How to Estimate the Carbon Footprint of Your Packaging

Climate change is happening fast. Global temperatures have risen 1℃ since the industrial revolution, and atmospheric CO2 concentrations are the highest ever, looking at one million years of historical data. 

Businesses should take steps to reduce, eliminate, and offset their carbon footprint, but it can be hard to know where to start. 

This guide will help you understand the carbon emissions associated with your packaging, estimate them, and give you the tools to reduce and offset them.

What are carbon emissions?

Carbon dioxide is a greenhouse gas (GHG), meaning when in the atmosphere, it traps heat on Earth and keeps it from dissipating into space. It is the most widely emitted, but not the only GHG out there. Methane (CH4), for example, has about 21x the potential for warming as CO2 and is released from decomposition of materials in landfills among other sources. 

For the purpose of measuring total GHG potential for warming, you measure all gases, and compare how much more impactful they are than the same amount of CO2 over a fixed period of time. Then you convert the gases into a CO2 equivalent, so you can have a single number. 

This number is CO2e (carbon dioxide equivalent), and it’s the total carbon dioxide equivalent of all GHG gasses, so CO2e and GHG are often used interchangeably. CO2e is measured in tonnes, and GHG potential is used to calculate temperature change estimates which can measure the amount of warming that CO2 would cause over 100 years. 

A company's total GHG emissions can be broken down into three parts — they’re called scopes. It’s important to know what scope you’re referring to anytime you talk about emissions. When people talk about being carbon neutral they’re only referring to Scope 1 or 2, but true carbon neutrality covers all three scopes.

Scope 1 — Direct Emissions: These are emissions that your company creates, via things like company vehicles or boiler combustion. Most companies purchase electricity rather than creating their own, so this is the smallest scope of the three.

Scope 2 — Energy Indirect Emissions: These emissions come from energy that your company purchases for direct use. This scope accounts for energy purchased for things like running an office or in-house fulfillment center.

Scope 3 — Other Indirect Emissions: These are upstream, downstream, and end-of-life indirect emissions your company is responsible for. This is by far the largest scope, and the most abstract and hard to track. Scope 3 accounts for basically all of the embedded emissions in your product manufacturing supply chain — from raw material extraction and processing to final manufacturing and distribution to your warehouse.

Because footprint tends to increase exponentially from one scope to the next, it is critical to measure your scope 3 emissions to prevent grossly underestimating the impact you are creating in the world.

Calculating scope 1-3 CO2e emissions

So how do you calculate your scope 1-3 CO2e emissions? There are a number of ways, but the most common is a Life Cycle Analysis (LCA). There are two main types of LCAs: process LCAs and Economic Input-Output (EIO) LCAs. Each has its pros and cons. 

Process LCAs, build your footprint from the ground up, whereas EIO LCAs take a top down approach.

In a process LCA, you trace the making and selling of all your products, and all of your business operations such as travel, office supplies, utilities, snacks, etc. Track it all backwards through transit and manufacturing until you get to the raw material extraction. 

Track it all forwards and calculate the emissions impact based on real-world upstream and downstream supply chains and disposal. For example your product ends up in the landfill on average after two years of use, and decays releasing methane and CO2. 

For something like company travel, you would need to factor in not only that passenger’s share of fuel burn, but also the snacks they ate and the embedded emissions of the plane itself via the fractional percent of the total use of the plane your employee used. 

This is the most in-depth type of LCA. The process LCA requires a third party and can take months and costs tens of thousands of dollars. Because it is so granular, a process LCA can often undershoot emissions by as much as 50%. This is called model leakage, and it is inevitable with this type of approach, as you can’t possibly track every thread of potential emissions.

An alternative type of LCA is an Environmental/Economic Input-Output (EIO) model. EIO LCAs take a top down approach to calculating emissions, looking at the economic value of your products and business, and using sector or material-specific emission factors to provide a high-level estimate of your footprint. Think of it as looking at the GDP of an industry, the total carbon footprint of that industry, and then using that information to create an emissions factor per dollar of economic activity. Often, there are country-specific model methodologies that leverage government information, such as the Producer Price Index (PPI) from the Bureau of Labor Statistics. One of the most robust is the United States Environmentally Extended Input-Output model (USEEIO) by the EPA, which we will circle back to in the examples. 

The upside of any EIO model is that it is relatively quick and cheap, and has almost no leakage. The downside is that it is agnostic to specifics about your company's supply chain or business practices since it only looks at averages. It can also be geographically specific, which is tricky in a global economy. If you can find more granular buckets for your sector or material, this model will be more accurate and more in tuned to the specifics of your company. Finally, this specific model does not factor in any incidental GHG sequestration. Though marginal, you can often find incidental sequestration in the lifecycle of various products. In the case of plant-based products like paper, this sequestration is actually significant. Any carbon emissions released at end-of-life are predominantly offset by carbon captured in the growth of the plant — in this case, a tree. This sequestration is not factored into this model, so paper may perform better overall than it would appear.

The USEEIO is the best model to start with because it can highlight your current carbon footprint, as well as specific areas where you can improve. We’re going to apply this model to packaging, but keep in mind that packaging may be a small part of your company’s overall footprint.

Calculating your packaging footprint

Let’s look at the spend of the hypothetical company, Shipping Things. Currently they are spending $1.43 on domestically produced corrugated boxes and shipping about 10,000 units a month. To do the math, we’re going to use the EIO calculator from Carnegie Mellon University based on the USEEIO model. 

$1.43 / box × 120,000 boxes/year = $171,600/year

For the corrugated boxes, we selected the latest model with the applicable sector: US 2007 PPI; Wood, Paper, and Printing macro sector; Cardboard Containers detailed sector. To use the calculator, we have to convert the Shipping Things annual box spend into millions of dollars. The $171,600 annual spend is $0.1716m. We select Greenhouse Gases as our category, then run the model. 

The results show that the CO2e impact of Shipping Things annual box spend is 138 tonnes. It would take 180 acres of forest a year to sequester that much CO2e!

138 tonnes ÷ $171,600 annual box spend = 1.78 lbs CO2e/dollar spent on corrugated boxes in the US

As the company grows, we can scale this model easily by calculating the CO2e impact of each dollar that Shipping Things spend on corrugated. By dividing the annual tonnes of CO2e (138) by the annual spend ($171,600) we get a factor of 1.78 lbs of CO2e per dollar we spend on corrugate. This factor is very useful for comparing average emissions across packaging categories to guide better decisions. 

Let’s say that Shipping Things is considering switching from domestic boxes to poly mailers made in China. The tool we are using is US-specific, but we can add more information to get a rough sense of how producing in China would compare to the US. By finding the GHG per dollar of Gross Domestic Product, we can see that on average, China is currently emitting about 4x the GHG per dollar of economic value vs the US.

1.78 lbs CO2e/dollar spent on US corrugated boxes × 4 = 7.02 lbs CO2e/dollar spent on China corrugated boxes

We can get a rough estimate of China produced corrugated by multiplying our US number by 4. If we wanted higher fidelity numbers, we could look for China-specific data, but this will do for now. Below are the factors for a number of different product categories along with the adjusted China number. You can see our $1.43/unit box in the first row, and pricing for other products.

Based on this data, if we decided to ship a fabric bag inside of our corrugated box, it would take a forest almost double the size of Central Park in NYC to sequester the same amount of carbon we emit every year! We can also see that the emissions per dollar is much higher for poly mailers made in China than our domestic boxes. This is because they are much cheaper, mostly because they use significantly less material. In the end, making the switch to poly mailers would theoretically cut Shipping Things packaging emissions by over 50%.

The CO2 calculator also breaks out contributing sectors. This is great because it can help you identify areas to improve your supply chain footprint. For the Shipping Things boxes, we see that electricity is the biggest contributing factor, followed by processing of the input materials of the corrugated and paper.

You can do this same exercise for the rest of your business, or just jump straight to your end product if there is an appropriate sector. Use your selling price, and see the total emissions for your company. From there keep calculating to get a better idea of where all of your emissions are coming from.

Decreasing and offsetting your emissions

Now that you have a sense for your packaging footprint, what can you do about it? An obvious step would be to reduce the amount of packaging you use. One of the great things about the EIO method is that reducing emissions aligns nicely with reducing COGS.

A second option would be to evaluate switching to a lower impact packaging material. If you are shipping clothes in corrugate, maybe it is worth considering poly mailers. Based on our previous examples and the individual category factors, even though per-dollar emissions for poly mailers produced in China are much higher than domestic corrugated boxes, when you factor in cost, it can be a great option. Switching to poly mailer from a corrugated box would reduce the footprint of each item by over half!

Third, look at how you can optimize your supply chain to use less emissions than the sector average. The biggest factor for corrugated was electricity used in the container production, so Shipping Things could work with factories that produce their own solar power, or another type of renewable energy. For corrugated containers, direct transport was close to 7% of total emissions. Choosing local production cuts down on miles (and therefore emissions) racked up between the factory and the distribution center.

Finally, offset your emissions! Carbon offsetting deserves its own deep dive, but it is a great way to help with climate change while we are transitioning supply chains to be carbon neutral. Shipping Things could offset its corrugated impact for only a few thousand dollars a year through a verified marketplace like The Gold Standard. Review your company's carbon footprint, and see what you can do to help make the future a bit brighter.