Carbon accounting 101: What is it and why you should do it

George Gibson

George Gibson

In recent years, or even just the last few days, you’ll no doubt have heard companies making big claims to be ‘carbon neutral’, ‘climate positive’ or to become ‘net-zero’ by a certain date. Noble, no doubt, but all a bit arbitrary unless backed by solid evidence. To add foundations to your ambitions, you need carbon accounting…

What is carbon accounting?

The term ‘carbon accounting’ summarises the process of getting said evidence. In other words, quantifying, tracking and reporting the amount of greenhouse gas emissions released into the atmosphere as a result of your business activity. 

In our Charting the path to net-zero for businesses blog we showed that calculating emissions is a key stage in getting to net-zero. Carbon accounting forms the foundations of these calculations. It helps you understand your starting point,  find the emissions hotspots in your value chain, and pinpoint the biggest opportunities for reduction.

Organisational vs product footprinting

Carbon footprint assessments can happen at a product or organisational level. At a product level, Product Life Cycle Assessments (or LCAs) evaluate the environmental impact of a product through its entire life cycle, including extraction and processing of raw materials, manufacturing, distribution, product usage, and finally end-of-life.

But for the purpose of this blog, we’ll be exploring organisational carbon footprinting. This means assessing the greenhouse gas emissions of a business’s operating activity through the entire value chain, including upstream suppliers and downstream processes like remote working, product use, disposal and pensions.

What isn’t measured can’t be managed: The carbon accounting process

A) The carbon audit 

Conducting a carbon audit lets you allocate responsibility for emissions to the relevant areas of your company and value chain. This will inform decisions on how operations can be decarbonised, and help you to set the right science-based targets. 

B) Target setting 

Target setting determines the level of ambition for your reduction strategy. It opens the door for  carbon accounting to forecast scenarios and strategies to meet these targets. It also allows you to spot the strategies that may appear more sustainable but could actually increase greenhouse gas emissions. For example, swapping to a material with a lower carbon footprint in raw materials, but with increased shipping emissions. *It’s worth noting that this assumes a narrow GHG emissions lens and there may be other environmental credentials unaccounted for in this process but which should be considered. 

C) Emissions reporting 

Carbon accounting isn’t a one-off job. An emissions inventory needs to be taken and reported annually during your journey to net-zero. This is how you’ll measure your performance and impact over time.. 

Emissions reporting is increasingly becoming an industry-standard requirement for many businesses.‍ Under regulations such as the SECR, larger and publicly-listed companies are required to disclose GHG emissions in their directors’ reports. Many investors are also mandating it as a requirement in order to assess liability and risk. High emissions within a difficult to decarbonise scope 3 value chain is considered a liability by some investors. 

By measuring and reporting your footprint, you also acquire supporting evidence for your environmental claims, and reduce the risk of greenwashing accusations. 

To learn more about Carbon Accounting, you can watch Ecologi’s Carbon Accounting 101 webinar here.

You can measure your footprint and get started on your net-zero journey with Ecologi Zero, our free carbon footprinting tool for small and medium-sized enterprises.

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