The carbon footprint is one of the most used concepts lately in terms of the environment and has a close relationship with financial habits.
How personal finance influences the environment by offsetting carbon footprints
The carbon footprint is a calculation of the direct and indirect emissions generated by a product, a company or an individual.
Everything we do leaves a footprint, including investments and other aspects related to finance.
To calculate the carbon footprint it is necessary to analyze the gases emitted to manufacture the product in question, those that can be indirectly imputed because they are necessary for its production and those that are produced by its use.
An investment portfolio can be measured in terms of how many tons of CO₂ it generates per million euros invested. A new type of investor has emerged who, when making a decision, values the environmental impact of the product they are being offered and wants to make investments that offset the carbon footprint generated by their daily activities.
Companies are beginning to measure the carbon footprint of the financial products they offer in order to advise customers on this matter.
Another action they are taking is the creation of a socially responsible fund that offers customers the possibility of increasing their capital and participating in an investment with great social benefits.
In addition, the United Nations and Europe are promoting new regulations and commitments to curb environmental deterioration, such as the Paris Agreement or the UN Sustainable Development Goals for 2035.
Sustainability is becoming not an option, but an obligation for everyone, since there are different economic rewards for developing projects to measure and reduce the carbon footprint.
Companies’ commitment to carbon footprint reduction starts by including sustainability in their strategic and operational plan.
First, they must measure the carbon footprint in its three scopes:
- They measure direct greenhouse gas emissions that are produced by sources owned or controlled by the company. For example, pollution produced by the company’s fleet of vehicles.
- Sources indirectly attributable to the generation of energy purchased and consumed.
- In this last scope are the emissions produced by others, such as business travel, commuting, waste, etc.
This can be done with the help of a carbon footprint calculator.
Once the carbon footprint has been measured in its three scopes, companies can reduce it by taking some of the following measures:
- Reducing business air travel and encouraging video conferencing.
- Cloud storage instead of using paper.
- Change lighting by using environmentally friendly bulbs.
Sustainable financial habits, how to reduce your carbon footprint
Sustainable finance is finance that includes social and environmental factors in long-term investment decisions.
This type of finance includes issues related to climate change adaptation and mitigation and the environment, as well as inequality, inclusion and investment in human capital.
To reduce your carbon footprint through investments, it is possible to choose traditional asset management products, SRI funds, pension plans and green and social bonds, among others.
The aim is to finance companies that care for the environment and have solidarity purposes. To choose the best financing option:
- Choose the environmental purpose. Be clear about the criteria that the company should pursue in order to invest in it.
- Select the financial criterion. Decide on the amount to be invested and the length of time the investment will be maintained.
- Find the right product. It is necessary to obtain information from different sources about products that meet personal preferences or hire a financial advisor to inform and guide throughout the process.
- Compare and choose. Study the options that meet the criteria, their returns and conditions.
In addition to sustainable financial habits, it is advisable to carry out other actions to reduce the carbon footprint, such as reducing the volume of waste, limiting driving and saving energy consumption.
The goal at both the individual and corporate level is to achieve carbon neutrality, that is, to emit the same amount of carbon dioxide into the atmosphere as is removed in different ways.
The carbon footprint is a metric to measure the environmental impact of individuals and companies. Personal finances have a significant influence, as investments are made in the production of products that directly and indirectly generate emissions. To reduce the carbon footprint, companies must measure it and take action, and individuals can invest in sustainable finance and change their lifestyle habits.