Measuring a startup’s carbon emissions
How a Toronto-based startup went carbon neutral and how your company can too
Human-caused (known as anthropogenic) climate change is one of the defining issues of our time. Recently, I’ve been thinking about the impact Lending Loop has had on our climate and wanted to begin measuring our emissions.
This post covers my journey to conduct a carbon inventory of Lending Loop’s carbon emissions. At the end, I’ll share a few learnings I had during this process that we’ll be acting on in 2020 to further reduce our carbon footprint.
What is causing climate change?
The Canadian Government’s Climate Atlas does a great job of explaining the underlying cause of climate change:
Evidence shows that only increased concentrations of greenhouse gases in the atmosphere — specifically carbon dioxide concentrations — can explain Earth’s observed warming trend. Greenhouse gases are called that because they effectively act like a greenhouse or a layer of insulation for the Earth: they trap heat and warm the planet.
And there’s only one explanation for why carbon dioxide concentrations are on the rise: the combustion of fossil fuels by humans.
What impact does a software company have on the climate?
The inputs that go into a business to make it operate require energy and in many places that energy comes from the burning of fossil fuels. Software companies have employees that commute to the office and travel to visit clients, rely on data centers to run their code, have their offices heated and cooled and source inputs from vendors that all have their own carbon emissions.
In order to quantify our emissions, I had to look at the inputs of our business and quantify the amount of carbon each emitted. This form of audit is typically called a carbon audit or carbon inventory. As with any metric in a startup — you can only improve what you measure, so with that, let’s dig in.
How is a carbon inventory done?
To audit Lending Loop’s carbon emissions we need to use a framework for categorizing and grouping our emissions. A common standard used by other software companies such as Shopify and Stripe is from GHG Protocol.
GHG Protocol has worked with industry and governments to establish a framework for calculating emissions in a standardized manner. The framework groups emissions into three scopes:
Scope 1 — Direct Gas Emissions
Direct GHG emissions occur from sources that are owned or controlled by Lending Loop, for example, emissions from burning natural gas to heat our office.
Scope 2 — Electricity indirect GHG Emissions
Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by Lending Loop. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.
Scope 3 — Other Indirect GHG Emissions
Scope 3 emissions are a consequence of the activities of operating Lending Loop, but occur from sources not owned or controlled by us. We decided to focus on employee commuting, business travel, marketing and servers.
Lending Loop’s Carbon Inventory
Lending Loop is an online marketplace that connects small businesses looking for affordable financing with more than 10,000 investors from across Canada. As an online marketplace, we require a robust technical infrastructure, a variety of teams and an office for us to work out of.
With the GHG Protocol framework, I started to group all of the inputs of our business into the Scope 1, 2 and 3.
Scope 1 Emissions
With no emission sources that are owned or controlled by us at Lending Loop, we had 0 Scope 1 Emissions.
Scope 2 Emissions
We have an office in Toronto which requires a significant amount of electricity for heating, cooling and keeping our lights on. To calculate our office’s emissions, we took our 2019 office electricity consumption (in kWh) and then multiplied it by the CO2 emitted by kWh in Ontario. CarbonZero provides a helpful calculator to make this easy!
Our Scope 2 emissions from operating our office in Toronto were 2.6 TCO2e (tonnes of CO2 equivalent).
Scope 3 Emissions
As you can imagine, this is where the bulk of emissions for a software company are. However, this is also the most challenging category to quantify as data availability and electricity sourcing can be opaque. With that said, we can quantify the following several Scope 3 Emissions items accurately:
- Business travel (flights, Uber/Lyft, Taxi etc.)
- Employee commuting
- Office deliveries
- Marketing (out of home, printing and direct mail)
After collecting all of the information for each of the above Scope 3 Emissions inputs, I built a model that estimates the amount of carbon per input using tools such as CO2 calculator and estimates provided by schools such as MIT.
Lending Loops 2019 Scope 3 Emissions were 40.26 TCO2e.
What we’re going to do next
When we look at our emissions line-by-line, the major emitters are transportation and servers. We have come up with the following emission reducing action items for our team in 2020:
- Promote the use of public transit, cycling and even walking when possible — many of our partners, vendors and investors are a short distance from our office!
- Move our company ride sharing account to Lyft as they offset every trip automatically (Uber does not)
- Continue to migrate our servers to AWS regions that are 100% powered by non-emitting energy sources (AWS has several regions that are 100% powered by non-emitting sources). Google Cloud Platform and Azure are already carbon neutral.
- Be strict with company air travel and promote transit and travel by train when possible
- Purchase offsets for the remainder of our carbon emissions for 2019 (offsets can be purchased from Less, Pachama and Wren). We purchased our offsets from Less and specifically selected a methane capture project in Ontario.
Conducting a carbon inventory showed me where we can make changes to our operations that will result in emitting less carbon. My hope, along with other companies performing this exercise is to direct our spend to companies that are doing their part to reduce their emissions, eventually driving change with larger vendors and providers which can make an impact on global CO2 emissions.
If you’re interested in making your company carbon neutral, checkout the following:
- Increment’s carbon neutral worksheet
- GHG Protocol
- Offset providers such as Less, Pachama and Wren
- CarbonZero emissions calculator
To learn more about what Lending Loop is doing to reduce our impact on our environment you can visit lendingloop.ca/environment.