What are Scopes 1, 2 and 3 Emissions?
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In this article, we define what Scope 1, 2, and 3 emissions are and their significance in managing a company's carbon footprint.
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Carbon Accounting Explained: 2025 Business Guide
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Financial tracking is fundamental to business operations, but in today's climate-conscious economy – monitoring your carbon footprint has become equally important.
Accurate carbon accounting allows your organisation to:
- Work systematically toward environmental goals
- Develop effective Environmental Management System
- Pursue valuable certifications like ISO 14001
In this article, we'll explain what carbon accounting is, explore proven methodologies used by leading companies, and provide practical steps to implement effective carbon measurement in your organisation.
What is Carbon Accounting?
Carbon accounting, also known as greenhouse gas (GHG) accounting, is the process of measuring, tracking, and reporting carbon dioxide and other GHG emissions produced across an organisation’s operations, products, and supply chains. It forms the basis for understanding a company’s environmental impact and is critical for setting reduction targets, disclosing emissions, and meeting compliance standards.
This process provides a foundation for understanding environmental impact and helps organisations take informed actions to reduce emissions as a result of measuring the level of carbon dioxide emissions they have created. This allows them to fairly trade carbon credits between states, companies, and individuals in the carbon market.
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Carbon accounting methodologies vary by industry and scope, but all aim to quantify emissions in carbon dioxide equivalent (CO₂e) — the universal metric for comparing different greenhouse gases. These calculations help organisations manage their climate strategies and engage in the carbon market, where carbon credits can be traded between companies, governments, and individuals.
In order to calculate your company’s emissions accurately, you’ll need to gather high-quality data on both direct and indirect emissions — often relying on standardised emission factors provided by bodies like the World Business Council for Sustainable Development (WBCSD).
Calculating your company's GHG emissions and overall carbon footprint often requires the collection of precise emissions data regarding both your direct and indirect emissions. This can prove challenging but luckily – there are several available types of carbon accounting software to choose from to make calculating your total greenhouse gas emissions easier, including our own platform at Greenly!
“ Why it matters: Carbon accounting enables businesses to identify key sources of emissions, monitor progress over time, comply with regulations, and align with global sustainability goals. It also plays a crucial role in strategies like carbon credit trading and contributing towards global net-zero aspirations. ”
Carbon accounting has many practical uses including:
| Purpose | Description |
|---|---|
| Regulatory Compliance | Ensures adherence to local, national, and international environmental laws and carbon reporting requirements. |
| Tracking Emissions | Provides a clear picture of direct (Scope 1), indirect (Scope 2), and value chain (Scope 3) emissions. |
| Carbon Reduction Planning | Identifies high-emission areas to develop targeted reduction strategies. |
| Sustainability Reporting | Communicates an organization’s environmental performance to stakeholders through reports like CDP, GRI, or TCFD. |
| Carbon Market Participation | Facilitates the trading of carbon credits or offsets, enabling cost-effective emissions reductions. |
| Stakeholder Engagement | Demonstrates accountability and commitment to sustainability for customers, investors, and employees. |
| Cost Savings | Highlights inefficiencies in energy or resource use, potentially reducing operational costs. |
| Risk Management | Identifies potential risks from carbon-related regulatory changes or reputational damage. |
| Product Lifecycle Analysis | Assesses the carbon footprint of products, aiding eco-design and sustainable supply chain decisions. |
| Alignment with Global Goals | Supports compliance with initiatives like the Paris Agreement or science-based targets (SBTs). |
Calculating your company's GHG emissions and overall carbon footprint often requires the collection of precise emissions data regarding both your direct and indirect emissions. this can prove challenging but luckily there are several available types of carbon accounting software to choose from to make calculating your total greenhouse gas emissions easier, including our own platform at Greenly!
What Is the Difference Between Carbon Accounting and Carbon Assessment?
Here's the main difference between carbon accounting and a carbon assessment:
- Carbon accounting is the technical process of quantifying an organisation’s greenhouse gas emissions using standardised carbon accounting methodologies. This typically involves collecting emissions data, applying appropriate emission factors, and calculating a company’s carbon footprint in carbon dioxide equivalent (CO₂e).
- Carbon assessment, on the other hand, builds on carbon accounting by interpreting those results to drive decision-making. While accounting delivers the “what” — the numerical footprint — assessment focuses on the “what next.” A carbon assessment evaluates the implications of those emissions and outlines strategies to reduce them.
In a sense, carbon accounting is nothing more than a number – in the same vein of getting a test score back. While some people will get a bad grade on their last exam and have newfound motivation to want to do better, for others, the poor mark is nothing more than that – and it won't provoke any action or concern for potential improvement.
In short, carbon accounting provides the data and doesn't require someone to reduce their carbon emissions; carbon assessment turns that data into action. The assessment stage is where organisations identify reduction opportunities, engage with frameworks like the World Business Council’s GHG Protocol, and explore offsetting through tools such as via verified carbon credits.
At Greenly, we don’t just calculate emissions — we provide comprehensive carbon assessments to help companies reduce their footprint and embed sustainability into business strategy.
What is the Main Goal of Carbon Accounting?
The main goal of carbon accounting is to measure, track, and report the greenhouse gas (GHG) emissions associated with an organisation's operations, products, or supply chains. This enables businesses to identify emission sources, develop reduction strategies, comply with regulations, and align with sustainability goals.
Here is an overview of key objectives of carbon accounting:
- Better Understanding of Emissions – Many companies struggle to grasp concepts like carbon dioxide equivalents (CO₂e) and emission factors, both of which are essential for tracking and reducing carbon emissions. Carbon accounting enables businesses to quantify and report their emissions accurately using established methodologies. This understanding lays the groundwork for effective emissions management.
- Compliance with Environmental Regulations – As regulations mandating greenhouse gas (GHG) reporting expand globally, corporate carbon accounting has become crucial for staying compliant. By calculating and reporting emissions in line with legal requirements, companies can avoid fines and demonstrate accountability. This includes tracking GHG emissions, supply chain activity, and other environmental impacts to meet regional and international standards.
- Identifying Opportunities to Reduce Emissions – Carbon accounting breaks down emissions into categories such as Scope 1, 2, and 3 emissions, as defined by the Greenhouse Gas Protocol. This granular approach allows organisations to pinpoint high-impact areas and develop strategies to reduce emissions, such as optimising energy consumption and decarbonising supply chains. By identifying these opportunities, businesses can work toward sustainable development and long-term emissions reductions.
- Promoting Accountability – Carbon accounting raises awareness about the negative impacts of global warming and the role businesses play in contributing to emissions. By tracking supply chain emissions and corporate carbon footprints, companies are empowered to take responsibility and act on their climate impact. This accountability not only enhances brand reputation but also motivates organisations to meet their emissions reduction targets.
- Informing Strategic Decision-Making – With a comprehensive overview of their emissions, businesses gain valuable insights to guide better decision-making. Carbon accounting helps companies identify inefficiencies, reduce indirect emissions, and align with global agreements like the Paris Climate Accord. These informed decisions can mitigate climate risks and improve overall sustainability practices.
- Achieving Emissions Reduction Targets More Effectively – Many companies are unaware of their greenhouse gas emissions until they conduct carbon accounting. By creating GHG inventories and providing accurate data, carbon accounting enables organisations to track progress, implement reduction strategies, and improve their carbon management. This systematic approach makes hitting emissions reduction targets more feasible and achievable.
What Are the Two Main Methodologies Used in Carbon Accounting?
Carbon accounting relies on two main and widely used methodologies to calculate a company’s greenhouse gas (GHG) emissions: the spend-based method and the activity-based method. Both have their strengths depending on available data, goals, and timeline — and each influences how organisations measure emissions in carbon dioxide equivalent (CO₂e).
The Spend Based Method
The spend-based method calculates emissions by multiplying the cost of a purchased product or service by an associated emission factor. It uses Environmentally Extended Input-Output (EEIO) models, which estimate emissions based on economic transactions across sectors.
Pros:
- Quick and easy to implement
- Requires minimal data
- Ideal for first-time carbon footprint trackers
Cons:
- Less accurate due to fluctuating prices and currency rates
- May not reflect specific production processes or nuances in a company's supply chain
When to use it:
The spend-based method is best for when time or data access is limited, and carbon calculations need to be done quickly. However, its results should be interpreted with caution due to economic variability – such as inflation or currency exchange rate fluctuations. These inaccuracies may make this method to measure carbon emissions or a company's greenhouse gas emissions less reliable basis for carbon accounting.
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The Activity Based Method
The second approach to carbon accounting is the activity based method.
The activity-based method provides more precise emissions data by measuring actual physical activity (e.g., liters of fuel used, kilograms of material purchased). It applies tailored emission factors to this real-world usage data, often resulting in more accurate carbon accounting.
Pros:
- Greater accuracy and detail
- Reflects real consumption and emissions sources
- Ideal for Scope 3 analysis and supply chain tracking
Cons:
- More time-intensive
- Requires detailed operational data
When to use it:
The activity-based method is best for calculating GHG emissions when accuracy is a priority and the proper data and detailed resources are available. This makes the activity-based method particularly useful for compliance, investor reporting, and long-term sustainability planning.
Why Use a Hybrid Approach?
Leading organisations are now often opting for a hybrid carbon accounting methodology, combining both carbon accounting methods to allow for greater accuracy and speed.
This allows companies to benefit from:
- Speed in areas with only financial data (spend-based)
- Precision in areas with granular activity data (activity-based)
Ultimately, a hybrid approach can allow companies to build a comprehensive, credible carbon footprint — improving transparency and supporting claims in line with World Business Council protocols and other global standards.
The table below will further illustrate the key differences between the spend based and activity based methods for carbon accounting:
| Aspect | Spend-Based Method | Activity-Based Method |
|---|---|---|
| Description | Calculates emissions by multiplying the economic value of purchased products or services by relevant carbon emissions factors. | Calculates emissions based on the quantity of materials or components used, considering the actual data of physical flows. |
| Complexity | Less complex, quicker to calculate using EEIO models. | More specific and detailed, potentially more time-consuming. |
| Accuracy | Less reliable due to price fluctuations and exchange rate inconsistencies. | More accurate and precise, as it uses real data of material usage. |
| Best Use Case | Useful for quick calculations, especially when time is a constraint. | Preferred for detailed and accurate carbon accounting. |
| Hybrid Approach | Can be used in conjunction with the activity-based method for a more practical approach. | Encouraged to be used alongside the spend-based method for comprehensive accounting. |
| Example | Calculates the carbon footprint based on the price of a chair purchased. | Calculates the carbon footprint based on the quantity of materials like wood and fabric used for the chair. |
How Does Carbon Accounting Classify a Company's Emissions?
The estimated carbon emissions calculated from carbon accounting are often divided into three different categories, often referred to as, “scopes” – these scopes in carbon accounting seek to organise and simplify the process.
According to the Greenhouse Gas (GHG) Protocol, the three scopes are broken down whether the carbon emissions come from industrial or vehicle related activities, heating or electric cooling systems, or other various emissions that do not fall under scopes one and two.
Understanding Emission Scopes: The Foundation of Carbon Accounting
Carbon accounting relies on a clear categorisation of emissions, which are broken down into three distinct "scopes" – as defined by the GHG Protocol, the world's most widely used greenhouse gas accounting standard.
Carbon emissions are classified into the following scope categories:
Scope 1 emissions: Direct Emissions
These are emissions that your company directly produces through owned or controlled sources, such as from industrialisation habits or vehicles used in your company.
Here are some examples of scope 1 emissions:
- Fuel combustion in company vehicles and facilities
- Fugitive emissions from refrigeration or air conditioning systems
- Chemical production or chemical leakage in owned or controlled process equipment
- On-site generation of electricity, heat, or steam
- Overall fuel usage or non-renewable energy sources
- Energy use for office spaces or various facilities
Real-world example: Imagine a manufacturing company tracking emissions from its factory boilers or company-owned delivery trucks. These are direct emissions as they are produced from owned and controlled sources.
Scope 2: Indirect Energy Emissions
These emissions result from the generation of purchased electricity, steam, heating, and cooling that your company consumes:
Here are some examples of scope 2 emissions:
- Purchased electricity for offices and facilities
- Purchased steam
- Electricity used for heating or cooling systems
- Energy consumption of rented or leased office spaces and vehicles
Real-world example: A big name corporation, like Google, looking to determine the carbon footprint of the electricity used to power its data centers or office buildings. These would be indirect emissions as they wouldn't be produced directly in house at Google.
Scope 3: Value Chain Emissions
Known as the largest portion of an organisation's carbon footprint, often accounting for up to 90% of a company's emissions – scope 3 emissions refer to all other miscellaneous or indirect emissions occurring in a company's value chain that don't fall under scopes one or two.
Here are some examples of scope 3 emissions:
- Upstream activities: Purchased raw materials, goods and services, business travel, employee commuting, waste disposal, and leased assets (if upstream, such as offices or vehicles not owned).
- Downstream activities: Use of sold products, end-of-life treatment of products, investments, franchises, business travel, and leased assets (if downstream, such as assets you lease out to others).
Real-world example: A clothing retailer accounting for emissions from cotton farming, textile manufacturing, shipping, product usage, and disposal. These are miscellaneous emissions that wouldn't fall under scope 1 or scope 2 emissions data.
Remember, scope emissions are used on behalf of numerous government based and non-profit organisations to help companies break down their emissions – such as the Environmental Protection Agency and the Science Based Targets Initiative (SBTi).
As scope 3 is the most general category for carbon accounting, it is often the most difficult to precisely measure and the most challenging to reduce emissions – making it a subject of interest in carbon reporting and for businesses working towards net zero emissions.
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Carbon Neutral vs. Net Zero: Understanding Key Differences
In addition to understanding the differences between scope 1, 2, and 3 emissions – it's important to understand the disparity between key terms such as carbon neutrality and net zero.
While often used interchangeably, these terms represent different types of climate commitments –here's a breakdown of the differences between carbon neutral and net zero:
Carbon Neutrality
- Definition: Balancing carbon emissions by offsetting an equivalent amount of carbon elsewhere
- Scope: Usually focused on Scope 1 and 2 emissions
- Time Frame: Companies can contribute to carbon neutrality quickly via carbon offsets
- Method: Heavy reliance on carbon offset purchases
Net Zero
- Definition: Reducing emissions across all scopes as close to zero as possible, and then seeking to offset any remaining "residual emissions"
- Scope: Comprehensive coverage of Scopes 1, 2, and 3
- Time Frame: Typically a longer-term goal (usually with a time frame reference to 2050) with interim or "broken down" reduction targets
- Method: Prioritises absolute emissions reductions first (up to 90%), with limited high-quality carbon removal offsets for unavoidable emissions
Key difference: Carbon neutrality is often a stepping stone toward net zero, as the latter requires more profound business transformation and emissions reduction – making net zero a more challenging global goal to contribute to than carbon neutrality.
The table below will demonstrate additional differences between carbon neutrality and net-zero:
Differences between Carbon Neutral and Net Zero
| Aspect | Carbon Neutral | Net Zero |
|---|---|---|
| Definition | Achieving a balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. Typically involves offsetting emissions by investing in carbon reduction projects. | Reducing carbon emissions to as close to zero as possible and offsetting any remaining emissions. Focuses on reducing emissions through changes in processes and energy use. |
| Approach | Often relies on purchasing carbon credits to offset emissions that cannot be eliminated. | Prioritises actual reductions in emissions before considering offsets, aiming for minimal reliance on offsets. |
| Scope | Can be applied to specific activities, products, or the entire organisation. | Generally applied to the entire organisation or country, encompassing all operations and activities. |
| Long-term Goal | Maintaining a balance of emissions through continuous offsetting. | Achieving a state where no net emissions are produced, focusing on sustainable practices and renewable energy use. |
| Measurement | Often measured on an annual basis, with regular offsetting required to maintain neutrality. | Measured as a reduction trajectory over time, aiming for absolute zero emissions as much as possible. |
| Example Actions | Investing in reforestation projects, purchasing carbon offsets, improving energy efficiency. | Implementing renewable energy solutions, transforming production processes, enhancing energy efficiency, and then offsetting remaining emissions. |
| Certification | Carbon neutral certifications are available from various organisations and often involve demonstrating offset purchases. | Net zero certifications require comprehensive emission reductions and are more stringent in terms of allowable offsets. |
Common Carbon Accounting Frameworks and Standards
There are a wide variety of carbon accounting frameworks and standards to use, as organisations can rely on several established frameworks to guide their carbon accounting practices.
Here's a breakdown of the various carbon accounting frameworks and standards to help your company choose the one most suitable to your emission reduction goals:
GHG Protocol
Often known as the gold standard for carbon accounting, providing detailed methodologies for calculating emissions across all three scopes. Both their Corporate Standard and Scope 3 Standard are widely referenced in corporate sustainability reporting.
Read more about the GHG Protocol in our blog article here.
ISO 14064
This international standard provides guidance at the organisation level for quantifying and reporting of greenhouse gas emissions and removals, which is done by providing specific verification requirements.
Read more about ISO 14064 in our blog article here.
CDP (formerly Carbon Disclosure Project)
The CDP is a global disclosure system that allows companies to measure and manage their environmental impact.
The CDP scores companies based on their climate disclosures, creating incentives for improved reporting and performance – which is becoming all the more pivotal as growing concerns around climate change continue.
Read more about the CDP in our blog article here.
Science Based Targets initiative (SBTi)
While not a carbon accounting framework itself, the SBTi provides methods for setting emissions reduction targets aligned with climate science and the Paris Agreement goals.
Read more about the SBTi in our blog article here.
Task Force on Climate-Related Financial Disclosures (TCFD)
Developed by the Financial Stability Board, TCFD recommendations can help companies disclose climate-related financial information, including those related to carbon emissions.
Read more about the TCFD in our blog article here.
Overall, by seeking to better understand these frameworks and the fundamental concepts of emission scopes – it can help your organisations to develop a more robust climate strategy and choose carbon accounting systems that provide accurate, comprehensive data for informed decision-making and credible sustainability reporting.
Why Carbon Accounting Matters to Decision-Makers
There are several reasons why your company could benefit from deciding to commit to carbon accounting, such as adhering to environmental legislation, boosting brand reputation, and making process towards your company's climate goals.
Carbon accounting delivers tangible business benefits beyond environmental impact, such as :
- Regulatory compliance with current and upcoming climate legislation
- Enhanced brand reputation and stakeholder trust
- Measurable progress toward climate goals
- Increased investor appeal and access to sustainable finance
Here's a more detailed breakdown of how carbon accounting can prove itself indispensable for decision makers and businesses:
- Better Decision Making – For executives and sustainability leaders, carbon accounting provides the data foundation needed to make strategic decisions and develop corporate sustainability. More and more investors and customers are seeking to partner or purchase products or services from businesses that seek not only financial success, but environmental and social just as well.
- Avoid Greenwashing – Carbon accounting provides concrete data that can help establish transparency and eliminate the risk of greenwashing. The statistics provided by carbon accounting can serve as evidence that your company is indeed striving to reduce carbon emissions.
- Improve Overall Impact – Carbon accounting principles illustrate not only the value in measuring and reducing emissions, but the the overall action that can be taken to mitigate their negative impact on surrounding communities and boost their overall business value.
- Financial Benefits – Carbon accounting can also stimulate financial growth within a company, as investors, employees, and consumers alike are more likely to contribute to the product or service if they seek sustainable practices.
- Ensure Regulatory Compliance – When new environmental regulations emerge, companies with established carbon accounting systems gain competitive advantage. Third parties will be more willing to invest into the business or project as companies will be able to demonstrate their willingness to comply with new environmental regulations.
All of the following benefits of carbon accounting ultimately attract new investors, which only continues to stimulate the economic success of the business or project.
The business case is clear – as climate risks intensify, investors are increasingly interested in companies that are willing to adjust their business model to improve overall sustainability. This reiterates how companies that use carbon accounting are likely to have a greater appeal to new investors.
Carbon Accounting With Greenly: Case Study on Sia Partners
Sia Partners is a consulting and accounting firm with an international presence in 18 countries that was founded in 1999. Sia Partners was tackling carbon management on its own but they were spending too much time exchanging information between their different offices. In 2020, they opted for the Greenly emissions tracking tool for greater simplicity and efficiency.
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Is Carbon Accounting Mandatory?
In recent years, governments and regulatory bodies around the world have implemented laws requiring companies to measure and report their carbon emissions. These regulations aim to promote transparency, accountability, and progress toward global sustainability goals.
Below is an overview of key regulations in the UK, EU, and US that mandate carbon accounting:
United Kingdom
- Streamlined Energy and Carbon Reporting (SECR):
Introduced in 2019, SECR requires large UK-incorporated companies to report their energy use and carbon emissions in their annual reports. - Who it applies to: Large companies meeting two of the following criteria: £36+ million turnover, £18+ million balance sheet total, or 250+ employees.
- Reporting requirements: Scope 1 and Scope 2 emissions, energy consumption, and intensity ratios.
- UK Emissions Trading Scheme (UK ETS):
Replacing the EU ETS post-Brexit, this scheme requires companies in high-emission sectors (eg, power, manufacturing) to monitor and report their emissions annually, with limits on allowable emissions.
European Union
- Corporate Sustainability Reporting Directive (CSRD):
Set to replace the Non-Financial Reporting Directive (NFRD), the CSRD mandates that companies report on their sustainability performance, including detailed carbon emissions data. - Who it applies to: Large EU companies with 250+ employees, €40+ million turnover, or €20+ million in assets, as well as certain non-EU companies operating in the EU.
- Reporting requirements: Scope 1, 2, and 3 emissions, climate-related risks, and sustainability initiatives.
- EU Emissions Trading System (EU ETS):
This cap-and-trade system applies to energy-intensive industries, requiring them to monitor and report emissions and purchase allowances for excess emissions.
United States
- SEC Climate Disclosure Rule (Proposed):
The U.S. Securities and Exchange Commission (SEC) is finalising a rule that would require publicly traded companies to disclose climate-related risks, as well as Scope 1, 2, and in some cases, Scope 3 emissions. - Who it applies to: Publicly listed companies.
- Focus: Enhancing transparency for investors and stakeholders.
- California Climate Disclosure Laws (SB 253 and SB 261):
Recently enacted, these laws require large companies operating in California to report their Scope 1, 2, and 3 emissions. - Who it applies to: Companies with over $1 billion in revenue doing business in California.
- Timeline: Reporting begins in 2026 for 2025 emissions data.
Companies That Use Carbon Accounting
Many of the world's leading companies, including Microsoft, Google, and Apple, have embraced carbon accounting to measure and manage their environmental impact. Most achieve this by leveraging advanced carbon accounting software or platforms, which streamline the process and provide actionable insights for sustainability initiatives.
Here is a breakdown of how these three big-name companies make the most of carbon accounting:
- Microsoft has made its sustainability efforts well known via the use of carbon accounting, such as adopting ambitions to work towards carbon negativity by 2030. In addition to this, Microsoft is focusing efforts on investing in renewable energy, energy efficiency, and carbon removal projects.
- Google is also positioning itself as a leader in sustainability, working towards operating on 100% renewable energy and becoming carbon-free by 2030. Google uses carbon accounting and their own emission factors to calculate its greenhouse gas emissions. In addition to calculating their GHG emissions, Google also releases annual reports to remain transparent with their users, investors, and other stakeholders – as well as having invested in renewable energy projects to boost energy efficiency.
- Apple has made a substantial effort to mitigate excess GHG emissions and other indirect emissions. For example, Apple is working towards carbon neutrality across its entire supply chain and product life cycle. They also encourage users to make use of their electronic trade-in program before purchasing a new iPhone or laptop to help mitigate waste and boost sales of refurbished products.
Beyond environmental benefits, carbon accounting offers a range of advantages, including:
- Cost savings
- Compliance with regulations
- Alignment with corporate social responsibility (CSR) goals
- Greater appeal to customers and investors.
Ultimately, it plays a crucial role in combating climate change, advancing sustainable development, and ensuring businesses remain competitive and forward-thinking.
Why Your Company Should Use Carbon Accounting
Carbon accounting and Carbon Assessment are important as they impact our environment, society, and even our global economy. Here's a breakdown of why carbon accounting and reporting are becoming more crucial by the day:
Environmental Benefits
- Avoid Climate Change – Carbon accounting and reporting helps companies measure and reduce their greenhouse gas (GHG) emissions as it provides them with greater insight on how to reduce both their direct and indirect emissions and achieve their individual climate goals.
- Boost Sustainability Initiatives – Accurate carbon accounting and reporting can help to encourage emission reductions outside of your organisation as well, such as with your stakeholders or your supply chain. This can also inspire other companies to better understand their carbon emission and work towards net zero.
Economic Benefits
- Reduced Operational Costs – Being able to better understand emissions data via carbon accounting software can help companies to effectively reduce emissions, energy consumption, and understand their overall inefficiencies and setbacks. As a result, these efforts to improve energy efficiency and reduce waste not only help companies to reduce their corporate carbon footprint but also to save on operational costs.
- Set Your Company Apart From Competitors – Companies that make an active effort to take part in greenhouse gas accounting and utilise carbon accounting methods to reduce emissions can differentiate themselves from their competitors. Think about it: investors are starting to take an interest in companies and their emissions data – which makes committing to GHG accounting a great way to illustrate your company's commitment to reducing emissions, optimising your value chain, and appealing to environmentally conscious consumers.
Regulatory Compliance
- Meet Legal Requirements – Many regions around the world including the U.S., U.K., and Europe have existing and new regulations coming out which require businesses to report their GHG emissions. This means that carbon accounting and reporting can help organisations to comply with these regulations and avoid potential fines and legal issues.
- Stay One Step Ahead – New environmental legislation is being developed all of the time in line with well-known organisations like the World Resources Institute, GHG protocol, and governments across the world. As new regulations are created to compel companies to take accountability for their direct emissions, indirect emissions, and even their supply chain emissions – future requirements are only bound to become more stringent. Luckily, the use of various carbon accounting methods can help companies prepare themselves for these imminent legislative changes.
Social Responsibility
- Build Greater Stakeholder Trust – It can be challenging to engage your stakeholders, but carbon accounting and reporting can help your company build a more transparent relationship and cultivate greater trust with your stakeholders – such as your investors, customers, and employees. Overall, GHG accounting can help illustrate your commitment to corporate social responsibility and sustainability – all of which support business growth too.
- Public Accountability – By publicly disclosing carbon emissions and reduction efforts via the use of GHG accounting, organisations can hold themselves accountable for their carbon footprints and find greater motivations to reduce them. In addition, a company's carbon accounting and reporting efforts can help promote the importance of understanding our company's GHG emissions, emission factors, supply chain activity, and how to reduce our overall environmental impact.
Improved Strategic Decision-Making
- Better Strategy Development – The data provided by carbon accounting can help uncover valuable information for future and improved strategic planning. As a result, this can help organisations set achievable science-based targets for emission reductions.
- Risk Management – Seeking to understand your company's carbon emissions can help your business to better identify, manage, and mitigate risks associated with climate change – such as extreme weather events, market risks, and even regulatory risks.
Carbon accounting is important as it encourages companies to better understand their supply chain, Scope 3 emissions, and total greenhouse gases produced to make better business decisions for the planet, people, and industry as a whole moving forward.
How Can Your Company Start Reducing Emissions?
Remember, measuring your carbon emissions is just the beginning – as action is what drives real change.
Carbon accounting and reporting is only one step that a company can take to reduce their output of carbon emissions.
Here are 3 small and practical steps your company can take to immediately begin reducing your emissions:
1. Optimise Building Energy Systems
Making an effort to implement smart controls for heating, ventilation, and air conditioning (HVAC) systems across your facilities can make a big difference in your emissions.
It’s easy to accidentally leave the heat or air conditioning on in an office, car, or other rented space tied to your company when it’s unnecessary. For instance, programming automated shutdowns during unoccupied periods and establish clear protocols for holidays and weekends can help to cut back on unnecessary energy consumption and in turn – reduce overall company emissions.
This single change delivers both environmental benefits and immediate cost savings to your bottom line.
2. Transform Employee Transportation
Long gone are the days where taking the metro instead of driving your car to work were the only ways to cut back on carbon emissions. Therefore, developing a comprehensive sustainable mobility program for your workforce can make a difference.
Beyond traditional public transportation subsidies, your company could consider using the following:
- Electric vehicle incentives for employees
- Bike and scooter share memberships
- Carpooling platforms and rewards
- Flexible work arrangements to reduce commuting altogether
These initiatives directly reduce your Scope 3 emissions while improving employee satisfaction and wellness.
3. Rationalise Your Physical Footprint
Conduct a space utilisation audit across your entire operation. If your company takes a moment to evaluate which rented vehicles, co-working spaces, or companies that aren’t being used to their full capacity – your company can significantly reduce both costs and carbon emissions through strategic consolidation.
This assessment can reveal opportunities to eliminate or repurpose underutilised space, allowing for optimal environmental and financial benefits.
What About Greenly?
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At Greenly, we specialise in helping businesses take control of their carbon emissions through our suite of carbon management services. Whether you’re just starting your sustainability journey or looking to refine your current strategy, our platform and expertise provide the tools and insights needed to make a real impact.
Here’s how Greenly can support your business:
- Carbon Assessments: We offer detailed carbon footprint assessments to help you understand your emissions across Scopes 1, 2, and 3, identifying where your biggest environmental impacts lie.
- Emission Tracking: Our platform streamlines the process of tracking your emissions over time, providing clear data visualisation and actionable insights to monitor progress.
- Reduction Strategies: Greenly helps you develop tailored decarbonisation pathways to meet your sustainability goals, whether it’s reducing operational emissions or decarbonising your supply chain.
- Supplier Sustainability: We provide tools to evaluate and engage with sustainable suppliers, helping to reduce upstream emissions and enhance your value chain's overall sustainability.
- Achieving Science-Based Targets: Greenly supports businesses in setting and achieving science-based targets, ensuring your efforts align with global climate goals like the Paris Agreement.
By working with Greenly, you’ll not only reduce your environmental impact but also boost your brand reputation, meet growing customer and investor expectations, and gain a competitive edge in an increasingly sustainability-focused world.
Ready to make sustainability a priority? Contact us today to see how Greenly can help your business take the next step toward a greener future.
Sources
EPA https://www.epa.gov/ems and https://www.epa.gov/climateleadership/scopes-1-2-and-3-emissions-inventorying-and-guidance
Harvard Business Review https://hbr.org/2022/04/we-need-better-carbon-accounting-heres-how-to-get-there
Supply Chain Solutions Center https://supplychain.edf.org/resources/carbon-accounting/
The World Business Council for Sustainable Development https://www.wbcsd.org/#
Publications Office of the European Union https://op.europa.eu/en/publication-detail/-/publication/1edb6271-5b07-40fa-ae6b-55bce1c1c220
GHG Protocol https://ghgprotocol.org/ and https://ghgprotocol.org/corporate-value-chain-scope-3-standard and https://ghgprotocol.org/corporate-standard
CDP https://www.cdp.net/en
Task Force on Climate-Related Financial Disclosures https://www.fsb-tcfd.org/
SECR UK Government https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance
Tech Informed https://techinformed.com/microsofts-carbon-negative-plans-unpacked
Sustainability at Google https://datacenters.google/operating-sustainably/
Environment Energy Leader https://environmentenergyleader.com/stories/google-has-invested-35-billion-in-renewable-energy-projects-worldwide,2747
Apple Newsroom https://www.apple.com/newsroom/2020/07/apple-commits-to-be-100-percent-carbon-neutral-for-its-supply-chain-and-products-by-2030/
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In this article, we'll explore what sustainability reporting is, the benefits it brings, and why it's essential for your company.
Decarbonisation: what it is and why it matters
1 min
Level
In this article, we break down what decarbonisation means, explore why it's urgently needed, and outline practical steps companies can take to support the global push toward net zero.