Mastering Carbon Accounting: Your First Step Towards a Net Zero Future
Carbon accounting and reporting are no longer optional for businesses. Whether you’re an SME or a large corporation, understanding and managing your carbon footprint is essential—not just for staying competitive but also for complying with a growing list of regulations. From SECR (Streamlined Energy and Carbon Reporting) to the Corporate Sustainability Reporting Directive (CSRD), and requirements like the Public Procurement Notice (PPN) 06/21, businesses are increasingly obligated to provide transparent and accurate carbon data. Additionally, companies seeking to improve their B Corp scores or gain competitive advantage through certifications will benefit from a robust carbon accounting system.
However, the path to accurate carbon reporting can be full of pitfalls. To help you navigate, we’ve compiled a list of essential dos and don’ts that will ensure your carbon accounting efforts are transparent, credible, and impactful.
1. Why Carbon Accounting Matters for Your Business
Before diving into the specifics, it’s important to understand why carbon accounting should be at the top of your business agenda. Accurate carbon emissions measurement forms the foundation of your Net Zero strategy, enabling you to set realistic targets, track progress, and communicate achievements to stakeholders.
Do: Start by calculating your emissions.
Accurately calculating your emissions is crucial to establishing a complete baseline for your carbon reduction efforts. To get a full picture, it’s important to account for all sources of emissions, including direct (Scope 1), indirect (Scope 2), and value chain emissions (Scope 3). Many platforms rely on broad, spend-based estimates, but Net Zero Now offers a more precise approach by using detailed, activity-based data. This ensures a more accurate measurement of your carbon footprint, giving you a strong foundation to set actionable and impactful reduction targets. The Net Zero Now platform simplifies this process with sector-specific guidance and ensures a high level of accuracy in your reporting.
Don’t: Make claims without data.
Businesses risk losing credibility by making unfounded or vague claims about their carbon neutrality or sustainability. Often, companies claim carbon neutrality based only on Scope 1 and 2 emissions, which are typically much smaller compared to Scope 3 emissions. This can lead to misleading perceptions. In fact, it’s advisable to avoid making carbon neutrality claims altogether, as they don’t necessarily require actual emissions reductions. Instead, focus on claims around emissions reduction targets or Net Zero goals that are tied to a specific timeframe and address all relevant emission scopes. These claims are far more credible and reflect a genuine commitment to sustainability. As Harry, head of climate at Net Zero Now, says:
“Businesses often get tripped up by trying to race towards Net Zero without ensuring their data is comprehensive and accurate. Start with robust calculations and then make your move.” Harry Llewellyn, Head of Climate Services
2. Dos for Effective Carbon Accounting
2.1 Use the Right Protocols and Standards
It’s not enough to just track your emissions—you need to do so in a way that meets industry and regulatory standards.
Do: Follow industry-specific protocols like those provided by Net Zero Now.
Protocols tailored to your sector help ensure that your carbon accounting aligns with globally recognised standards, such as the GHG Protocol, which is the foundation for accurate emissions measurement. Furthermore, the emissions reduction targets suggested by Net Zero Now are designed to align with Science-Based Targets initiative (SBTi) guidance, ensuring that your goals are scientifically robust and aligned with global climate objectives. This approach makes your claims more credible and easier to communicate to stakeholders, helping you build trust and confidence.
Do: Choose the right carbon accounting platform over confusing spreadsheets.
Using a dedicated carbon accounting platform not only simplifies the process of tracking and reporting your emissions but also saves you a significant amount of time. These platforms are built to handle the intricacies of carbon accounting, reducing the likelihood of errors and streamlining workflows that would otherwise be tedious and time-consuming with manual spreadsheets. With automated tools guiding you step by step, you’ll ensure accuracy while freeing up valuable time to focus on your broader sustainability strategy and other business priorities.
2.2 Set Science-Based Targets
Setting emissions reduction targets isn’t just a best practice—it’s necessary for meaningful progress.
Do: Set measurable, science-based targets.
Science-based targets ensure your business is aligned with global climate goals, giving your efforts a clear direction and making them more impactful. These targets should be ambitious yet realistic to create tangible environmental and commercial benefits.
2.3 Monitor and Update Your Data Regularly
As your business grows or changes, so will your emissions profile, making it essential to stay consistent with your reporting practices.
Do: Commit to regular, annual emissions reporting.
Staying consistent with annual emissions reporting ensures that your carbon strategy remains aligned with your evolving operations. Each year, look for ways to improve the accuracy of your footprint measurement by refining your data sources. For example, progress from using spend-based data (such as total spend on flights) to activity-based data (like flight mileage broken down by seat class). Eventually, aim to move towards supplier-specific data, which provides even more precision in calculating your emissions. This iterative process will help ensure your carbon reduction efforts are both credible and effective over time.
3. Don’ts for Avoiding Carbon Accounting Pitfalls
3.1 Don’t Over-Rely on Carbon Offsets
While carbon offsets and carbon credits can help mitigate unavoidable emissions, they should not be your primary method for achieving Net Zero.
Don’t: Use offsets as a crutch to avoid real reductions.
Offsets should complement your emissions reduction efforts, not replace them. Over-reliance on offsets can undermine your credibility and reduce the overall impact of your actions. When purchasing offsets, make sure the carbon credits you choose are of high quality and tied to projects that are verified and audited. Additionally, we recommend investing in carbon removal credits, which actively remove carbon from the atmosphere despite their higher cost. This approach ensures that your offset strategy is both credible and aligned with long-term sustainability goals.
3.2 Don’t Forget Scope 3 Emissions
Many businesses make the mistake of focusing solely on direct emissions, overlooking the significant impact of Scope 3 emissions.
Don’t: Overlook indirect emissions.
Scope 3 emissions, such as those from your supply chain, product lifecycle, and other indirect activities, often make up the majority of your overall emissions. Ensure that you include these in your reporting to provide a more comprehensive and accurate picture of your carbon footprint. Additionally, when making public commitments about your emissions measurement or reduction targets, always be transparent about which emission scopes—Scope 1, 2, and 3—are being addressed. This clarity is essential for credibility and for setting meaningful reduction goals.
4. Reporting and Communicating Your Carbon Progress
4.1 Communicate Clearly and Regularly
In today’s market, transparency is a key differentiator. Your carbon accounting and reduction efforts should be communicated regularly to build trust with your stakeholders.
Do: Be transparent about your carbon accounting efforts.
Clear and regular communication not only builds credibility but also helps attract customers, employees, and investors. When communicating, ensure you provide a comprehensive narrative that includes your efforts to date, your current progress, and your ambitions for the future. This balanced approach gives stakeholders a clear picture of where your business stands and where it’s headed, further enhancing your reputation for sustainability.
4.2 Celebrate Milestones
Your journey to Net Zero deserves to be acknowledged and shared.
Do: Publicise key achievements like receiving Net Zero certification or meeting carbon reduction milestones.
Showcasing your progress can serve as inspiration for others in your industry and enhance your brand’s reputation.
4.3 Avoid Greenwashing
With rising awareness around sustainability, both consumers and employees are paying closer attention to companies’ environmental claims. Overstating or exaggerating your green efforts can backfire.
Don’t: Engage in greenwashing.
Ensure that all your sustainability claims are backed by accurate data and credible actions. Greenwashing—making misleading claims about environmental efforts—can severely damage your reputation and erode trust. To build lasting credibility, be transparent and honest about the progress and challenges in your sustainability journey.
4.4 Don’t Fall into the Greenhushing Trap
Just as dangerous as greenwashing is greenhushing—the practice of staying silent about your sustainability efforts to avoid scrutiny.
Don’t: Hide your sustainability progress out of fear of backlash.
Greenhushing, while seemingly a safe strategy, can lead to missed opportunities and erode trust. Being open about both your successes and challenges is key. As Harry, head of climate at Net Zero Now, notes:
“Don't let perfect be the enemy of good! All progress in the right direction should be communicated openly, and we find this openness often stimulates further action.” Harry Llewellyn, Head of Climate Services
Turn Carbon Accounting Into a Competitive Advantage
Carbon accounting and reporting are fundamental components of a credible Net Zero strategy. By following these dos and don’ts, your business can ensure that its efforts are accurate, transparent, and impactful. Begin your journey with trusted tools like the Net Zero Now platform, and you’ll build a future-proof, competitive business in the rapidly evolving Net Zero economy.
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