Carbon Intensity

Total emissions tell how much greenhouse gas an organisation reports for a period, and intensity puts that amount alongside an activity measure. Start with an absolute emissions inventory, where the numerator might cover Scope 1 direct emissions, Scope 2 purchased-energy emissions or a defined Scope 3 category.

The denominator should fit the decision: a manufacturer might use tonnes of output, a hotel occupied room nights and a freight operator tonne-kilometres, while revenue is useful in some comparisons but can move because of price inflation. GRI 305 asks organisations reporting a GHG intensity ratio to identify the chosen denominator and which emissions scopes and gases are included, and it divides absolute emissions by an organisation-specific metric.

For example, 500 tonnes of CO2e on $20 million of revenue gives 25 tonnes per $1 million, assuming matching period and currency, and the figure is not 25 tonnes per customer or product. A lower intensity can occur while total emissions rise: if output doubles and emissions rise 50%, each unit may be cleaner but the organisation still emits more overall, so report the absolute amount alongside the ratio.

A higher intensity is not always poor operations, since a factory may run at low capacity during a downturn while keeping boilers warm. GHG Protocol guidance on product intensity shows how functional units can reflect real use, so a washing machine could be assessed per wash over its lifetime, not only per machine sold.

Data quality matters as well, because meter readings, fuel invoices, supplier estimates and emission factors can carry uncertainty, and a ratio with many decimal places is not necessarily accurate. A change in reporting boundary can create a false trend.

Acquiring a plant, adding Scope 3 or changing supplier data may move the numerator, so restate a baseline where the reporting rules require or explain the difference. Scope 2 can be reported using different methods under relevant standards, with location-based and market-based figures that may differ, so state which one feeds the intensity ratio.

Revenue denominators need care across currencies and years, because exchange rates and price changes alter reported sales without changing physical output, and a business can show both physical and revenue intensity where useful. For product comparisons, use a consistent life-cycle boundary, since comparing a factory-only figure with a competitor's full-use-phase figure is misleading and the label "carbon intensity" alone does not fix the scope.

Some stakeholders may request a particular standard or unit, and a supplier should answer that request rather than substitute its preferred measure, stating any data gap. Management can link intensity to process improvements, as a new machine may reduce energy per tonne while a shift in electricity supply may reduce CO2e per unit, but the change should be attributed carefully rather than crediting the equipment alone.

Set a target with a base year and scope, because "reduce intensity by 20%" is ambiguous without a denominator and date, and include a plan for reporting absolute emissions too. Check for denominator gaming, since outsourcing a high-emission step can make a factory metric look better while shifting emissions into the supply chain, and remember that an intensity ratio is not a direct measure of climate impact or compliance, so use it as one management signal, not a substitute for the inventory, and explain metric changes before comparing years.