As the urgency of addressing climate change grows, businesses and organisations are increasingly turning to carbon accounting as a crucial tool to measure, manage, and reduce their carbon emissions.
Greenhouse gas (GHG) accounting, also known as carbon accounting, is the first step towards adopting sustainable practices and fulfilling environmental responsibilities. In this step-by-step guide, we will walk you through the process of starting carbon accounting, empowering you to take meaningful strides towards a more sustainable future for your organisation.
Step 1: Define your scope and identify emission sources
Begin by defining the scope of your carbon accounting initiative. This involves determining what activities, processes, and emissions sources you want to include. Will you focus solely on your organisation's direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2), or will you also incorporate emissions other indirect sources (Scope 3)? What will your materiality threshold be to determine which categories of Scope 3 are most relevant and impactful to your organisation?
Assess all potential sources of carbon emissions within your defined scope. This could include energy consumption, transportation, manufacturing processes and more. Collaborate with relevant departments to ensure a comprehensive understanding of your entire value chain and emissions landscape.
Clearly defining these boundaries early on will help to provide a framework for your accounting efforts.
Step 2: Choose a GHG accounting standard
Select a carbon accounting standard that aligns with your organisation's goals and resources. Common standards include the Greenhouse Gas Protocol and ISO 14064. Each provides guidelines for measuring and reporting emissions, helping you maintain consistency and credibility.
Step 3: Carbon accounting tools and software
Invest in carbon accounting tools or software that streamline the process. These tools automate data collection, emissions calculations, and reporting. They not only save time but also reduce the risk of errors associated with manual calculations.
Step 4: GHG data collection and calculation
Gathering accurate data is the foundation of effective carbon accounting. Collect data on energy usage, fuel consumption, travel distances and any other relevant metrics. If you’re worried about data quality, start with what you have and make a plan to improve it as your process matures.
To help this process, engage with business areas and ensure that they recognise the purpose of carbon accounting. Give them clear expectations about what data you need from them and the timeframes for when you need it. Remember, it’s likely that they will not have all the data to create a perfect carbon footprint right away, which is why it is important that they understand this will be a continuous and improving process. Make sure they are aware that this data collection will also benefit them, as it will provide useful insight into their operations and drive additional efficiency improvements.
To calculate emissions, use robust emission factors, which represent the amount of greenhouse gases produced per unit of activity. Various industry standards and databases provide emission factors to ensure accurate calculations.
Step 5: Establish baseline emissions
Create a baseline of your organisation's emissions to serve as a starting point for future comparisons. This baseline will be invaluable for tracking progress and evaluating the effectiveness of your emission reduction initiatives.
Step 6: Monitor and report
Transparent carbon reporting builds trust with stakeholders, both internal and external, and demonstrates your commitment to decarbonisation. This means that it is important to continuously monitor your emissions data, track progress against your baseline and regularly report your findings.
Disclosing your carbon footprint, as well as your accounting methodology, externally means sharing your emissions data and related information with the public. This demonstrates accountability and can be done through various channels, such as annual reports, sustainability reports, a page on your website, or platforms like the Carbon Disclosure Project (CDP). We suggest externally disclosing your carbon footprint and performance at least annually.
When it comes to communicating about climate action within your organisation, reporting information more regularly, for example as part of quarterly progress updates, is a good opportunity to relay performance, engage employees and gain extra buy-in.
Step 7: Set reduction targets
Based on your emissions data and analysis, set ambitious yet achievable carbon reduction targets. These targets will guide your efforts to minimise your carbon footprint and drive continuous improvement. Standards, such as the Science Based Targets initiative, ensure that targets help prevent the worst impacts of climate change.
Step 8: Create emission reduction strategies
Creating an effective emissions reduction strategy to achieve your carbon targets involves a systematic approach that is based on data-driven insight. It is key that any plan aligns with your organisation's specific business goals, operations and sustainability objectives.
We recommend first creating a long list of interventions, focussing on ‘mean’, ‘lean’ and ‘green’ categories.
Once you have identified a long list of company-specific interventions that will lead to carbon savings, you need to prioritise these actions based on the potential carbon impact, operational feasibility and capital costs. This information will form the basis of your decarbonisation plan and help to determine whether actions should take place in the short-, medium- or long-term.
Don’t forget to also consider enablers – the things that will help you achieve your actions, for example employee skills, governance or budgetary requirements.
Step 9: Implement emission reduction strategies
Implement your decarbonisation plan to achieve your reduction targets. This might involve energy efficiency improvements, transitioning to renewable energy sources, optimising transportation and adopting circular economy practices.
Make sure to refer back to your emissions data regularly. This will help you measure progress, identify trends and make informed decisions as your strategy evolves over time.
Step 10: Engage stakeholders and communicate
In addition to regularly reporting your emissions, it is important to continuously engage employees, customers, investors and other stakeholders in your carbon accounting journey. Decarbonisation touches every part of your organisation. By engaging internal and external stakeholders, you bring your people onboard and gain their support to take climate action together.
Transparent communication about your carbon reduction efforts builds support, fosters accountability, and showcases your commitment to sustainability. Your employees, suppliers, partners and investors will need to be engaged as part of your data collection process, and as you work to improve your data quality and granularity, you will need to further engage these stakeholders. Supplier engagement will be particularly important when it comes to improving your Scope 3 emissions (purchased goods and services) data over time.
To learn more about GHG accounting, check out our Ultimate guide for understanding your carbon footprint.
Carbon accounting to benefit your organisation
Carbon accounting is a powerful tool that empowers organisations to take actionable steps towards reducing their emissions. By following this step-by-step guide, you can initiate and navigate the carbon accounting process with confidence.
But if you are looking for more support, reach out to our expert team, who will be happy to give you a demo of our software or answer any questions you may have.