Calculating the organisation’s carbon footprint: voluntary or mandatory?

More and more legislative steps are being taken towards the ecological transition and a more sustainable model, following the guidelines of the European Green New Deal. Grants are emerging for the implementation of renewable energy technologies and energy storage, to improve the energy efficiency of equipment and installations, the development of electric mobility, the promotion of circular energy and the adoption of measures for a just transition.

Within this list of actions is the calculation of the carbon footprint, as a tool for detecting the weak points where the greatest quantities of greenhouse gas emissions -causing climate change- are generated. Once these sources of emissions have been detected, measures can be taken to reduce emissions -or mitigate climate change- which can lead to both energy and economic savings.

Carbon Footprint Register

Royal Decree 163/2014, of 14 March, defines the creation of a register of carbon footprint, offsetting and carbon dioxide absorption projects. This register is a database where organisations can register the information relating to the calculation of their carbon footprint, or their carbon offsetting projects, propose an improvement plan and obtain a free stamp to show their commitment to sustainability.

Different modalities of the seal awarded, depending on the level of participation of the organisation in the Register: whether it calculates its footprint, has managed to reduce its footprint or has offset all or part of it. Source: Registry of footprint, offsetting and CO2 absorption projects, MITECO.

Until now, this Register was voluntary. However, Law 7/2021, of 20 May, on Climate Change and Energy Transition, established in its Twelfth Final Provision that Royal Decree 163/2014 must be amended to introduce the obligation to calculate and draw up a carbon footprint reduction plan for a certain group of companies, as well as the most relevant aspects for the modification of the aforementioned Carbon Footprint Register.

Although only the draft has so far been published for public information, new legislation is expected to be announced in the coming months.

Who is affected by the change in regulations?

This legislation will affect those companies that until now did not calculate their carbon footprint and that are affected by Law 11/2018 on non-financial information and diversity (which transposes European Directive 2014/95, or its subsequent amendments), which, from its entry into force, will be obliged to calculate their footprint on an annual basis.

These are mainly large companies and certain groups: public limited companies, limited liability companies and limited joint-stock companies that simultaneously have the status of public interest entities whose average number of employees during the financial year exceeds 500 and, in addition, are considered large companies as defined by Directive 2013/34, i.e. whose net turnover, total assets and average number of employees determine their qualification in this sense. This obligation shall apply to ministerial departments of the General State Administration, its autonomous bodies and Social Security management entities. Also public interest companies that prepare consolidated accounts, provided that the group is classified as large, in the terms defined by Directive 2013/34/EU, and the average number of employees employed during the financial year by all the companies that make up the group is greater than 500.

The following will be exempted from verifying their carbon footprint:

• Those organisations that include scope 3 for small or micro-enterprises and the Spanish Climate Change Office has published the emission factors of the calculated footprint.

• An SME, association, foundation, cooperative or public administration that calculates its 1+2 footprint and, in addition, the emission factors for the year of calculation have been published.

Changes being made

The new legislation will bring about changes such as the following:

Modification in the seals obtained by the ministry: The seal obtained for the calculation and registration of the Carbon Footprint will graphically reflect the participation in the calculation of the carbon footprint and reduction of emissions, or in the compensation thereof. Likewise, it will also be reflected if the offsetting is carried out through CO2 absorption projects with an outstanding valuation according to the scale referred to in Article 7.5.

Scope 3: Companies that are not considered SMEs and that until now have only calculated emissions from scope 1 and 2 will have to start the gradual collection of information on the relevant activities in scope 3 (deadlines for this will be established). A timetable shall also be provided, together with the conditions for the incorporation of this scope into the calculation.

Extension of the reduction plan to a 5-year horizon, with quantifiable data to be provided. It must include at least a quantified reduction target for the five-year time horizon, together with the measures to achieve it.

No need to wait for the annual emission factors to be issued before making the calculation: Unlike in previous editions, a company wishing to calculate and register its Carbon Footprint will not have to wait for the Ministry to issue the Emission Factors for the year of calculation, but will only need to use the most current ones.

Validity of registration: Verifications performed by entities accredited by an international verification body, as well as verifications performed by designated operational entities (DOEs) or independent entities accredited (IEAs) by the United Nations under the flexibility mechanisms of the Kyoto Protocol shall be considered valid for registration. Also, ISAE 3410 reports and other non-specific carbon footprint schemes such as EMAS or ISO 50001 will be recognised as long as the necessary additional information is provided.

Modification of CO2 absorption projects for carbon footprint offsetting: the first 5 years of each project will be considered valid. Once this period has elapsed, updated documentation must be provided to verify the viability of the project, as well as its continuity and adjustment to the previously established management plan. In addition, CO2 removals generated in national territory in projects related to land use, land use change and forestry or blue carbon related activities that increase carbon stocks may also be registered.

It will be possible to register the Event Carbon Footprint in the same way as it is now possible to register the organisational carbon footprint.

The future of sustainability legislation

With these regulations as a precedent, it is expected that more obligations for organisations to calculate their carbon footprint will be established in the near future.

The trend, due to environmental concerns and corporate social responsibility, company image, environmental regulations, demand from customers and the general public and even investors, is to increasingly systematically implement the calculation of the carbon footprint as a tool for continuous improvement and visibility of the organisation’s environmental commitments.