Key Points
- A carbon footprint covers three scopes: direct emissions (Scope 1), purchased energy (Scope 2), and value chain activities (Scope 3).
- Scope 3 typically accounts for 70% or more of a company's total footprint, yet it carries the highest estimation uncertainty.
- ESRS E1 requires CSRD reporters to disclose Scope 1, Scope 2, and material Scope 3 categories using GHG Protocol methodology.
- Understating the footprint by omitting material Scope 3 categories is the single most common assurance finding on climate disclosures.
What is Carbon Footprint?
The AFM reviewed 32 CSRD-ready files in late 2025 and found the Scope 3 boundary wasn't reconciled to the consolidation scope in most of them. That gap is the practical problem. An auditor can trace Scope 1 fuel receipts and Scope 2 electricity bills. Scope 3 is where the file either tells a story or falls apart.
The GHG Protocol Corporate Standard splits an organisation's emissions into three scopes. Scope 1 covers direct emissions from sources the entity owns or controls (fuel combustion in boilers, company vehicles, process emissions). Scope 2 covers indirect emissions from purchased electricity, heat, or steam, reported using both the location-based method (grid-average factors) and the market-based method (supplier-specific or contractual factors). Scope 3 captures everything else across the value chain. Purchased goods, upstream transport, employee commuting, downstream use of sold products, and end-of-life treatment sit among the 15 defined categories.
ESRS E1.44 requires the undertaking to disclose gross Scope 1, Scope 2, and Scope 3 GHG emissions separately. The reported figures use CO2 equivalent as the unit, applying the global warming potentials from the most recent IPCC assessment. For CSRD reporters, the double materiality assessment determines which Scope 3 categories are material. The entity cannot simply exclude Scope 3 on grounds of difficulty. ESRS E1.AR 46 requires disclosure of estimation methodologies and data quality limitations where primary data is unavailable. The assurance provider (under ISSA 5000 or, for earlier periods, ISAE 3000 Revised) evaluates whether the boundary is complete and the calculation methodology consistent with the GHG Protocol. At firms like ours, this is where most of the review time goes.
Worked example
Client: Italian food production company, FY2026, revenue EUR 67M, IFRS reporter, first-time CSRD reporter (large undertaking, 1,200 employees). Rossi operates two production facilities near Bologna and sources raw materials (olive oil, tomatoes, grain) from suppliers across southern Europe.
Define the organisational boundary
Rossi applies the operational control approach per GHG Protocol Chapter 3. The two owned production sites and the company's distribution fleet fall within the boundary. A 40%-owned joint processing facility in Puglia is excluded because Rossi does not hold operational control.
Documentation note: record the consolidation approach chosen (operational control), list all facilities assessed, and document the rationale for excluding the Puglia joint facility per GHG Protocol Chapter 3. Cross-reference to the IFRS consolidation WP for consistency.
Quantify Scope 1 and Scope 2 emissions
Rossi's Scope 1 sources include natural gas consumption at the two plants (3.1 million cubic metres, producing 6,200 tonnes CO2e using ISPRA emission factors) and diesel for the distribution fleet (820,000 litres, producing 2,150 tonnes CO2e). Scope 2 electricity consumption totals 9.4 GWh. The location-based figure is 2,820 tonnes CO2e (using the Italian grid factor of 0.300 kg CO2e/kWh). The market-based figure is 1,880 tonnes CO2e because Rossi holds Guarantees of Origin covering 40% of its consumption from certified renewable sources.
Documentation note: record each emission source, the activity data (gas volumes, diesel litres, electricity kWh), the emission factors applied with source references, and both the location-based and market-based Scope 2 figures per ESRS E1.48-49.
Identify and quantify material Scope 3 categories
Rossi's double materiality assessment flags four material Scope 3 categories. Purchased goods and services (Category 1, estimated at 18,400 tonnes CO2e based on spend-based factors from Ecoinvent), upstream transportation (Category 4, 3,200 tonnes CO2e from supplier logistics data), downstream transportation (Category 9, 2,100 tonnes CO2e), and end-of-life treatment of packaging (Category 12, 1,600 tonnes CO2e). The remaining 11 categories are assessed as not material, with documented rationale. This is where a weak file turns into a tick box exercise.
Documentation note: record the screening of all 15 Scope 3 categories per GHG Protocol Scope 3 Standard Chapter 1. For each material category, document the quantification method (spend-based, average-data, or supplier-specific), the data sources, and the estimation uncertainty. For excluded categories, record the rationale per ESRS E1.AR 46.
Compile and reconcile the total footprint
Rossi's total carbon footprint for FY2026 is 36,350 tonnes CO2e (Scope 1: 8,350; Scope 2 location-based: 2,820; Scope 3: 25,300). Scope 3 represents 69% of the total. The engagement team reconciles (recon) the sum against the PY estimate (33,800 tonnes CO2e) and investigates the 7.5% increase, which traces to higher raw material procurement volumes. Appears reasonable. Waive further pursuit.
Documentation note: record the total footprint broken down by scope, the year-on-year recon, and the explanation for material changes per ESRS E1.50. Attach the calculation workbook as a supporting schedule.
Conclusion: Rossi's carbon footprint of 36,350 tonnes CO2e holds up because the organisational boundary follows the GHG Protocol, all 15 Scope 3 categories were screened with documented inclusion or exclusion rationale, and the emission factors trace to published sources.
Why it matters in practice
- Teams often report only the location-based Scope 2 figure and omit the market-based calculation (or vice versa). ESRS E1.48 requires disclosure of both methods. Reporting only one method understates the information available to users and fails to reflect the effect of renewable energy procurement decisions on the reported footprint.
Carbon footprint vs. carbon handprint
| Dimension | Carbon footprint | Carbon handprint |
|---|---|---|
| What it measures | Total GHG emissions caused by the entity's activities, products, or services | Positive climate impact the entity enables for others (e.g., customers avoiding emissions by using the entity's product) |
| Direction | Negative impact to be reduced | Positive contribution to be demonstrated |
| Governing framework | GHG Protocol, ISO 14064-1, ESRS E1 | No single governing standard; VTT Technical Research Centre methodology is the most cited |
| Assurance maturity | Established; ESRS E1 mandates disclosure and assurance for CSRD reporters | Emerging; no mandatory assurance requirement, limited practitioner guidance |
| Regulatory status | Required under CSRD for in-scope entities | Voluntary; not referenced in ESRS or the GHG Protocol |
The distinction matters because entities sometimes present handprint claims alongside footprint data to suggest net positive impact. The footprint figure is subject to assurance under ESRS E1. The handprint figure is not. An auditor reviewing the sustainability statement should evaluate whether handprint claims are presented in a way that could mislead users about the entity's actual emissions trajectory.
Related terms
Related tools
Related reading
Frequently asked questions
How do I choose emission factors for a carbon footprint calculation?
Use the most jurisdiction-specific factors available. For EU entities, national environmental agencies publish annual grid emission factors (e.g., ISPRA in Italy, UBA in Germany). For Scope 3 spend-based estimates, databases such as Ecoinvent or DEFRA provide secondary factors. ESRS E1.AR 39 requires the undertaking to disclose which emission factor sources it applied and to justify the selection. Where supplier-specific factors are available, prefer them over generic databases.
Does the carbon footprint include biogenic emissions?
ESRS E1.51 requires separate disclosure of biogenic CO2 emissions from biofuel combustion and land use. These are reported outside the three-scope total to avoid double counting with removal credits. The GHG Protocol Corporate Standard Chapter 9 provides guidance on biogenic carbon accounting. If Scope 1 includes combustion of biomass, the entity must disclose the biogenic component separately from fossil-fuel emissions.
When should I update the base year for the carbon footprint?
Recalculate the base year when structural changes (acquisitions, divestments, changes in calculation methodology) cause a cumulative threshold shift. The GHG Protocol recommends a significance threshold (commonly 5% of base-year emissions). ESRS E1.AR 41 requires the undertaking to disclose the base year, the recalculation policy, and any recalculations performed. Failing to recalculate after a major acquisition makes year-on-year comparisons misleading.