Carbon accounting: a guide for businesses

Carbon accounting is the act of measuring greenhouse emissions associated with your organisation’s operations. There are multiple methods of  carbon accounting, but the most commonly used in practice and regulatory frameworks is the Greenhouse Gas Protocol.

As well as reporting on emissions, carbon accounting often involves setting plans to reduce them. This keeps your organisation accountable for any greenhouse gases emitted through its operations.

The term ‘carbon footprint’ refers to the amount of greenhouse gas emissions released into the atmosphere from your organisation’s activities. This includes gasses other than carbon dioxide (CO₂). However, as CO₂ is the most commonly known greenhouse gas the other gases are often converted into units of CO2 equivalency (CO₂e). This gives an overall carbon footprint with all emission sources reported in one unit.

For reporting and attribution purposes, greenhouse gas emissions are divided into three categories:

Scope one emissions

These are the released greenhouse gas generated directly by your organisation. For example, from:

• The fuel burned in the company car, van or fleet.
• Burning natural gas to heat the buildings you operate.

If your air conditioning isn’t properly maintained and is leaking refrigerant, this also qualifies as scope one. 

Scope two emissions

These describe emissions generated by a separate organisation, but on behalf of yours.

This would commonly refer to the electricity you buy from a power station. If you rent space in a building you don’t control, you’d be buying heat or cooling instead of natural gas or other fuels. This makes it a scope two emission. 

Scope three emissions

These are all indirect emissions generated on behalf of your organisation, but not by direct request. There are 15 categories within this scope. Some of the main ones are:

• The fuel burned from your employees driving to work or taking a plane for business travel.
• Purchased goods, services, assets, and investments.
• Emissions from waste.
• Supply chain emissions.
• Use of your products and services by consumers.

To complete a full emissions inventory, you need to measure emissions in all three categories. We can help you to do this through our carbon accounting service.

The best approach is to start with scope 1 and 2 emissions and stretch into scope 3 emissions specific to your organisation.

You can gather emission source data using:

• relevant utility bills
• expenses information
• additional data collection protocols

By collecting this energy and carbon emissions data, you can identify the biggest problem points.

Once you’ve inputted your data into a spreadsheet, you can start calculating. The UK Government has a useful 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)

Understanding and having a plan in place to reduce your carbon footprint can help your business:

• Meet legislative requirements and help the UK achieve its carbon reduction targets.
• Align yourself with client organisations’ procurement requirements by demonstrating effective carbon accountancy.
• Build trust and maintain customer loyalty. Research shows that customers have more trust in brands that show they’re taking action for the climate emergency.
• Attract investment. Investors will closely scrutinise net zero plans before choosing the organisations they want to work with.
• Improve efficiency. Identifying areas of inefficiency can cut costs, while also reducing carbon emissions.
• Recruit and retain talent. Job seekers increasingly investigate a potential employer’s environmental impact before applying. Demonstrating your sustainability credentials can also boost employee engagement.

With baseline measurements and targets, you can put a plan in place to align with long term, science-based targets for decarbonisation.

Typically, this plan may set targets across your supply chain, including all three scopes, over five or 10 years. If you’re looking for support, our expert team of consultants can help you.

During this phase, you should look at your organisation’s culture, leadership and governance, and strategic vision. The aim is to get your people on board with decarbonisation. You should also think about how your net zero plan is reflected in other parts of your company, such as your mission and vision statements.

Think about your net zero plan as part of the bigger picture. How is your business going to play its part in keeping global temperature rises to 1.5°C in line with the Paris Agreement?

There are various online tools to help you calculate your business’ carbon footprint. The UK Government launched a UK Business Climate Hub to help SMEs halve their emissions by 2030. This will bring them in line with the UK’s 2050 net zero target.

Wherever your business is on its net zero journey we’re here to help. Our comprehensive carbon accounting and net zero consultancy service can support your organisation on its net zero journey.

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