A Strategic Imperative: The Importance and Future of Corporate Carbon Footprinting for Companies

The Imperative of the Future: How Managing Carbon Footprint is Becoming Critical for Companies' Financial Reporting and CBAM Compliance

In today's business world, sustainability is no longer a choice but a strategic imperative. At the starting point of this journey lies a fundamental concept that enables companies to understand the environmental impact of their operations: Corporate Carbon Footprint. So, what is the strategic importance of this concept, which sectors are more critical and where does recycling fit into the equation?

The Foundation of Everything: The Strategic Role of Carbon Footprint

Corporate carbon footprinting can be considered the "101 lesson" in a company's sustainability journey. Without this foundation, it is not possible to conduct further analysis and be successful. We can summarize its strategic importance under two main headings:

• Understanding the Current Situation: Only after conducting a carbon inventory can a company clearly see the impacts of its activities and the areas where it is weak or open to improvement. This calculation is the first and most important step in drawing a roadmap for improvement.
• Preparing for the Future: As we move forward on the sustainability journey, companies will face new challenges and data demands. Teams that have not internalized corporate carbon footprinting will struggle to present the data requested in the future in the right format and manner. Therefore, this is the main exercise that builds future competencies.

The Force that Determines the Imperative: Laws or Customers?

Officially, the carbon footprint obligation in Turkey applies to large companies subject to the MRV (Monitoring, Reporting and Verification) regulation, but this scope is expected to expand soon. But strategically waiting for regulations and laws is no longer the right move.

The real driving force is customer demands rather than laws. The customer is the main factor shaping the market, and with the increasing awareness of sustainability, the demands are intensifying. Therefore, it is no longer correct to make a sector distinction. Nevertheless, some sectors where customer sensitivity is more intense stand out:

• Manufacturing
• Energy
• Transportation

Within the manufacturing sector, areas with high amounts of waste and those that directly produce greenhouse gases are in a more critical position. In addition to the main sectors such as fertilizers and steel, the plastics sector and companies that use plastic materials intensively are among the sectors that will suffer the most.

Key to Mitigation: Recycling and Circular Economy

In order to reduce the carbon footprint, it is first necessary to calculate it accurately with a "cradle to grave" approach. Recycling plays two critical roles in this reduction process:

• Turning Waste into Input: It is the basis of the circular economy model that a company recycles the waste generated in its own production processes and the waste from the products it puts on the market as an input back into the system. This significantly reduces total emissions.
• Use Recycled Raw Materials: Choosing recycled materials as raw materials in production is also a critical factor that significantly reduces emissions.

Once these two steps are taken, operational emissions (Scope 1 and 2), i.e. emissions from the types of fuel used, are largely left. At this point, turning to renewable energy options can significantly reduce emissions.