Carbon Footprint vs Carbon Equivalent (CO2e): Understanding the Differences and Impact on ESG Reporting

The terms carbon footprint and carbon equivalent are closely related, leading to frequent mix-ups in reporting as well as public discussions. Conversations on sustainability almost always involve climate change and greenhouse gases. Yet, many still assume the problem boils down to just carbon dioxide (CO₂). In reality, global warming is a result of a mix of harmful gas emissions, including CO_2, but also methane, nitrous oxide, and sulphur hexafluoride (SF₆), which is considered one of the most potent greenhouse gases. Together, these emissions make up an organisation’s carbon footprint. To capture an organisation’s emissions and their combined impact, the term carbon equivalent (CO₂e) is used as a measurement unit.

When calculating emissions, terms like carbon footprint and carbon equivalent often appear side by side. But what’s the difference, and why do these distinctions matter in ESG reporting? This article explores the key differences between carbon footprint and carbon equivalent, explaining why this matters and how it shapes sustainability reporting practices for organisations.

What is a carbon footprint?

An organisation’s carbon footprint is the total amount of greenhouse gases resulting from its operations. This may focus on CO₂ as the main emission tracked, but carbon footprint reporting covers more than just carbon dioxide. Most organisations calculate their carbon footprint based on the total emissions from activities such as energy use, transportation, supply chains, etc. Beyond carbon dioxide, these emissions include other greenhouse gases such as:

• Methane (CH₄) in agriculture and fossil fuel extraction
• Nitrous oxide (N₂O) in agriculture and chemical manufacturing industries
• Fluorinated gases (F-gases) used in refrigeration, air conditioning, and other industrial uses

The Greenhouse Gas (GHG) Protocol splits emissions into three main “scopes”. This makes it easier for organisations to track and identify areas for potential reduction:

• Scope 1: Direct emissions from sources owned or controlled by an organisation, such as facilities and vehicles.
• Scope 2: Indirect emissions from energy that an organisation purchases, such as electricity, heating, or cooling.
• Scope 3: Indirect emissions from the supply chain, including water disposal, employee travel, and the use of products sold.

How is carbon footprint calculated?

To calculate an organisation’s carbon footprint, a formula is used that multiplies organisational activity and consumption data by their specific emissions factor. The results are then typically reported in tonnes of carbon dioxide equivalent (CO₂e).

CO₂e = Σ [ Activity_i × EmissionFactor_i ]

Where:

• Activity_i = the measured activity for source i (e.g., litres of fuel used, kWh of electricity consumed, kilometres travelled, etc.)
• EmissionFactor_i = the emissions factor for source i (e.g., kg CO₂e per liter, kg CO₂e per kWh, etc.)
• Σ = sum across all emission sources included (i.e. Scopes 1-3)

Today, organisations use carbon footprint calculators to measure the amount of CO₂ emissions generated. Beyond calculating emissions, calculating carbon footprint also improves the organisation’s understanding of user behaviours and consumption patterns, enabling data-backed decisions for carbon reduction strategies.

What is carbon equivalent (CO₂e)?

Carbon dioxide equivalent (CO₂e) is a standardised unit expressing the total warming effect of various greenhouse gas emissions by converting their impact into the amount of CO₂. This helps condense data from various emissions into a single unit, making it easier to compare emissions from different sources on a like-for-like basis, and simplifying complex environmental data to provide clearer insights into the organisation’s overall contribution to global warming.

How is CO₂e calculated?

In carbon equivalent calculations, each greenhouse gas emission is multiplied by its Global Warming Potential (GWP) value. The GWP is a measure of how much energy the emission of 1 tonne of a gas will absorb over a period of time relative to the emission of 1 tonne of CO₂. This is a number scientifically assessed by the Intergovernmental Panel on Climate Change (IPCC) in case of changes caused by energy absorption estimates, gas lifetime, or changing atmospheric concentrations of greenhouse gases. This converts it into the equivalent amount of CO₂ that causes the same warming effect. 

For example, methane has a GWP of about 28 to 30 over 100 years, which means one ton of methane has the same climate impact as 28 to 30 tonnes of CO₂. 

Carbon equivalent calculators help translate abstract measurements and numbers into simpler terms, and can help ESG or sustainability teams communicate greenhouse gas reduction strategy and targets.

The IPCC regularly publishes GWP estimates in its assessment reports. These are then used in international climate policies and greenhouse gas inventories under frameworks like the United Nations Framework Convention on Climate Change (UNFCCC). This standardisation is crucial for sustainability reporting and organisations complying with environmental policies and regulations. By using CO₂e as a unit, analysts and ESG teams can compare and manage gas emissions on a more simplified scale.

Carbon Footprint and Carbon Dioxide Equivalent: What Is the Difference?

As previously explained, carbon footprint describes the overall measure of gas emissions from an individual, organisation, activity, or product. However, because greenhouse gases vary in their warming effect, this value is expressed in carbon equivalents (CO₂e).

This overlap tends to create confusion. Many businesses and media outlets typically use the term carbon footprint, even when results are presented in CO₂e. This adds to the belief that carbon footprint refers only to CO₂, when it actually covers a full range of gases converted into the common unit.

The technical distinction between the two terms is as follows:

• Carbon footprint: The accounting method covering the activities included and how data is collected
• Carbon equivalent: The unit measuring all greenhouse gases, standardised for improved comparisons

For example, a clothing brand may calculate its carbon footprint by tracking organisational activities such as producing, transporting, selling, and disposal. This includes emissions from raw material sourcing, manufacturing processes, shipping, and store operations, which are then expressed in carbon dioxide equivalent (CO₂e) based on their Global Warming Potential.

Where carbon footprint refers to the emissions being counted and the activities that cause them, carbon equivalent defines the value of these emissions by expressing all gases in a consistent unit to capture the overall environmental impact of the brand.

Without this distinction, organisations risk underreporting their total emissions. Over time, this will also lead to miscommunications with stakeholders, regulators, and investors.

What is the impact of CO₂ and CO₂e on ESG reporting? 

CO₂ and its broader measure, CO₂e, play a crucial role in ESG reporting by providing a comprehensive view of an organisation’s greenhouse gas emissions. Properly measuring and reporting these emissions ensures companies deliver transparent, accurate, and comparable sustainability disclosures that meet regulatory requirements and stakeholder expectations.

Accurate and transparent disclosures

Using CO₂e in sustainability or ESG reporting enables accurate and transparent disclosures by providing a standardised, quantifiable measure of greenhouse gas emissions. The conversion of CO₂ and other greenhouse gases, such as methane and nitrous oxide, enables organisations to capture their total climate impact consistently. CO₂e disclosures also help identify the relative contribution of various gases to the total carbon footprint, which can support more informed strategies and decisions. 

Compliance with international frameworks

Depending on where the organisation is based, this also helps reports stay aligned with international frameworks, such as the GHG Protocol and the EU’s Corporate Sustainability Reporting Directive (CSRD), by aggregating the warming impact of various gases into a single, unified unit. 

For example, organisations complying with the CSRD are mandated to report their full GHG inventory in CO₂e, not just CO₂. This prevents organisations from omitting significant emission sources and prevents the production of incomplete or misleading reports. Likewise, failure to meet this requirement may be considered an incomplete disclosure.

Stakeholder engagement

Beyond compliance, carbon equivalent reporting shapes how investors, customers, and regulators assess companies. 

For example, financial institutions may screen portfolios based on financed emissions, which require carbon equivalent calculations across financial activities. Meanwhile, in the manufacturing industry, CO₂e tracking highlights material choices and energy intensity, which allows organisations to set credible decarbonisation roadmaps. Service-based organisations rely on accurate Scope 3 CO₂e reporting to cover activities that are often overlooked, such as business travel, purchased goods, or digital infrastructure.

Cross-sector comparability

Standardised CO₂e disclosures also improve comparability across sectors. An energy company and a consumer goods brand can translate methane, refrigerants, or other gases into a single common unit (CO₂e) to enable clearer benchmarking. This consistency reduces the risk of issues such as greenwashing, while building stakeholder trust and strengthening the credibility of long-term transition plans.

Best Practices in Carbon Footprint Reporting

To ensure credibility, consistency, and usefulness in emissions accounting, organisations should follow several established best practices based on global leading standards.

1. Adopt a recognised accounting standard

Use frameworks such as the GHG Protocol Corporate Standard as your foundational guide. This sets global norms for quantifying and reporting greenhouse gas emissions across all scopes. Aligning with such standards ensures your methodology is defensible and comparable.

2. Clearly define boundaries and base years

Before measurement, define organisational and operational boundaries and select a base year to compare all future emissions against. The U.S. EPA recommends starting with these steps to create a consistent inventory of emissions data over time. Meanwhile, the EU follows base year guidelines from the Greenhouse Gas Protocol Corporate Standard, with the common practice being to align with the Kyoto Protocol and choose 1990 as the base year.

3. Use reliable emission factor databases

Emission factors convert activity data into CO₂e. Use vetted sources such as the IPCC’s Emissions Factor Database, or databases recommended in the GHG Protocol’s calculation tools, such as the Iron and Steel tool, which provides two different ways to calculate CO₂ emissions. 

For example, a mining company operating in the EU would collect activity data such as ore extraction volumes, fuel consumption from mining, and electricity usage, and convert it into CO₂e using emission factors from the IPCC and the Iron and Steel tool. There are also carbon calculators that can be used to automate the emission calculation process. This would ensure transparent and compliant ESG reports aligned with the region’s CSRD and GHG Protocol.

4. Ensure data transparency and document assumptions

When you estimate emissions, some data may be missing or incomplete. Document all assumptions, estimation methods, and data gaps. Organisations should also have scheduled internal audits where ESG reports can be reviewed and validated to ensure accuracy, completeness, and compliance with relevant standards, depending on the region. Transparency helps build stakeholder confidence and prepares you for third-party reviews or audits.

5. Prioritise and phase in Scope 3 emissions

For many organisations, Scope 3 accounts for the largest share of total emissions. It is also the trickiest group of emissions to measure. The GHG Protocol’s Scope 3 Guidance can help organisations evaluate categories such as upstream transportation or product use, and gradually improve data quality over time.

6. Apply quality control and uncertainty analysis

Build checks and review steps into your process, such as reasonableness checks or variance analysis, to ensure data doesn’t stray into unrealistic values. In case of any uncertainties, quantify or report confidence intervals for accountability.

7. Integrate emissions metrics into decision-making

Use the insights gathered for the reporting as guidelines for business operations such as procurement, capital investment, product design, or operational efficiency. For example, strategise to choose lower-carbon materials or energy suppliers if emission values are particularly high.

How Presgo Helps with Accurate ESG Reporting

The carbon reporting process requires meticulous detail and accurate data. Presgo reporting software and its Carbon Calculator simplify this process by automatically converting activity data into CO₂e values and explaining exactly how emissions were calculated. This helps organisations track, report, and act on emissions data with confidence. 

Through AI-powered carbon calculations, Presgo can automatically compute Scope 1 and Scope 2 emissions, while collecting Scope 3 data directly from suppliers through structured or unstructured surveys. Emissions data can then be analysed by country, division, or activity, so organisations can identify top emitters and make data-backed decisions for a reduction strategy.

Presgo’s automated calculator is designed to meet international reporting standards, including automated Scopes 1, 2, and 3 calculations. It allows for flexible emission factor management according to trusted frameworks like the GHG Protocol, IPCC, US EPA, UK Defra, and IGES, and can be set to meet various regional, sector, and global-specific emission factors.

By aligning with reporting standards, Presgo supports compliance while helping ESG teams set achievable reduction targets.
Book a demo to learn how Presgo’s AI-first features can help streamline your organisation’s carbon reporting journey.