Carbon Footprint of the US: SMEs' Role

Most organizations would agree that the US has a significant carbon footprint.

This article explores the role small and medium-sized enterprises (SMEs) play in the US carbon footprint and what steps they can take to drive positive change.

You'll understand the business case for emissions reduction, learn assessment methodologies to calculate your company's footprint, and discover strategies across operations, supply chain, and policy to lower your climate impact.

SMEs and the Carbon Footprint of the US

This section introduces key topics around U.S. greenhouse gas emissions, the impact of small to medium-sized enterprises (SMEs), and the business case for emissions reductions.

U.S. Greenhouse Gas Emissions 2022: A Benchmark Analysis

The EPA's 2022 inventory of U.S. greenhouse gas emissions showed that total emissions reached 6,558 million metric tons of carbon dioxide equivalent. This represents a 1.3% increase from 2021 levels. Key factors influencing this increase included greater reliance on fossil fuels for electricity generation and growth in transportation emissions.

Within the overall national emissions, the top emitting sectors in 2022 were transportation (27% of total), electricity production (25%), industry (23%), commercial and residential (13%), and agriculture (10%).

SMEs' Carbon Footprint: A Significant Contributor

Small to medium-sized enterprises make up over 99% of all businesses in the United States. Though individual SME emissions may be relatively small, collectively they account for nearly 50% of total U.S. greenhouse gas emissions. This makes their role in climate action essential for meeting national emissions reductions goals.

Factors driving SMEs' large footprint include energy usage across facilities, logistics fleets, and supply chains. Lack of staff capacity, funding, and strategic prioritization of sustainability also contribute. However, by measuring emissions through carbon accounting software, SMEs can identify "hot spots" to target for reductions.

The Business Case for Emissions Reduction

Beyond environmental benefits, studies show financial advantages for SMEs that measure and reduce emissions. These include cost savings from energy efficiency, lower regulatory and supply chain risks, increased competitiveness for contracts, and reputational gains that improve customer acquisition and retention.

Early emissions reduction also future-proofs SMEs against tightening regulations on corporate climate action. By starting now, they have more flexibility to meet targets in a cost-effective way.

Furthermore, sustainability communications help SMEs strengthen trust and loyalty among eco-conscious consumers and talent. With 73% of millennials preferring purpose-driven companies, climate action gives SMEs a competitive edge.

What is the average carbon footprint of USA?

The average carbon footprint for a person in the United States is approximately 16 tons of carbon dioxide equivalent (CO2e) per year. This means that the average American is responsible for emitting 16 tons of greenhouse gases annually through daily activities like driving, using electricity, or consuming goods and services.

To put this in perspective, 16 tons of CO2e is equivalent to:

Burning over 1,700 gallons of gasoline
The emissions from driving a typical passenger car 40,000 miles
The emissions from using 21 barrels of oil

The carbon footprint of the average American is among the highest in the world and more than double the global average. High per capita emissions in the U.S. can be attributed to factors like:

High energy consumption: The U.S. uses more energy per capita than most countries. About 80% of this energy comes from fossil fuels which emit greenhouse gases.
Transportation reliance: Many Americans depend on personal vehicles for daily transportation versus public transit. This leads to more emissions from burning gasoline.
Consumption patterns: The average American consumes more goods and food which requires energy to produce and transport, resulting in emissions.

The total carbon footprint of the United States as a country was around 6.6 billion metric tons of CO2e in 2019. This amounts to about 15% of global emissions, making the U.S. the second highest emitter behind China. Reducing America's heavy reliance on fossil fuels across sectors like electricity, transportation, buildings, and industry is key to lowering the nation's carbon footprint.

How does the US carbon footprint compared to other countries?

The United States has historically been one of the world's top emitters of greenhouse gases. As of 2021, the US was responsible for emitting approximately 5 billion metric tons of carbon dioxide per year, accounting for about 13.5% of total global emissions. This makes the US the second highest emitting country in the world, behind only China.

To put this in perspective, the US carbon footprint is more than double the total emissions from all 28 European Union member countries combined. On a per capita basis, Americans emit around 15 metric tons of CO2 per person annually - nearly double the EU average.

A few key factors drive the large carbon footprint of the US:

Energy Production: A heavy reliance on fossil fuels like coal and natural gas for electricity production accounts for about 25% of US emissions. Most EU countries have transitioned faster to renewable energy sources.
Transportation: America's car culture and sprawling cities make transport a huge emissions contributor, responsible for around 29% of the country's carbon footprint.
Industry and Manufacturing: Major industrial activities like steel and cement production, as well as manufacturing, generate over 20% of US emissions.

While many countries have managed to decouple economic growth from emissions growth, the US has struggled to curb its rapidly rising greenhouse gas output over the past decades. Strong climate policies and a nationwide transition away from fossil fuels will be critical for the US to reduce its massive carbon footprint. Key strategies include rapidly scaling renewable energy, electrifying transport, improving industrial energy efficiency, and pricing carbon.

Why is the US carbon footprint so high?

The US has one of the highest carbon footprints per capita in the world, largely driven by its energy-intensive economy and high rates of consumption. Here are some key reasons behind the country's large greenhouse gas emissions:

Fossil fuel-based energy: The US still relies heavily on coal, oil and natural gas to meet its energy needs. These carbon-intensive sources account for about 80% of total energy consumption. Power plants, industrial facilities and vehicles burning fossil fuels make up the bulk of emissions.
Transportation: America's car culture and sprawling urban areas mean a high dependence on gasoline-powered vehicles. The transportation sector accounts for around 29% of US emissions. Air travel also contributes significantly.
Industry and manufacturing: Major industrial and manufacturing hubs across the country are big contributors. Most facilities continue to run on fossil fuels and emit CO2 as well as other heat-trapping gases.
Building operations: Heating, cooling and powering commercial and residential buildings generates over 12% of emissions, especially due to predominant use of fossil fuels.
Agriculture and land use: Agricultural practices including fertilizer application and livestock digestion release significant methane and nitrous oxide emissions. Deforestation also plays a role.

Transitioning to renewable energy, enhancing efficiency measures, sustainable transportation, eco-friendly agriculture and manufacturing practices can help the US lower its carbon footprint over time. Small and medium enterprises have an important role to play in driving these changes.

Which country has the highest carbon footprint?

China is currently the world's largest emitter of carbon dioxide, producing over 11 billion metric tons in 2021. As the most populous country and second largest economy, China's high emissions are driven by its heavy reliance on coal for electricity and industrial growth.

The United States comes in second, emitting over 5 billion metric tons of CO2 in 2021. With a large economy and high standard of living, America's carbon footprint per capita is among the highest globally. Key sources include transportation, electricity generation, industrial activity, and commercial buildings.

Other top emitting countries are India, Russia, and Japan. These nations have growing, fossil fuel-intensive economies and large populations.

As major emitters, these countries have an opportunity to lead in climate solutions. Widespread adoption of renewable energy, energy efficiency, electric vehicles, and sustainable land use can curb emissions growth. Setting ambitious climate targets and policies to decarbonize can also catalyze global action.

Assessing Your Company's Carbon Footprint

This section will cover methodologies and tools SMEs can use to accurately measure their greenhouse gas emissions.

Defining SMEs' Organizational Boundaries for Emissions

When assessing their carbon footprint, SMEs first need to define their organizational boundaries. This determines which operations, facilities, subsidiaries, etc. should be included when accounting for emissions.

The key considerations when setting organizational boundaries include:

Operational Control - Include any operations, facilities, or vehicles the SME has operational control over, whether owned or leased. This captures direct emissions the SME can influence.
Equity Share - For joint ventures, partially owned entities, etc., include emissions proportional to the SME's equity share in those operations.
Financial Control - Optionally include operations the SME has financial control over, such as subsidiaries or investments, regardless of equity share.

Clearly defining organizational boundaries ensures all relevant emissions sources are captured for a comprehensive and accurate carbon footprint assessment.

Choosing the Right Assessment Methodologies

Once organizational boundaries are set, SMEs need to select appropriate assessment methodologies for quantifying emissions. The main standards include:

GHG Protocol - Developed by the World Resources Institute, this is the most widely used international carbon accounting standard. It separates emissions into three scopes based on source.
ISO 14064 - An international standard that aligns closely with the GHG Protocol but has additional verification requirements.
Industry-specific frameworks - Some industries like oil & gas have tailored methodologies for emissions assessments.

The GHG Protocol is recommended for most SMEs as it balances rigor and practicality. ISO 14064 or industry frameworks can provide more stringent options for SMEs needing verified disclosures.

Collecting Essential Data for Carbon Accounting

Measuring emissions requires collecting extensive data across SME operations including:

Energy usage - Electricity, fuel, and heating/cooling consumption by facilities and vehicles.
Business travel - Miles logged by vehicle type for fleet and employee commuting or flights.
Supply chain - Emissions associated with key goods and services procured.
Waste - Landfill waste, recycling, and compost volumes.

Robust data collection processes must be implemented to quantify usage across all emission sources over the chosen inventory timeframe (typically annually).

Ensuring Verification for Credible Emissions Reporting

To ensure inventory quality and alignment with GHG reporting standards, third-party verification is essential. Verification by accredited, independent experts provides credibility and identifies potential improvements to an SME's emissions assessments over time.

Initial verification focuses on verifying methodology selection, data collection processes, calculations, and identifying any significant gaps or uncertainties. This establishes a foundation for reliable annual reporting moving forward.

Strategies for Emissions Reduction in SMEs

This section outlines specific tactics SMEs can deploy across operations to lower their carbon footprint.

Investing in Energy Efficiency for Carbon Reduction

Upgrading to energy-efficient equipment like LED lighting and optimizing HVAC systems can significantly reduce electricity usage and costs. Some steps SMEs can take include:

Conduct an energy audit to identify high-impact savings opportunities
Replace outdated lighting with LED bulbs - this can cut lighting electricity use by 50-70%
Install smart thermostats and upgrade to high-efficiency HVAC systems
Improve building insulation to reduce heating and cooling loads
Switch to ENERGY STAR certified electronics and appliances

These measures often have short payback periods of 2-3 years from energy savings yet can slash 10-20% of an SME's emissions.

Engaging the Supply Chain in Emissions Reduction

Working with vendors and suppliers on sustainability initiatives can reduce embedded emissions across the supply chain:

Calculate emissions from procurement and distribution to identify hotspots
Set supplier sustainability standards on energy, materials, packaging
Support vendor investments in renewable energy and efficiency upgrades
Source locally to shorten transport distances and emissions
Opt for minimal, recyclable, or biodegradable packaging

Supply chain engagement allows SMEs to multiply emissions reductions beyond their direct operations.

Transitioning to Renewable Energy Adoption

On-site solar, renewable PPAs, REC purchases, and utility green power programs are great ways to green the electricity supply:

Install rooftop or carport solar PV systems to generate clean power
Procure off-site renewable energy from wind and solar farms via PPAs
Buy Renewable Energy Certificates (RECs) through Green-e certified programs
Enroll in utility green power options as a simple first step

Switching to renewables can eliminate over 60% of an SME's emissions footprint. Cost parity with fossil fuels makes this a financially sound strategy.

Adopting Sustainable Transportation to Lower Emissions

Upgrading fleet vehicles and improving transportation practices can drive major emission reductions:

Replace gasoline/diesel vehicles with electric or hybrid options
Implement biofuels like biodiesel or renewable diesel where possible
Train employees on efficient driving to boost MPG through eco-driving
Promote commuter ridesharing to conserve fuel and mileage
Shift freight from trucks to lower-emission rail transport

A 15-20% cut in fleet emissions is achievable through these measures, without impacting operations.

This section explores how SMEs can stand out by communicating their emissions reduction achievements to customers, investors, and other stakeholders.

Emissions Certifications and Reporting Frameworks

To benchmark sustainability progress, SMEs can pursue leading emissions and impact certification standards like:

Global Reporting Initiative (GRI)
CDP Climate Change and Water Security disclosures
B Corporation (BCorp) certification
Science Based Targets initiative (SBTi)

By measuring and disclosing sustainability metrics through standardized frameworks, SMEs can more effectively report performance to stakeholders.

Product Carbon Footprinting for Transparency

Conducting product life cycle analyses allows SMEs to determine the carbon footprint of goods and services. By calculating and labeling product emissions, transparency is improved. This allows customers to make informed, eco-conscious purchase decisions.

Marketing Sustainable Business Practices

SMEs can integrate climate messaging into websites, campaigns, and sales materials. Showcasing sustainability initiatives helps attract environmentally-minded investors, customers and talent. Tactics include:

Highlighting emissions reduction targets and progress
Featuring energy efficiency upgrades and renewable energy adoption
Promoting sustainable supply chain efforts
Sharing corporate social responsibility partnerships

Accessing Green Financing and Investment

By disclosing sustainability metrics and hitting emissions reductions targets, SMEs can access green financing opportunities. These include:

Sustainability-linked loans with preferential interest rates
Green bonds that fund environmental projects
Impact investor funding tied to ESG performance

Leveraging sustainability reporting unlocks new funding streams to accelerate climate action.

Policy Landscape and SMEs' Role in Climate Action

This section explores emerging regulations around climate risk disclosures and GHG reporting that will impact SMEs.

Anticipating SEC Climate Risk Disclosure Rules

The Securities and Exchange Commission (SEC) is expected to release new rules requiring public companies to include climate-related risks in their financial filings. This will likely require conducting climate risk analyses and disclosing Scope 1, 2, and 3 emissions.

SMEs should prepare by:

Auditing current emissions tracking practices
Identifying climate-related risks across operations
Modeling financial impacts of climate scenarios
Disclosing material climate risk factors to investors

Though private companies won't be directly impacted, these rules signal a broader regulatory shift toward climate transparency. Proactively improving emissions measurement and climate risk analysis will strengthen SMEs' standing with stakeholders.

Preparing for Enhanced Emissions Reporting Mandates

Over the next few years, more localities and sectors can expect to face expanded emissions reporting obligations. For example, the SEC could extend climate disclosure rules to additional filers, and state/city policies may add reporting requirements for SMEs in certain sectors.

To prepare, SMEs should:

Implement carbon accounting systems
Track Scope 1, 2, and 3 emissions
Verify data with third-party assessors
Train staff on sustainability reporting

Automated and scalable emissions tracking will help SMEs easily produce reliable disclosures as new mandates emerge.

Understanding Carbon Pricing Mechanisms

Carbon pricing schemes that put a cost on GHG emissions are expanding. These include carbon taxes, cap-and-trade programs, and internal carbon prices. More sectors likely face carbon pricing obligations in coming years.

SMEs should:

Calculate exposure to current and proposed carbon pricing systems
Estimate future compliance costs based on emissions
Incorporate carbon pricing assumptions into financial planning
Adjust business plans to mitigate carbon pricing risks

Proactively modeling carbon pricing impacts provides insight on risks and opportunities to guide strategy.

Outlook for Policy Action and Sectoral Emissions

Momentum is building around additional climate regulations on SMEs, particularly targeting emissions-intensive sectors. For example, further constraints on fossil fuel production and use are likely.

SMEs in impacted sectors should treat enhanced emissions reduction requirements as inevitable and adjust strategies accordingly. Comprehensive carbon accounting and planning systems will be essential to cost-effectively achieving compliance. Leading with ambitious climate action now can also help SMEs influence policy development in their favor.

Conclusion: SMEs' Strategic Steps Towards a Lower Carbon Footprint

Recap of Essential Strategies for Emissions Management

Conduct carbon footprint assessments to understand baseline emissions
Set science-based emissions reduction targets
Implement energy efficiency measures and renewable energy adoption
Switch to lower-carbon materials and optimize transportation
Engage employees on sustainability initiatives

The Strategic Imperative of a Robust Climate Strategy

SMEs that proactively address emissions will be better positioned to:

Meet emerging regulations and disclosure requirements
Attract investment and partnerships
Satisfy customer and stakeholder demands
Build resilience against climate impacts
Unlock innovations and cost savings

Getting ahead of the curve allows SMEs to turn climate action into a competitive advantage.

A Call to Action for Comprehensive Climate Engagement

The time for climate action is now. SMEs must fully embrace decarbonization efforts through comprehensive emissions measurement, target-setting, reductions, and transparency. Collective action across sectors and business sizes is essential to meaningfully tackle the carbon footprint challenge. SMEs have a strategic role to play in driving national and global progress towards net-zero emissions.