NEWS & INSIGHTS

What Is Carbon Accounting?

Carbon accounting is the process of measuring and tracking a business’ carbon dioxide emissions to assess their environmental impact. This, in turn, helps organisations determine their impact on climate change. 

Let’s talk about basic terminology in sustainability. 

We’ve seen reports use several different terms: carbon accounting, carbon footprint, carbon inventory, emissions inventory and sometimes just ‘carbon’. 

What these normally refer to is the process of calculating the amount of carbon that a company emits.  

When we speak about carbon accounting specifically, we are referring to the collection of data that offers businesses the knowledge to make informed decisions about their environmental footprint.  

In this blog, we outline carbon accounting as a systematic approach enabling companies to quantify and manage their greenhouse gas emissions. We also explore tools to make carbon accounting easier.  

What is Carbon Accounting? 

Carbon accounting is a method used to measure and monitor the carbon dioxide equivalents (CO2e) an entity emits. Unlike what the name might imply, carbon accounting encompasses all greenhouse gases, not just CO2. This approach allows businesses to quantify their emissions comprehensively. 

Carbon accounting is crucial for understanding an entity’s environmental impact, promoting transparency and accountability. By tracking and reporting these emissions, businesses can identify areas for improvement, develop strategies to reduce their carbon footprint, and align with global sustainability goals.  

Moreover, carbon accounting data allows organisations to make informed decisions that contribute to a healthier planet. Through this quantitative approach, businesses can also participate in carbon trading markets, and abide by ever-growing compliance regulations. 

Do I Need to Do Carbon Accounting? 

Everyone from governments to businesses and individuals can benefit from understanding their carbon footprint. This measurement offers a snapshot of your environmental impact over a year, guiding better environmental practices. 

There are some businesses who are obliged to report on their emissions. In the UK, reporting under the SECR is mandatory for quoted companies, large unquoted companies, and Limited Liability Partnerships (LLP). A company is defined as an LLP if it meets two or more of the following requirements: annual turnover of £36 million or more, balance sheet total of £18 million or more, or 250 or more employees.   

Read our article here to see if reporting is obligatory for your business.  

Why is Carbon Accounting Crucial for Businesses Especially? 

The concept of carbon accounting gained traction in the early 2000s, and quickly became a standardised measure for assessing a business’ ecological impact. With increasing regulatory pressures, the significance of carbon accounting has only grown, especially for fulfilling ESG reporting requirements. 

It now serves as a critical indicator for investors, consumers, and employees, reflecting a company’s dedication to sustainable practices. 

Carbon accounting helps businesses: 

  • Understand their full environmental impact. 
  • Pinpoint decarbonisation opportunities. 
  • Enhance ESG (Environmental, Social, and Governance) performance. 
  • Navigate the evolving regulatory landscape. 
  • Improve brand awareness 

Understanding Carbon Factors 

Now that we’ve understood what carbon accounting is, let’s look into how you can get started measuring your carbon. 

The first step is understanding how to calculate conversion rates, which measure the total amount of emissions being released into the atmosphere. By taking your emissions, and calculating conversion rates, a company’s different activities releasing emissions can be converted into activity data.  

These factors are grouped into three categories, known as Scope 1, Scope 2 and Scope 3 

Scopes are important in the reporting exercise, because the latest UK Government GHG Conversion Factors Reporting Spreadsheet organises the conversion factors according to these categories. 

Scope 1 emissions come from the direct activities of your company. In other words, these emissions are sourced from assets owned or controlled directly by your organisation. The fuel that you burn from your company’s fleet of vehicles is an example of this. 

Scope 2 emissions come from purchased electricity for your own use. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organisation’s greenhouse gas inventory because they are a result of the organisation’s energy use. 

Scope 3 emissions stem from activities external to your operations , as the result of the purchasing of goods or services offered by your company, as well as business travel, employee commutes, and waste management. 

While direct emissions (scopes 1 and 2) are crucial, indirect emissions (scope 3) often represent the majority of a company’s environmental impact. Addressing these emissions is key to achieving significant reductions in your carbon footprint. 

Exploring Carbon Accounting Methods 

From physical-unit to hybrid methods, there are a range of approaches for businesses to accurately report their emissions. Choosing the right method depends on factors like data availability and accuracy needs. 

Carbon accounting is getting better and offering more ways for companies to figure out how much pollution they’re making. 

Some methods count the direct pollution from a company’s activities. Others mix these measurements with estimates based on how much the company spends and what it buys. 

The UK’s GHG Protocol helps companies track their pollution over time in a clear way. Other tools like the Life Cycle Assessment look at the whole life of a product, from creation to disposal. This is great for companies that want to know the total environmental impact of what they sell. 

Choosing the right method is a big decision. It has to match what the company wants to achieve, what its customers expect, and the laws it needs to follow. Making this decision will depend on the company’s priorities and the resources at its disposal. 

Carbon Accounting Software: A Game-Changer 

Software like that offered by ClearVUE.Business streamlines the carbon accounting process. It automates data collection and analysis, making it easier for companies to comply with reporting requirements and set ambitious decarbonisation targets. 

With this kind of software, companies don’t have to do everything manually, saving time and cutting down on human error. So, setting and hitting targets for less pollution gets a lot easier. 

Taking Action with Carbon Accounting 

ClearVUE.Business not only helps in measuring emissions but also guides companies towards effective decarbonisation strategies. With expert analysis and a comprehensive platform, businesses can confidently step towards a more sustainable future. 

In a world increasingly focused on environmental sustainability, carbon accounting is not just an option—it’s a necessity. ClearVUE.Business is leading the way, helping businesses turn carbon insights into actionable strategies for a greener planet. 

Reach out here to get started for free.  


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