How to start carbon accounting

Want to reduce your business's carbon footprint? Start with carbon accounting. Here's how:

• What is it? Carbon accounting tracks greenhouse gas (GHG) emissions to identify areas for reduction.

• Why do it? It helps with compliance, cost savings, and improving your brand's reputation.

• How to start?

  1. Set a baseline: Gather data on energy use, fuel, and materials.

  2. Understand emissions: Learn about Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain).

  3. Use tools: Software like Emerald Power, Plan A, or Persefoni simplifies tracking and reporting.

  4. Train your team: Teach staff GHG Protocol basics and software use.

Quick tip: Focus on Scopes 1 and 2 first for easier tracking before tackling complex Scope 3 emissions.

Ready to take action? Dive into the details and start managing your emissions today.

Carbon Accounting Basics

What Does Carbon Accounting Mean?

Carbon accounting involves measuring and tracking an organization's greenhouse gas (GHG) emissions. There are two main methods for this:

• The spend-based method calculates emissions using financial data, such as expenses on goods and services.

• The activity-based method relies on physical data, like energy usage or miles traveled.

Many organizations combine these methods to cover all bases effectively.

To ensure accuracy, emissions are categorized into specific scopes based on their sources.

Understanding Scope 1, 2, and 3 Emissions

The GHG Protocol defines emissions in three categories:

Scope 3 emissions often account for the majority of an organization's carbon footprint - sometimes up to 80%. Tracking these emissions usually requires advanced tools and methodologies.

Understanding these categories helps align your carbon accounting efforts with globally recognized standards like the GHG Protocol.

Overview of the GHG Protocol

The GHG Protocol is the go-to framework for measuring and reporting emissions. It’s built around five key principles: relevance, completeness, consistency, transparency, and accuracy. These principles ensure that emission reporting is both reliable and actionable.

"Carbon accounting is not just about measuring emissions; it's about making informed decisions to reduce them." - Dr. Cynthia Cummis, Director of Private Sector Climate Mitigation at the World Resources Institute ^[2]

This framework supports regulations like the EU's CSRD and TCFD guidelines, setting a global standard for environmental reporting.

Choosing Carbon Accounting Tools

Why Use Carbon Accounting Software?

Relying on manual methods for carbon accounting often leads to mistakes, but modern software helps by automating data collection. This not only boosts accuracy but also saves time. These tools work seamlessly with existing business systems to track energy use, material consumption, and other activities that generate emissions. Automation becomes especially useful when dealing with Scope 3 emissions, which involve complex supply chain data and multiple emission sources.

Tasks like integrating utility data and real-time monitoring are streamlined with software, cutting down on errors and improving efficiency. Below are some standout software options tailored for mid-sized businesses.

Top Software for Mid-Sized Businesses

Choosing the right tool depends on your organization's needs, technical know-how, and budget. The following options comply with GHG Protocol standards and offer distinct benefits:

• Emerald Power: Offers automated data collection and real-time monitoring at a starting cost of €249/month, making it a budget-friendly choice.

• Plan A: Designed for beginners, featuring an easy-to-navigate interface and strong analytics tools.

• Persefoni: Focuses on AI-driven data validation and in-depth emission analytics, perfect for businesses with complex compliance needs.

Software Comparison Table

This table underscores the importance of evaluating features, usability, and cost to find the best fit for your organization.

Carbon Accounting 101: Why it's important and how to get started

Steps to Start Carbon Accounting

"Carbon accounting is not just about compliance; it's about making informed decisions to reduce your carbon footprint and contribute to a sustainable future." - Dr. Stefan Henningsson, Senior Advisor at the World Business Council for Sustainable Development ^[3]

Setting a Carbon Baseline

A carbon baseline is your organization's starting point for tracking emissions, acting as a benchmark for future reductions. To create one, you'll need to gather historical data on energy use, fuel consumption, and material purchases. This helps pinpoint areas for improvement.

Focus on key activities that generate emissions, such as:

• Electricity usage (measured in kilowatt-hours)

• Fuel consumption in company vehicles (liters)

• Raw material purchases (kilograms)

• Waste production and disposal practices

Reviewing Documentation

Collect essential records, including:

• Utility bills from the past year

• Material and supply purchase records

• Transportation and logistics data

Once your baseline is established, the next step is to simplify data collection and analysis by integrating software into your systems.

Integrating Software with Existing Systems

Choosing the right carbon accounting software is just the beginning. Proper integration with your current business systems ensures accurate, automated data collection, minimizing manual errors. For example, Emerald Power's Pro plan connects easily with ERP systems and utility monitoring tools, streamlining the process.

Steps for smooth integration include:

• Linking utility meters directly to the carbon accounting platform

• Setting up API connections to pull ERP and CRM data

• Automating data validation to ensure accuracy

• Configuring real-time dashboards for continuous monitoring

Even with advanced software, human expertise is essential to maintain data accuracy and consistency.

Training Staff and Building Knowledge

To ensure effective carbon accounting, your team needs the right training. Staff should understand both the technical tools and the importance of precise data collection.

Key training areas include:

• Basics of the GHG Protocol: Teach staff about emission scopes and reporting rules

• Software training: Provide hands-on sessions to familiarize them with the platform

• Data collection processes: Establish clear guidelines for gathering and validating data

• Ongoing learning: Schedule quarterly sessions to address new challenges and updates

For organizations just starting out, it's wise to focus on Scope 1 and 2 emissions first. These are simpler to track and allow teams to build confidence before tackling the more complex Scope 3 emissions. This step-by-step approach helps ensure reliable processes and accurate reporting.

Maintaining and Improving Carbon Accounting

Regular Tracking and Reporting

Setting up clear schedules and standardized templates is key to effective carbon accounting. A well-organized system should include daily energy monitoring, monthly trend analysis, quarterly progress checks, and annual sustainability reports.

Key areas to focus on:

• Energy usage trends

• Operational changes and their effects

• Progress toward emission reduction targets

• Accuracy and completeness of data

This structured approach helps businesses stay on top of evolving regulations and ensures accountability.

Meeting Regulatory Requirements

Around 49,000 companies in Europe are affected by the EU Corporate Sustainability Reporting Directive (CSRD) ^[5]. To comply, maintaining precise and up-to-date carbon accounting practices is non-negotiable. Regular updates to these practices also help businesses align with shifting regulations and meet stakeholder expectations.

Using Data to Meet Emission Goals

Once compliance is covered, carbon accounting data can drive smarter sustainability strategies. By analyzing this data, businesses can pinpoint inefficiencies and take steps to lower emissions.

Spot Areas for Improvement

• Analyze energy use to find ways to cut consumption

• Evaluate waste management processes

• Measure the environmental impact of supply chain activities

Make Smarter Decisions
Use carbon data to weigh the costs of carbon credits against operational changes. This insight can guide energy efficiency projects, supply chain improvements, or waste reduction efforts, bringing both environmental and financial advantages.

To keep sustainability top of mind, integrate carbon metrics with other business performance indicators. This ensures environmental goals are woven into everyday decision-making instead of being treated as a separate concern.

Conclusion: Start Your Carbon Accounting Journey

Getting started with carbon accounting might feel overwhelming, but it begins with a single step. With 71% of companies already using or planning to use carbon accounting software ^[2], there's no better time to dive in. Beyond meeting compliance requirements, this effort can bring operational savings and boost your brand's reputation. By following some key steps, your organization can confidently move forward.

Start with the Basics: Determine your carbon baseline and choose software that fits your needs. Options like Arbor, Plan A, and Greenly provide solutions ranging from $5,000 to $200,000, depending on the features you require ^[1][2].

Focus on Integration and Training: A successful carbon accounting strategy requires more than just software. Establish reliable data collection processes and ensure your team is well-trained to handle reporting across all emission scopes ^[1][4].

Build Long-Term Practices: Use established guidelines like the GHG Protocol to strengthen your efforts. Carbon accounting is not static - it evolves with your business and regulatory changes. By committing to thorough practices, you can make real progress while adding value to your business ^[1][4].

The resources you need to start are already available. Begin with a clear plan and expand your efforts as your knowledge and capabilities grow.

FAQs

How do you calculate carbon footprint for a business?

Calculating your business's carbon footprint involves measuring greenhouse gas (GHG) emissions using this formula: GHG emissions = activity data × emission factors.

Start by collecting data on activities like energy usage and transportation. Then, apply emission factors - standard values that estimate emissions per unit of activity.

• Gather activity data: Look at energy usage, transportation, and material consumption in your business operations.

• Apply emission factors: Use emission factors from trusted sources like the GHG Protocol. These factors help translate activity data into estimated emissions.

"The activity-based method calculates emissions based on the quantity of materials or components used, considering actual data of physical flows. While more time-consuming, it generally provides more accurate results than the spend-based method." ^[1]

• Cover all emission scopes: Include data for Scope 1, 2, and 3 emissions to ensure you're accounting for direct, indirect, and value-chain emissions.

Using carbon accounting software can simplify these steps by automating calculations and syncing with your business systems ^[1][2]. Pairing these tools with staff training and clear data collection processes makes it easier to spot areas for emission reductions ^[1][4].

Once you've completed these steps, you can start effectively tracking and reducing your carbon footprint.