Carbon accounting: a guide for businesses

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

In addition to reporting on emissions, carbon accounting often involves setting plans to reduce these. This keeps the 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 carbon dioxide 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 come directly from your business. They include emissions from fuel combustion in furnaces and vehicles, as well as emissions from chemical production.
• Scope two emissions come indirectly from the consumption of purchased energy from utility sources that your business doesn’t own. This includes electricity, heating and cooling.
• Scope three emissions are all indirect emissions not covered by scope two. Scope three covers anything linked to your commercial activity that you don’t own or control. This includes your entire supply chain, travel, waste, purchased goods, assets and investments, and how consumers use your products and services. For example, consider the emissions generated by employees driving to a manufacturing plant out of town as a necessary part of industry operations.

To complete a full emissions inventory, you need to measure emissions in all three categories. We can help you to do this through our Measure Plan Act 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 the relevant utility bills, expenses information or additional data collection protocols. By collecting this energy and carbon emissions data, you can identify the biggest problem points.

Once you’ve done your research and inputted your data into a spreadsheet, you can start calculating. The UK Government has a handy 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 to:

• 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 then 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 to Plan and Act.

During this phase, you should look at your organisation’s culture, leadership and governance, and strategic vision. The aim is to get your organisation’s 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 new 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 Measure Plan Act comprehensive carbon accounting and net zero consultancy service can support your organisation on its net zero journey.

Get in touch to find out what we can do for you.