How to Manage Operational Carbon Risk

Three steps every organization can take to measure emissions, report transparently, and take action.

The Carbon Series – Part 2

In the first edition of the Carbon Series, we asked: What is operational carbon risk, and why does it matter? We explored how climate risk becomes tangible in the day-to-day, through utility bills, infrastructure choices, and regulatory exposure.

To recap, operational carbon risk is where climate risk becomes measurable in day-to-day operations, showing up in utility costs, infrastructure performance, and compliance obligations. It is the point where climate pressures stop being abstract and begin affecting budgets, assets, and resilience.

Now comes the next step: How do you manage it?

Managing operational carbon risk means moving from awareness to action. It requires quantifying emissions, reporting them transparently, and taking practical steps to mitigate exposure. Each of these stages builds the foundation for long-term resilience and prepares organizations for the more strategic decisions we’ll explore in Part 3.

1. Quantify Your Risk

Before you can manage operational carbon risk, you need to measure it. That starts with a credible baseline of your Scope 1 and 2 emissions.

• Scope 1: includes direct emissions from owned or controlled sources, such as natural gas combustion in boilers.
• Scope 2: covers indirect emissions from purchased electricity or steam.

But defining boundaries matters. For example, in commercial real estate, Scope 1 and 2 emissions may include not only utility consumption but also emissions tied to investments in gas- or electricity-dependent buildings. The way you set these boundaries determines how complete and actionable your baseline will be.

For most organizations, operational carbon risk translates directly to utility exposure: natural gas and electricity. Establishing a clear emissions baseline ensures you understand where costs and risks are concentrated.

Two types of systems support this process:

• Energy and Emissions Management Information Systems (EMIS): Top-layer platforms that collect and visualize energy and emissions data, helping organizations track performance over time.
• Distributed Energy Resource Management Systems (DERMS): A deeper-layer system that goes beyond data. DERMS integrate with building automation systems (BAS) to actively manage distributed energy assets, providing real-time control over how facilities consume and produce energy. For instance, at Blackstone, our BlackPac™ energy management platform is designed to provide this level of governance and confidence.

Together, these systems help organizations quantify operational carbon risk with both visibility and control.

Read our blogs:

• A Simple Guide to Understanding GHG Measurement and Reporting
• The Importance of Carbon Accounting

2. Report Your Risk

Quantifying emissions is only useful if you can translate that information into insights for decision-makers and stakeholders. Reporting provides transparency, accountability, and credibility, all critical to managing risk effectively.

Organizations may report through:

• Voluntary frameworks such as CDP, GRI, or ISSB.
• Sector-specific programs such as STARS in higher education.
• Mandatory disclosures, which are expanding across jurisdictions.

Why report?

• To benchmark performance against peers and identify areas for improvement.
• To build trust with investors, regulators, and customers.
• To meet compliance requirements and avoid penalties.
• To demonstrate progress against decarbonization goals.

Strong reporting does more than satisfy compliance requirements, it creates the narrative around how your organization is managing operational carbon risk. By turning emissions data into credible, transparent insights, you show stakeholders that you are not only measuring but also actively managing exposure.

Organizations that report position themselves as proactive leaders rather than passive responders. In today’s carbon-conscious marketplace, that distinction matters: it builds trust, strengthens your license to operate, and lays the groundwork for strategic opportunities we’ll explore in Part 3 of this carbon series.

3. Mitigate Your Risk

Quantifying and reporting set the stage, but real risk reduction comes from action. Mitigation involves tactical changes that lower both emissions and long-term costs.

Examples include:

• Replacing gas-fired or fossil fuel infrastructure with low-carbon alternatives.
• Integrating renewable energy through procurement or on-site generation.
• Upgrading building systems for efficiency through commissioning.
• Electrifying fleets or equipment to reduce reliance on fossil fuels.

For more real-world examples of how organizations are reducing their operational carbon risk, check out our case studies page.