What Is a Good Carbon Intensity Ratio by Industry?

A Leeds-based precision engineering firm with £8 million turnover and forty-two staff recently ran its first carbon audit. They emitted 320 tonnes of carbon dioxide equivalent across Scopes 1, 2 and 3, which gave them a carbon intensity ratio of 40 tonnes per million pounds of revenue. Their finance director stared at the figure and asked the only question that matters: is that any good? The honest answer was — compared to a software company, it looks dreadful. Compared to a blast furnace, it is practically saintly. That is the problem with carbon intensity ratios. They are meaningless without context, and ‘good’ is entirely an industry question.

Carbon intensity simply means greenhouse gas emissions divided by a business activity metric. Revenue is the most common denominator, but tonnes of product, square metres of floor space, employee headcount or units shipped all work depending on the sector. The GHG Protocol Corporate Standard does not mandate a specific ratio, which is why so many UK businesses under SECR reporting end up publishing a number without knowing whether it signals competence or complacency. If you are obliged to disclose under SECR — and many medium and large organisations now are — you might want to check whether SECR reporting is mandatory for your business before you choose your intensity metric.

Why Revenue-Based Ratios Mislead Heavy Industry

Imagine a cement manufacturer and a management consultancy. The cement plant emits 800 kilograms of carbon dioxide equivalent for every tonne of clinker it produces. The consultancy emits roughly 2.5 tonnes in total for the entire year, mostly from flights and office electricity. Divide both by revenue and the consultancy looks fifty times cleaner, but that tells you nothing about operational efficiency. It merely reflects that brains-for-hire command higher margins than limestone chemistry.

This is why revenue-based intensity ratios, while convenient for investors making cross-sector comparisons, often punish capital-intensive sectors and flatter asset-light ones. A food processor with tight margins and high energy demand will always look worse than a fintech startup with forty employees and global revenues. Does that make the food processor poorly run? Not necessarily. It simply means revenue is the wrong denominator. For heavy industry, output-based ratios — grammes of carbon dioxide equivalent per kilogramme of product, or per tonne of material throughput — are far more honest indicators of operational control. The UK Government SECR guidance explicitly permits alternative intensity metrics if they better reflect performance, yet most businesses default to revenue because it is easiest to calculate.

What Good Looks Like Across Key UK Sectors

So what is a good carbon intensity ratio by industry? The ranges below are drawn from disclosed SECR filings, CDP responses and sector benchmarks used by the Climate Change Committee for UK net zero tracking. They are not targets; they are observations of where competent, non-laggard performers currently sit. If your number is significantly above the upper bound, you probably have both an operational problem and a reputational one.

The contrarian point most consultants will not make: publishing a ratio at the low end of your sector range is not always a win. If you have achieved it by divesting manufacturing assets to a third party and then buying the finished goods back, you have simply shunted Scope 3 emissions off your ledger while increasing them in reality. That is why intensity ratios must be read alongside absolute emissions trends and a full understanding of Scope 1, 2 and 3 emissions differences. A falling intensity ratio with a rising absolute footprint is a red flag, not a victory.

How to Calculate Yours Properly

Pick your denominator first, and pick it to match what you actually control. If you run a factory, use output volume. If you run a consultancy, use headcount. Revenue is a fallback, not a default. Then gather your emissions numerator using the GHG Protocol scopes — and yes, that includes Scope 3 if you want your ratio to withstand scrutiny from lenders or large procurement teams. Most UK businesses already know how to pull Scope 2 from electricity bills, but if you need a refresher on the mechanics, our guide on how to calculate Scope 2 emissions from electricity bills in the UK walks through it.

One mid-sized Sheffield manufacturer we audited last year initially reported 12 tonnes per million pounds of revenue. That seemed exceptional. When we looked closer, they had excluded subcontracted transport and raw material extraction from their Scope 3 boundary. Restating the ratio with those included pushed them to 67 tonnes per million. Their customers, a large European retailer with CSRD-aligned supply chain requirements, would have spotted that gap in minutes. The lesson is that a carbon intensity ratio is only as credible as the inventory behind it.

If you want an outside view on whether your numbers hold up, book a confidential chat with our audit team. We will tell you where the gaps are before your investors or biggest customer do.

Benchmarking Against SBTi and Sector Pathways

The Science Based Targets initiative does not publish a single “good” intensity figure. Instead, it offers 1.5-degree and well-below-2-degree pathways by sector, expressed as percentage reductions per year. For example, the cement sector pathway demands roughly 24 percent emissions intensity reduction by 2030 against a 2020 baseline. The power sector pathway is steeper. Professional services, because absolute footprints are already low, face less aggressive intensity declines but are increasingly expected to hit near-zero by 2040 or earlier. You can explore the methodology at the Science Based Targets initiative directly.

Here is the uncomfortable truth: most UK businesses currently reporting under SECR are not on any of these trajectories. The average disclosed intensity reduction is barely 2–4 percent annually, and many companies are still rising. That is not necessarily because they are lazy. Decarbonising industrial heat, switching fleet vehicles, or renegotiating supply contracts takes years, not quarters. But it does mean that “good” is shifting. A ratio that looked respectable in 2022 may look complacent by 2026, especially if your competitors have begun building net zero roadmaps with actual interim targets.

Reporting Traps That Distort Your Ratio

Three common mistakes warp carbon intensity ratios and invite awkward questions at AGMs. First, cherry-picking the denominator. A company with flat-lining revenue but falling emissions will show a flattering intensity trend even if nothing improved operationally. Second, boundary shrinkage. Every year a few businesses quietly remove overseas subsidiaries or divested divisions from their carbon inventory, which flatters the ratio while the real-world footprint stays constant. Third, market-based versus location-based Scope 2. If you buy renewable energy certificates and report market-based Scope 2 as zero, your ratio collapses beautifully. Whether that represents real decarbonisation or accounting optimism depends on the quality of those certificates and the additionality behind them.

The UK net zero strategy and the EU CSRD overview are both tightening the screws on these ambiguities. CSRD in particular will require granular sector-specific disclosures and third-party assurance for many UK companies with EU subsidiaries or listings. If you are a medium company approaching the SECR threshold, SECR reporting requirements for medium companies is a sensible place to start reading, because the line between voluntary best practice and mandatory compliance is thinner than it looks.

Using Intensity Ratios to Drive Real Reductions

A carbon intensity ratio should not be a retrospective ornament. Used properly, it is a forward steering mechanism. One Worcestershire food producer we work with now ties departmental bonuses to quarterly intensity movements — kilogrammes of carbon dioxide equivalent per tonne of finished product — rather than absolute emissions alone. Why? Because absolute emissions rise in harvest season when output doubles, but intensity should still fall if they are running their ovens efficiently. That shifts the conversation from “use less energy” to “use less energy per unit of value,” which is the only metric that scales with business growth.

The flip side is that intensity ratios can hide stagnation. A services firm whose revenue grew 30 percent but emissions stayed flat will celebrate a falling ratio while ignoring the fact that their absolute footprint never moved. If the IEA pathways and UK carbon budgets teach us anything, it is that absolute reductions still matter. Intensity is a gear ratio, not the destination. Use it to check whether you are decoupling emissions from growth, but do not confuse efficiency with impact.

If your business needs to move from measuring to meaningfully improving, talk to us about a carbon audit that ties directly to your operational reality. We do not sell generic benchmarks; we build ratios you can actually run the business with.

Frequently Asked Questions

What exactly is a carbon intensity ratio?

It is your total greenhouse gas emissions divided by a normalising factor such as revenue, production output, floor area or employee numbers. It lets you compare performance over time or against peers, provided you use a denominator that actually reflects how your business creates value.

Is there a single ‘good’ carbon intensity ratio all businesses should aim for?

No. A good carbon intensity ratio by industry varies dramatically. A software firm at 3 tonnes per million pounds of revenue and a steelworks at 400 tonnes per million can both be well-run. Sector context, operational boundaries and growth stage all determine what “good” means for your specific organisation.

Should I include Scope 3 when calculating my ratio?

If you want your ratio to survive scrutiny from large customers, lenders or incoming CSRD requirements, yes. Excluding Scope 3 simply pushes the carbon into someone else’s ledger. It does not remove it from the atmosphere, and increasingly it does not remove it from your reputation either.

How often should we recalculate and publish our carbon intensity ratio?

Annually as a minimum, aligned with your financial reporting cycle. Many leading UK businesses now move to quarterly internal tracking so that operational issues — a spike in transport emissions, an HVAC fault — are caught before they distort the annual figure.

Can we use carbon offsets to improve our carbon intensity ratio?

You can, but you probably should not if the goal is credible reporting. Offsets reduce your net emissions figure, but they do not improve operational carbon intensity. Most serious frameworks, including SBTi, require intensity reductions to reflect actual business changes rather than purchased credits.

Frequently asked questions

What exactly is a carbon intensity ratio?

It is your total greenhouse gas emissions divided by a normalising factor such as revenue, production output, floor area or employee numbers. It lets you compare performance over time or against peers, provided you use a denominator that actually reflects how your business creates value.

Is there a single ‘good’ carbon intensity ratio all businesses should aim for?

No. A good carbon intensity ratio by industry varies dramatically. A software firm at 3 tonnes per million pounds of revenue and a steelworks at 400 tonnes per million can both be well-run. Sector context, operational boundaries and growth stage all determine what ‘good’ means for your specific organisation.

Should I include Scope 3 when calculating my ratio?

If you want your ratio to survive scrutiny from large customers, lenders or incoming CSRD requirements, yes. Excluding Scope 3 simply pushes the carbon into someone else’s ledger. It does not remove it from the atmosphere, and increasingly it does not remove it from your reputation either.

How often should we recalculate and publish our carbon intensity ratio?

Annually as a minimum, aligned with your financial reporting cycle. Many leading UK businesses now move to quarterly internal tracking so that operational issues — a spike in transport emissions, an HVAC fault — are caught before they distort the annual figure.

Can we use carbon offsets to improve our carbon intensity ratio?

You can, but you probably should not if the goal is credible reporting. Offsets reduce your net emissions figure, but they do not improve operational carbon intensity. Most serious frameworks, including SBTi, require intensity reductions to reflect actual business changes rather than purchased credits.