Sustainability is becoming a huge factor in all countries across the world. Due to this, businesses are under growing pressure to account for their carbon emissions.
Whether driven by regulatory requirements, investor expectations, or customer demand, carbon accounting has become a crucial step for organisations seeking to understand and reduce their environmental impact.
This guide breaks down the essentials of carbon accounting and offers a practical roadmap for businesses looking to get started.
What is carbon accounting?
Carbon accounting, also known as greenhouse gas (GHG) accounting, is the process of measuring and tracking the greenhouse gas emissions produced directly or indirectly by a business. These emissions are typically measured in carbon dioxide equivalents (CO₂), allowing for comparison across various types of GHGs.
The main goal of carbon accounting is to provide a clear picture of a company’s climate impact, which can then inform reduction strategies and sustainability reporting.
Why is carbon accounting important?
- Regulatory compliance: Many countries now require companies to disclose their carbon emissions.
- Investor expectations: ESG (Environmental, Social, and Governance) investing is growing rapidly, and investors want transparency.
- Customer Trust: Consumers increasingly prefer businesses that demonstrate environmental responsibility.
- Operational Efficiency: Measuring emissions often reveals inefficiencies that, when addressed, can lower costs.
- Futureproofing: Understanding your carbon footprint prepares your business for future climate-related risks and opportunities.
The three scopes of emissions
Carbon emissions are categorised into three scopes as defined by the Greenhouse Gas Protocol:
- Scope 1 – Direct emissions: Emissions from sources owned or controlled by the company (e.g., company vehicles, onsite fuel combustion).
- Scope 2 – Indirect emissions: Emissions from the generation of purchased electricity, steam, heating, and cooling.
- Scope 3 – Other indirect emissions: Emissions not owned or directly controlled by the business but related to its operations (e.g., supply chain, business travel, product lifecycle).
Scope 3 is often the largest portion of a company’s carbon footprint and the most challenging to track.
Steps to Implement Carbon Accounting
1. Set Goals and Boundaries
Define the purpose of your carbon accounting (e.g., internal benchmarking, regulatory compliance, sustainability reporting) and determine which operations and emission scopes you’ll include.
2. Collect Data
Gather data from utility bills, fuel receipts, business travel records, and supply chain partners. Accuracy and consistency are key.
3. Use Carbon Accounting Tools
There are several tools and software platforms available, such as:
- SimaPro
- Carbon Trust Footprint Calculator
- Normative
- Persefoni
These tools help automate data entry, calculation, and reporting.
4. Analyse and Report
Once emissions are calculated, create a carbon inventory report. Identify major emission sources and develop reduction strategies. You can share this report with stakeholders or include it in sustainability disclosures.
5. Set Reduction Targets
Align with frameworks like the Science-Based Targets initiative (SBTi) to set credible emission reduction goals that contribute to limiting global warming.
6. Monitor Progress and Iterate
Carbon accounting is not a one-time activity. Establish a regular cadence for tracking and reviewing emissions, and update your strategies accordingly.
Common challenges in carbon accounting
- Data Gaps: Incomplete or inconsistent data, especially in Scope 3.
- Complex Supply Chains: Hard to trace emissions from upstream and downstream partners.
- Resource Limitations: Smaller businesses may lack dedicated sustainability teams or tools.
Carbon accounting is a foundational step in any business’s sustainability journey. While it can be complex, especially for large or global organisations, it’s a powerful tool for making informed decisions and demonstrating climate leadership. With the right approach, businesses can not only meet external expectations but also uncover opportunities for innovation, efficiency, and long-term resilience.
Ready to get started with carbon accounting? Begin by mapping out your emissions sources, setting clear goals, and exploring tools that match your business size and needs.
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