Carbon Accounting

What is carbon accounting required?

Carbon accounting is used to calculate and record the amount of carbon dioxide emissions. The ultimate goal is the reduction of carbon emissions and eventually reaching net zero, carbon accounting help in measuring the amount of offset required, through the purchase of carbon credits, reducing or stopping certain activities, etc.

Today it isn’t something that we just account for, it has become an industry-standard requirement for many businesses. Hence carbon accounting not only records and quantifies carbon emissions but also assists in reducing and making informed decisions regarding the same.

How does Carbon accounting work?

Through a variety of approaches, including the spend-based method, the activity-based method, the supplier-specific method, and the hybrid method, carbon accounting measures emissions. Based on the accuracy of the employed emission factors and the quality of the data provided, this outputs an estimate of the carbon footprint. Then, depending on their place of origin, these are divided into “emission scopes.” The Greenhouse Gas Protocol specifies these. Measurements of direct emissions, firm indirect emissions and non-firm indirect emissions are made under scopes 1, 2, and 3, respectively.

Why do businesses require Carbon accounting?

  • It develops carbon sustainability; by recording emissions, originations can work on mitigating the environmental and social impact.
  • It acts as a provenance to showcase the efforts in the reduction of carbon emissions.
  • Serves as a ledger to regulatory bodies, governments, consumers and investors.
  • To attract investors; while investors invest in businesses that are sustainable and can adapt to changing climate.

What are the methods of carbon accounting?

A few methods of carbon accounting are the spend-based method, the activity-based method, the supplier-specific method, and the hybrid method.

What are the Carbon Accounting scopes?

They are classification of emissions based on the origin of emissions classified by The Greenhouse Gas Protocol as,

Scope 1: direct firm-level emissions.
Scope 2: indirect firm-level emissions.
Scope 3: indirect non-firm level (i.e. excluding Scope 2).

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