A decision has been made, and now, as a business owner, you are looking into understanding your environmental impact and measuring your direct and indirect emissions. Whether requested by stakeholders and consumers, required by governments or voluntarily measured, you now need a Carbon Accounting report. This blog covers some benefits of carbon accounting and reporting standards for calculating companies’ carbon footprint.
So, What is carbon accounting? And How does it benefit your business?
Carbon accounting, also known as Greenhouse Gas (GHG) accounting, refers to the process of measuring your business’s direct and indirect emissions. However, greenhouse gases affect the climate differently. Therefore, this process quantifies the business’s carbon footprint into metric tonnes of carbon dioxide equivalent (CO2e) emissions.
Carbon accounting is the cornerstone of your climate actions. After all, you can not reduce or mitigate what you don’t measure. Accounting for your emissions provides a measurable metric for reducing emissions, claiming carbon neutrality and achieving Net Zero goals. Furthermore, carbon accounting reports offer detailed insights into the impact of your operations and can communicate your actions to the public and stakeholders.
Before discussing the details of carbon accounting, let’s review why you should consider measuring and managing your greenhouse gas emissions.
Social Responsibility: Carbon accounting allows growing businesses to act against their environmental impact. It provides a measurable metric for reducing emissions, claiming carbon neutrality, and achieving Net Zero goals.
Operational Insights and Financial Efficiency: Detailed carbon accounting reports offer insights into your operations’ impact. They often identify cost-saving opportunities through energy efficiency and resource optimization.
Regulatory Compliance: Helps ensure compliance with environmental regulations and standards and identifies emission hotspots and potential risks, enabling proactive management.
Stakeholder Communication and Competetive Advantage: Businesses can leverage a GHG inventory report to communicate their actions transparently to the public and stakeholders to gain a competitive advantage. This initiative demonstrates a commitment to sustainability, potentially attracting eco-conscious customers and investors.
Calculating the GHG emissions of a business involves a structured process to quantify its greenhouse gas emissions across different operational activities. Initially, the scope of emissions is defined and typically categorized into three scopes as per international standards, such as the Greenhouse Gas Protocol (GHG protocol).
GHG Protocol categorizes emissions into three scopes. Scope 1 covers direct emissions from owned or controlled sources like onsite fuel combustion and company vehicles. Scope 2 includes indirect emissions from purchased electricity, heating, and cooling. Scope 3 encompasses other indirect emissions or supply chain emissions, such as those from business travel, supply chain activities, and waste disposal, which are not owned or directly controlled by the company but result from its operations.
Carbon accounting starts with data collection, which involves detailed records of energy use, fuel consumption, business travel distances, and waste generation within each scope. This data serves as the foundation for emission calculations. Although this step might seem time-consuming, it requires minimal time and effort as all data already exist in accounting data and business expenses.
Our team of experts has developed pathways for each business category to gather necessary data with minimal time investment. Thereafter, using standardized emissions factors provided by governmental agencies, industry associations, or specialized carbon accounting tools, we convert this information into CO2 equivalents (CO2e).
Contact us today for a free consultation to calculate your business carbon footprint.
What are Emissions Factors?
An emissions factor is a value that helps estimate the amount of a pollutant released into the air from a specific activity. For instance, it can measure how much CO2e is emitted per ton of fuel burned, or emissions of each kWh of electricity purchased in a certain region. Emissions factors allow us to estimate emissions from various sources of air pollution accurately. By using emissions factors, we can understand the environmental impact of different activities, from industrial processes to everyday actions like driving a car.
Once emissions are calculated for each scope, they are aggregated to determine the company’s total carbon footprint. This comprehensive assessment provides insights into the company’s environmental impact and forms the basis for strategic decision-making. Companies often use these findings to create detailed reports that outline emission sources, trends, and areas for potential reduction. By monitoring their carbon footprint over time and implementing targeted emission reduction strategies, companies can enhance operational efficiency, meet regulatory requirements, appeal to environmentally conscious consumers, and contribute to global climate goals.
Carbon accounting benefits micro, small, and medium enterprises (MSMEs) by reducing operational costs through better energy efficiency, ensuring compliance with environmental regulations, enhancing their reputation with environmentally conscious consumers, accessing new markets that prioritize sustainability, fostering innovation, and positioning them for long-term viability in a changing regulatory and market landscape.
In future blogs, we will delve into Net Zero strategies and climate neutrality claims, tackling critical questions like: How can businesses effectively reduce their emissions? What role do carbon offsets play in mitigating carbon emissions? What occurs when you purchase carbon credits, and do they truly work?
