The Essential Role of Carbon Accounting in Achieving Sustainability Goals

What is Carbon Accounting?

Greenhouse gas accounting is the way companies can measure how many overall emissions and greenhouse gases they are producing and emitting into the atmosphere. It is useful for states, organizations, and various individuals such as potential investors or stakeholders to delineate how many emissions a company is responsible for through the use of carbon credits.

Also, it allows a company to fairly trade carbon credits throughout the market, and to better understand the greatest source of their own emissions.

Some of the?main greenhouse gases?include:

• Carbon dioxide (CO?)
• Methane (CH?)
• Nitrous oxide (N?O)
• Hydrofluorocarbons (HFCs)
• Perfluorocarbons (PFCs)

These greenhouse gases trap heat in the atmosphere and contribute to global warming and overall temperature rise as a result of human activity. According to the?sixth assessment report by the IPCC, these drastic temperatures will continue to rise unless ample action is taken to reduce emissions.

How does GHG accounting work?

Carbon accounting requires two things: data collection and data processing. To account for their emissions effectively. Carbon accounting relies on two sets of data:

1. Business data
2. Emissions factors

Business data?describes the activities performed by a business. This can be either:

• Spend data?– how much money was paid to company X for a certain good or service, or
• Activity data?– how many liters of fuel or kilograms of material were bought.

The infographic below shows the business data required to calculate a business’s full carbon emissions, including?upstream and downstream?sources:

Emissions factors are the second type of data needed for carbon accounting. They indicate the amount of greenhouse gas emissions linked to each unit of business activity.

Once all the necessary data is collected, it can be transformed into emissions estimates. The method for this conversion varies based on the chosen methodology.

Methods

Greenhouse gas accounting uses two methods, both of which can be used at the same time to optimize a company's calculation of their carbon footprint for accuracy.

1.?????? Spend-Based Method

The spend based method works by multiplying the financial value of something a company purchases by the amount of carbon dioxide or greenhouse gas emissions it emits to produce a numerical piece of data.

2.?????? Activity-Based Method

The activity-based method, which is more specific than the spend-based method, uses data to retrieve how many units of specific materials have been purchased.

Both the spend-based method and the activity-based method utilize factors associated with carbon emissions to determine a company’s impact on overall emissions.

Process of the carbon accounting, from data collection to reporting-

Types of GHG accounting can be classified into:

1. Corporate or Organizational GHG Accounting: Corporate or Organizational GHG Accounting focuses on measuring and reporting the total greenhouse gas emissions produced by an entire organization. This approach encompasses all emissions from various sources, including Direct emissions from company vehicles, Indirect emissions from purchased electricity, waste disposal. etc.
2. Project GHG Accounting: Project GHG Accounting focuses on measuring and reporting greenhouse gas emissions specifically associated with individual projects or initiatives. This approach helps organizations assess the environmental impact of particular activities, allowing for targeted management and mitigation strategies.
3. Product Life Cycle GHG Accounting: Product Life Cycle GHG Accounting involves assessing greenhouse gas emissions throughout the entire life cycle of a product, from raw material extraction to disposal. This comprehensive approach provides insights into the environmental impact at each stage, enabling organizations to make informed decisions for sustainability.

Why is greenhouse gas accounting important to business?

Greenhouse gas accounting is important as it can help a company improve in all areas of business, such as by reducing their total emissions or by adhering to GHG accounting standards or other environmental regulations –?all of which can make a business more attractive to customers and investors.

Following few more reasons why GHG accounting is important-

• Can help your company adhere to the Global GHG accounting and reporting standard;
• Reveals where your company can succeed in reducing emissions such as by?mitigating the use of air conditioning;
• Ensure that your efforts to reduce greenhouse gas (GHG) will be developed on a physical science basis and in line the values depicted by the GHG Protocol and the?Intergovernmental Panel on Climate Change.

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