: Carbon Footprint Analysis

17 Pages Posted: 10 Jun 2009

See all articles by Andrea Larson

Andrea Larson

University of Virginia - Darden School of Business

William Teichman

University of Virginia - Darden School of Business

Abstract

Stakeholder climate change actions worldwide have prompted companies to measure their greenhouse gas emissions and reduce their carbon footprints by decreasing energy and fuel use. In the process, they are cutting costs, decreasing exposure to severe weather, reducing energy vulnerability, and potentially opening up revenue sources for carbon credit sales in the emerging markets for carbon trading. This note is effective in MBA, undergraduate and executive education courses on clean commerce innovation, carbon markets, sustainability, and environmental and regulatory issues. This technical note stands alone and also works as a companion note to "Frito-Lay North America: The Making of a Net-Zero Snack Chip" (UVA-ENT-0112). For instructors, a teaching note is available, along with a supplemental Excel spreadsheet for use in performing carbon emissions calculations.

Excerpt

UVA-ENT-0113

April 24, 2009

Corporate GREENHOUSE GAS ACCOUNTING:Carbon Footprint Analysis

For much of the 20th century, scientists speculated that human activities, such as the widespread burning of fossil fuels and large-scale clearing of land, were causing the earth's climate system to become unbalanced. In 1979, the United Nations took a preliminary step to address this issue when it convened the First World Climate Conference. In the years that followed, governments, scientists, and other organizations continued to debate the extent and significance of the so-called climate change phenomenon. During the 1990s, scientific consensus on climate change strengthened significantly. By the turn of the century, approximately 99% of peer-reviewed scientific articles on the subject agreed that human-induced climate change was a reality. While modelers continued to refine their forecasts, a general consensus emerged among the governments of the world that immediate action must be taken to reduce human impacts on the climate system.

Large numbers of businesses initially responded to the climate change issue with skepticism. The American environmental regulatory landscape of the 1970s and 1980s was tough on business, with sweeping legislative initiatives relating to air quality, water quality, and toxic waste remediation. Private industry was still reacting to this legislation at the time that scientific consensus was building on climate change. Many companies were content to hold back and wait for scientists and government officials to reach an agreement on the best path forward before taking action, or in some instances, to directly challenge the mounting scientific evidence.

In recent years, however, a number of factors have contributed to a shift in corporate opinion. These factors include growing empirical data of human impacts on the global climate system, definitive reports by the U.N. Intergovernmental Panel on Climate Change, and increased media and government attention on the issue. Perhaps most significant, however, is the impact that rising energy costs and direct pressure from shareholders to disclose climate-related operating risks are having on business managers who can for the first time connect this scientific issue with financial considerations.

. . .

Keywords: environment, cleantech, clean commerce, sustainability, sustainable business, triple bottom line, carbon footprint, carbon neutral, net zero

Suggested Citation

Larson, Andrea and Teichman, William, Corporate Greenhouse Gas Accounting: Carbon Footprint Analysis. Darden Case No. UVA-ENT-0113. Available at SSRN: https://ssrn.com/abstract=1417219

Andrea Larson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/larson.htm

William Teichman

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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