7 Best Practices for Carbon Accounting

Want to nail carbon accounting for your business? Here's what you need to know:

1. Set clear company boundaries

2. Establish solid data collection methods

3. Use standard carbon reporting rules (like GHG Protocol)

4. Track all emission types (Scope 1, 2, and 3)

5. Use carbon tracking software

6. Keep clear records

7. Check and update regularly

Why bother? 83% of consumers prefer buying from sustainable companies. Plus, ethical spending is booming - it doubled from €55 billion to €117 billion in just 10 years in the UK.

But here's the kicker: only 9% of companies can accurately measure their greenhouse gas emissions. That's where carbon accounting software like Emerald Power comes in. It automates data collection, tracks emissions in real-time, and makes reporting a breeze.

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1. Set Company Boundaries

Defining your company's boundaries is the first big step in carbon accounting. It's not just about your main office - you need to think about everything from your supply chain to your remote workers.

Why does this matter? Without clear boundaries, you might miss important emission sources or count the same emissions twice. That's a surefire way to mess up your reporting and carbon reduction plans.

There are two main ways to set these boundaries:

1. The equity share approach

You account for emissions based on your ownership percentage. Own 30% of a subsidiary? You report 30% of its emissions.

2. The control approach

You report 100% of the emissions from operations you control, regardless of ownership. This can be either financial control or operational control.

Kylie Ford, Principal ESG Consultant at Conservice ESG, says:

"Understanding and articulating the scope of your direct influence is crucial to achieving carbon neutrality."

Let's look at a real example. In 2022, Microsoft went big. They included not just their own operations, but their entire supply chain and even how customers use their products. This let them set bigger, more meaningful carbon reduction targets.

When setting your boundaries, think about:

• Your organizational structure

• Your control over different parts of the business

• Which emission sources matter most to your overall footprint

Make sure your carbon accounting boundaries line up with your financial reporting. It'll make life easier when you're trying to link your carbon footprint to your financial performance.

Carbon accounting software like Emerald Power can help. Their platform handles complex organizational structures and automatically collects data from various sources. It makes tracking emissions across your entire defined boundary a whole lot simpler.

2. Set Up Data Collection Methods

Accurate carbon accounting needs solid data. Without it, your carbon reduction plan might as well be built on quicksand. So, how do you set up effective data collection? Let's break it down.

Start by spotting your main emission sources. These could be energy use, transport, waste, and supply chain activities. Once you've got these nailed down, figure out how to gather data from each one.

For energy use, automation is your friend. Many carbon accounting tools, like Emerald Power, can hook up to your existing systems and pull data automatically. This cuts down on time and human error.

Supply chain emissions (Scope 3) can be a bit of a headache. They can make up to 80% of your carbon footprint, so they're a big deal. One smart move? Rank your suppliers based on their environmental impact. This way, you focus your data collection where it counts.

Here's a real-world example: A big company using Ecochain's platform trained their top suppliers to use the software themselves. The suppliers could then measure their own greenhouse gas emissions, with the results feeding straight back into the platform.

Heads up: new rules are coming. The EU's Corporate Sustainability Reporting Directive (CSRD) will hit over 50,000 large European companies from 2025. It requires reporting in line with the Greenhouse Gas (GHG) Protocol, so comprehensive data collection is a must.

To get your data collection running smoothly:

1. Create a clear carbon footprint collection plan. Include your goals, who's doing what, budget, tools, and timeline.

2. Find the right people in each department who can give you the info you need.

3. Use a platform that lets you collect and process data collaboratively and continuously.

Your choice of tools can make or break your carbon accounting. Look for software that offers:

• Audit-grade data collection

• Automated data ingestion

• Investor-grade disclosures

• Unified auditing capabilities

• Relevant industry partnerships

Sophia Beavis, Workplace Sustainability Manager at Okta, has some advice:

"I encourage other sustainability teams to embrace climate software early on. If you're setting science-based targets, Watershed makes it really easy to understand the steps you need to take to meet them."

 

3. Use Standard Carbon Reporting Rules

Carbon accounting isn't a free-for-all. There's a playbook, and it's called the Greenhouse Gas (GHG) Protocol. It's not just popular - it's the go-to guide for carbon reporting.

The GHG Protocol has been around since the late '90s. It gives businesses, governments, and organizations a shared language for measuring and reporting greenhouse gas emissions. How big is it? In 2016, 92% of Fortune 500 companies responding to the CDP used it, either directly or indirectly.

Why use the GHG Protocol? It makes your carbon accounting:

• Consistent: You measure the same things, the same way, every year.

• Comparable: You can stack up against other companies in your industry.

• Credible: Investors and stakeholders trust it.

The GHG Protocol splits emissions into three buckets:

1. Scope 1: Direct emissions you own or control.

2. Scope 2: Indirect emissions from bought electricity, heat, or steam.

3. Scope 3: All other indirect emissions in your value chain.

Here's the kicker: Scope 1 and 2 are must-reports. Scope 3? Optional. But don't ignore it - Scope 3 often makes up the biggest chunk of a company's carbon footprint.

Take Microsoft. In 2022, they went all-in, including their entire supply chain and even how customers use their products. This big-picture view helped them set better carbon reduction targets.

The GHG Protocol isn't the only standard out there. ISO 14064 is another one that plays well with the GHG Protocol. It sets minimum compliance levels and can beef up your carbon accounting system.

When shopping for carbon accounting software, make sure it fits these standards. Emerald Power, for example, offers a platform that follows GHG Protocol rules. It automates data collection and simplifies reporting, making it easier to stay on track.

Using standard carbon reporting rules isn't just about checking boxes. It's about giving a true picture of your emissions. As SEC Chair Gary Gensler said:

"Our federal securities laws lay out a basic bargain. Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called 'complete and truthful disclosure.'"

4. Track All Emission Types

Carbon accounting isn't just about ticking boxes. It's about getting the full picture of your carbon footprint. And that means tracking ALL emission types.

Let's break it down:

Scope 1: Your direct emissions. The fuel your company cars burn, the gases your factories release.

Scope 2: Indirect emissions from energy you buy. Think office lights and air conditioning.

Scope 3: Everything else in your value chain. From suppliers to customers using your products.

Here's the kicker: Scope 3 is often the biggest chunk of your carbon footprint. The CDP's 2021 Global Supply Chain Report found 11.4 times more emissions in a company's supply chain than in its direct operations. That's HUGE.

Take Microsoft. In 2022, they didn't just look at their own operations. They dug into their entire supply chain and even considered how customers use their products. This let them set more meaningful carbon reduction targets.

But tracking all these emissions isn't a walk in the park. That's where carbon accounting software comes in. Platforms like Emerald Power offer tools that:

• Automate data collection across all scopes

• Make reporting easier

• Help you set and track net zero targets

Remember: You can't manage what you can't measure. By tracking all emission types, you're getting a true picture of your carbon footprint.

"Carbon measurement and tracking are the foundation of carbon analytics." - Jasmiina Toikka, Head of Content Marketing at Sievo

So don't skip any emission type. The fuel in your company car, the electricity powering your suppliers' factories - it all counts. Track everything, and you're on your way to real, impactful change in your carbon reduction journey.

5. Use Carbon Tracking Software

Spreadsheets and manual data entry for carbon tracking? That's so last decade. Today, it's all about smart software solutions like Emerald Power.

Emerald Power isn't just another tool. It's a complete package for mid-market businesses who want to get serious about their carbon footprint. It automates data collection, streamlines reporting, and keeps you in line with CSRD regulations and GHG Protocol standards.

Why is carbon tracking software a big deal?

It's accurate and efficient: No more human error from manual calculations. Emerald Power's automated data collection keeps things tight.

It gives you real-time insights: You're not looking at old news. You're seeing your emissions as they happen, so you can act fast.

It covers all the bases: From Scope 1 to Scope 3, Emerald Power's got you covered. You get the full picture of your carbon footprint.

It makes compliance a breeze: With regulations getting tighter, Emerald Power's GHG Protocol compliant formulas keep you on the right side of the law.

Here's the kicker: despite these benefits, many companies are lagging behind. A study found that while 85% of organizations want to cut their greenhouse gas emissions, only 9% can accurately track their total emissions across all activities. That's a huge gap - and a huge opportunity.

Simon Fürstenberg from Cozero puts it well:

"End-to-end carbon management is huge value. With carbon emission calculations, you have a number, but it doesn't really help you to act. A solution like Cozero's actually helps you go into your decarbonization planning, set your targets, and build a decarbonization strategy so you can reduce your emissions."

This applies to Emerald Power too. It's not just about numbers - it's about insights that drive real change.

When you're shopping for carbon tracking software, look for these key features:

1. Automated data collection: It should play nice with your existing systems.

2. Comprehensive reporting: Make sure it covers all scopes and gives you detailed, customizable reports.

3. User-friendly interface: The best tool is one your team will actually use.

4. Scalability: Your business will grow, and your carbon tracking needs will too.

Emerald Power checks all these boxes and then some. Its interactive interface, benchmarking features, and dedicated sustainability consultant support make it a top pick for businesses that mean business when it comes to carbon accounting.

6. Keep Clear Records

Clear records are the backbone of solid carbon accounting. It's not just number-crunching - it's creating a clear trail of your carbon footprint.

Why does this matter? First, it boosts accuracy. Well-organized data means fewer mistakes and fewer missed emissions sources. But there's more to it. Clear records are your best defense during audits and for staying compliant.

Take Australia's National Greenhouse and Energy Reporting Act 2007. If you're registered under this act, you need to keep records for 5 years after the reporting year ends. These records must be relevant, complete, and consistent.

What should you record? Here's the rundown:

• Activities that need reporting

• Data for each activity

• Evidence for calculations (receipts, invoices)

• Methods and measurement criteria

• Business decisions and accuracy records

But it's not just what you record - it's how you do it. Kezia Farnham, Senior Manager, says:

"Carbon accounting audits should seek to answer the following: Is the carbon accounting methodology accurate? Has it been applied correctly? Is the data accurate, complete and timely?"

To hit these marks, think about using a cloud-based, single system of record. Why? It offers:

1. Change tracking

You can see who changed what and when.

2. Document storage

All your supporting docs in one spot.

3. Easy access

Give external parties like auditors access when needed.

Emerald Power's carbon accounting software is a great tool for this. It offers automated data collection and real-time emissions tracking, making record-keeping a breeze.

Good record-keeping isn't just about following rules - it's about getting better. The IBM Sustainability Team puts it well:

"Data-driven decision-making is only valuable if the data is accurate, complete and up to date."

 

7. Check and Update Regularly

Carbon accounting isn't a one-and-done deal. It's an ongoing process that needs regular attention. Why? Because your business is always changing, and so are carbon accounting standards.

Always-on approach

Think of carbon accounting like keeping your car in good shape. You don't just fill it up with gas once and forget about it. You need to:

• Check in monthly to spot any weird changes

• Look at trends every quarter

• Do a big check-up once a year

Rebecca Berg from The Climate Registry puts it this way:

"Building sustainability efforts, particularly net-zero and carbon-neutral targets, on robust, verified data is the key to building a credible, climate-forward organization."

Pick a yearly reporting date

Choose a specific date each year for your final carbon report. Thrust Carbon says to update your numbers on the 2nd of the month when you start your final report. This makes it easier to see how you're doing over time.

Know when to recalculate

As your business grows, you might need to recalculate your starting point. Thrust Carbon suggests doing this if your total emissions change by 5% or more. This way, you're not constantly making tiny tweaks, but you're catching big changes.

For example, if business travel is only 1% of your emissions, it would need to jump up by 500% to cause a 5% change in your total emissions.

Keep up with industry changes

Carbon accounting rules and best practices are always evolving. Stay in the loop to make sure you're doing things right.

Use tech to your advantage

Software like Emerald Power can make this whole process a lot easier. It collects data in real-time and uses AI to help out. It can even send you reminders so you don't forget to check in on your carbon accounting.

Conclusion

Carbon accounting isn't just about ticking boxes. It's about driving real change and building sustainable businesses. Let's recap the key points:

1. Set clear boundaries

Know your company's scope and capture all relevant emissions sources.

2. Establish solid data collection

Accuracy is key. Automated systems like Emerald Power can cut errors and streamline the process.

3. Follow standard reporting rules

The Greenhouse Gas Protocol offers a global framework for consistent reporting.

4. Track all emission types

Don't ignore Scope 3 emissions. They're often the biggest part of your carbon footprint.

5. Use carbon tracking software

Tools like Emerald Power offer complete solutions for data collection, analysis, and reporting.

6. Keep clear records

Detailed documentation is crucial for audits and compliance.

7. Review and update regularly

Carbon accounting needs constant attention and refinement.

Rebecca Berg from The Climate Registry puts it well:

"Building sustainability efforts, particularly net-zero and carbon-neutral targets, on robust, verified data is the key to building a credible, climate-forward organization."

The business case for carbon accounting is clear. 83% of consumers prefer buying from sustainable companies. In the UK, ethical spending doubled from €55 billion to €117 billion in just ten years. That's a big deal.

Carbon accounting software is a game-changer. Platforms like Emerald Power offer automated data collection, real-time emissions tracking, and GHG Protocol compliance. These tools make the process easier and provide insights for better decision-making.

Looking ahead, carbon accounting will only become more important. We're racing towards the 2030 target of cutting emissions by 45% compared to 2010 levels. Organizations need to step up their carbon reduction efforts. The right carbon accounting practices and tools will be crucial in meeting these challenges.