The EU’s Corporate Sustainability Reporting Directive (CSRD) requires large listed companies to conduct comprehensive greenhouse gas emissions calculations. This is already affecting small and medium-sized enterprises (SMEs), which must also be able to provide data on the carbon footprints of their products and services.

Large, listed companies is required to report their greenhouse gas (GHG) emissions for this year at the beginning of 2025. In addition, other large companies must conduct emissions calculations starting at the beginning of next year, and the following year, the same requirement will apply to listed SMEs. With the CSRD, the number of companies reporting their emissions will increase significantly.

The emissions calculations to be included in sustainability reporting are conducted in accordance with the ESRS E1 standard for climate change under the CSRD. This standard is builds on GHG Protocol standards. Companies must report their direct GHG emissions from their own operations (Scope 1), indirect GHG emissions from purchased energy both location-based and market-based (Scope 2), indirect emissions related to their value chain (Scope 3), and their total GHG emissions using the two methods mentioned above. Additionally, companies must calculate their GHG emissions intensity by relating their total emissions to their net revenue.

CSRD and ESRS E1 require the calculation of Scope 3 emissions

Previously, many companies have only calculated their Scope 1 and Scope 2 emissions. The calculation of Scope 3 emissions has been considered time-consuming and only a few pioneering companies have calculated their value chain emissions comprehensively. However, the Corporate Sustainability Reporting Directive now requires the calculation of Scope 3 emissions. Companies with fewer than 250 employees can postpone reporting Scope 3 emissions by one year.

Scope 3 calculations must include all significant emission categories, and if any emission sources are excluded from the calculation, the reasons for these exclusions must be justified.

For many companies—such as those in manufacturing and retail—the most significant Scope 3 emission category is 'Purchased goods and services' (category 1). The number of goods and services to be procured can reach thousands and may be sourced from all over the world. Up-to-date emission factor data must be found for all these purchases to ensure accurate carbon footprint calculations.

High-quality emission factors should be used in the calculations

According to GHG Protocol standards, up-to-date and high-quality emission factors must be used in the calculations. Primary data, collected from suppliers and subcontractors, should be used whenever possible. If such data is not available, secondary data can be utilized. The best secondary data are regional or national averages based on physical quantities (kg, pcs etc.). The next best option is to use European or global averages from databases such as Ecoinvent. If no better information is available, the last option is to use spend-based method with currency-based factors. We have previously published a blog post how to choose the correct emission factor.

According to our analyses and comparative calculations, using euro-based factors often results in emissions that are up to twice as high as those calculated using up-to-date emission factors based on physical quantities.

CSRD and the ESRS E1 standard require companies to gather emissions data and other sustainability information from the companies within their supply chains. As a result, small and medium-sized enterprises acting as subcontractors are increasingly being asked to provide information on the carbon footprints or emission factors of their products and services.

The product carbon footprint is calculated in accordance with the ISO 14067 standard

If a B2B customer requires emissions data from its subcontractors or service providers, providing company-level scope 1 and scope 2 emissions data is typically not sufficient. Instead, product-level calculations must be performed according to standards developed for this purpose. The most recent and widely used standard for product carbon footprint calculations is ISO 14067. This standard guides the calculation of emissions for all stages of a product’s (goods or services) lifecycle from cradle to grave. However, if a company supplies its products to another company as raw material for its production, a so-called partial carbon footprint is calculated from cradle to gate. In this case, the calculation includes production and transportation of raw materials and the manufacturing phase (A1-A3).

The product carbon footprint is increasingly being considered as a procurement criterion in tenders. Therefore, SMEs should calculate the carbon footprints of their products before they are requested. There is often insufficient time for data collection and standard-based emissions calculations during the bidding phase. Companies that have determined their carbon footprint information in advance are likely to perform better in the tendering process.

The OpenCO2.net carbon footprint platform's emissions database already contains more than 5,000 emission factors validated by our experts. We offer subscriptions to our carbon footprint calculators and emissions database, as well as consulting services for emissions calculations. We perform company-level calculations (Scope 1, 2, and 3) in accordance with the ESRS E1 and GHG Protocol standards, separate scope 3 calculations, and product carbon footprint calculations according to the ISO 14067 standard. Additionally, we develop customized calculators on the OpenCO2.net platform that take into account the company’s own supply chain. You can explore our customer cases here.