Carbon accounting explained
Understanding and managing your business’ carbon footprint is essential for reducing environmental impact and complying with regulations. Our guide explains the basics of carbon accounting with practical tips.
What does carbon accounting mean?
Carbon accounting is the process of measuring the amount of greenhouse gases (like carbon dioxide) that a business or organisation produces.
It helps track where emissions come from, such as energy use, travel or production, so steps can be taken to reduce them and the environmental impact.
Think of it as a ‘carbon footprint calculator’ for companies.
Defining your carbon footprint
Your carbon footprint includes all greenhouse gas emissions resulting from your business activities, expressed in carbon dioxide equivalents.
Greenhouse gas emissions are categorised into three areas.
Scope 1
Scope 1 includes emissions that come directly from your business, such as chemical products, company vehicles or combustion furnaces (for example, if a property your business owns uses gas heating).
Scope 2
Scope 2 includes indirect emissions from utility sources that your business does not own, such as electricity, heating or cooling.
Scope 3
Scope 3 includes all other indirect emissions from your chain that are not covered by scope two, such as travel, waste and the ways your customers use your products and services.
Steps to measuring your emissions
To accurately assess your organisation’s carbon footprint you need to measure emissions for each of the three scopes.
Data collection
Start by gathering data from utility bills and expenses on your energy consumption, transportation, waste and other relevant activities. From this, you can identify the areas where your carbon footprint is the most evident.
Calculation methods
Next, utilise your spending data, activity data or use a combination of both to estimate your emissions. The UK Government has a greenhouse gas conversion factors document you can use.
The equation you want to end up with is:
Total energy consumption (fuel, electricity, miles travelled etc.) x emission factors (fuel, electricity, travel mode etc.) = carbon dioxide equivalent (CO2e)
Benefits of carbon accounting
There are several benefits to understanding and implementing carbon accounting.
Improve compliance
Carbon accounting will help you to meet your regulatory requirements and help you prepare for future legislation. It will also support your clients' procurement requirements around climate change if you’re providing goods or services to other businesses.
Identify ways to reduce your emissions
This process will help you to pinpoint areas where you could decrease emissions, improve efficiency and possibly cut costs.
Strengthen your brand’s reputation
Making a conscious effort to improve your organisation’s carbon footprint demonstrates environmental responsibility to your customers, stakeholders and employees.
Research has found that customers have more trust in brands if they show they’re committed to climate change and sustainability (The Sustainable Consumer).
Setting science-based targets
Establishing science-based targets aligns your emission reduction goals with climate science and makes sure that you contribute effectively to global temperature control. Your plan will typically address all three scopes, over five or ten years.
It is important to get everyone in your business to see the value of reducing your carbon footprint to make it a goal shared by all. It is also useful to consider how your plan is reflected in your wider vision statements.
Next steps for your business
To begin your carbon accounting journey you could start by:
- engaging employees and stakeholders
- selecting tools to streamline the process such as carbon accounting software
- seeking continuous improvement to keep up to date on carbon accounting and adjust strategies to reflect new developments.
Interested in making your business more sustainable?
Zellar have a tool to help you reduce your impact and tell your sustainability story.
Find out how Zellar can support your business.
Energy Saving Trust
Find more on reducing your business’ carbon footprint on the Energy Saving Trust’s carbon accounting guide for businesses article.