You can’t manage what you don’t measure. Carbon accounting, also called as GHG accounting, lets you quantify your organization’s greenhouse-gas (GHG) emissions in carbon dioxide equivalents (CO₂e). With a clear emissions baseline, you can set credible reduction targets, comply with evolving regulations, uncover cost-saving efficiencies, and build trust with customers, investors, and regulators. It is the essential process that allows organizations to measure, track, and report the carbon dioxide (CO₂) and other GHG emissions produced across their operations, products, and supply chains.
Step 1: Assess Your Readiness
Before diving in, take a holistic look at your organization’s preparedness.
- Leadership buy-in: Are executives committed?
- Team & expertise: Do you have internal staff or need external support?
- Data systems: Can you capture energy, fuel, and procurement data?
- A quick readiness audit clarifies gaps and secures the resources you’ll need.
Step 2: Define Clear Goals
Set SMART objectives (Specific, Measurable, Achievable, Relevant, Time-bound). Having clear goals helps align your efforts. For instance, a manufacturing company might aim to reduce Scope 1 emissions by 20% within three years.
Step 3: Determine Organizational Boundaries
To report on GHG emissions, you first need to determine the boundaries of reporting based on your organizational structure. The GHG Protocol outlines two main approaches:
- Equity Share: Tracking emissions based on your percentage of ownership in an operation.
- Control Approach: Accounting for 100% of emissions from operations over which you have either operational or financial control. Different goals may call for different approaches, and some companies use a combination.
Step 4: Set Operational Boundaries & Scopes
Once organizational boundaries are set, identify your operational boundaries by categorizing emissions into three scopes, as defined by the GHG Protocol. This classification organizes and simplifies the process. Categorize emissions into three scopes:
- Scope 1 (Direct): On-site fuel combustion, fleet vehicles, fugitive emissions.
- Scope 2 (Indirect Energy): Purchased electricity, steam, heating, cooling.
- Scope 3 (Value Chain): Upstream/downstream activities such as purchased goods, business travel, product use, end-of-life.
Depending on resources and goals, you might start with Scope 1 and 2, but increasing visibility on indirect emissions (Scope 3) is recommended for a more comprehensive picture.
Step 5: Identify Emission Sources
Within each scope, pinpoint specific sources:
- Stationary combustion: Boilers, furnaces
- Mobile combustion: Company cars, delivery trucks
- Process emissions: Chemical reactions, manufacturing leaks
- Fugitive emissions: Refrigerant leaks, methane venting
- Supply-chain categories: Raw materials, transport, waste
Step 6: Choose a Base Year & Reporting Period
To track progress, select a base year for which you have verifiable and comprehensive GHG emissions data. Recalculating emissions annually allows you to assess performance and track reduction efforts over time.
Step 7: Collect Data & Select Methodologies
Carbon accounting requires data collection and processing. You need two types of data:
- Activity Data (preferred): Physical quantities—liters of fuel, kWh of electricity, tons of raw material.
- Spend Data: Financial costs for goods/services when activity data is unavailable.
| Methods | Pros | Cons |
| Activity-Based | High accuracy; reflects real usage | Data-intensive; time-consuming |
| Spend-Based | Quick; minimal data requirements | Less precise; subject to price swings |
| Hybrid | Balances accuracy & speed | Requires clear rationale per source |
Step 8: Calculate & Verify Your Footprint
Once data is collected, calculate your carbon footprint in CO₂e units. The accuracy depends on the data quality and precision of emission factors. Verification is the independent assessment of your reported data to confirm its accuracy and completeness. This is often required by regulations and enhances the credibility of your data for stakeholders. Using auditable data collection processes is essential for verification.
Step 9: Report & Act on Insights
Clear reporting and communication of your emissions are vital for transparency and meeting regulations. This allows you to share your progress with stakeholders like customers, investors, and employees.
Conclusion
Starting your carbon accounting journey is a strategic investment in risk management, cost savings, and corporate reputation. As the foundation for any credible net-zero or carbon-neutral pledge, a robust GHG inventory empowers you to fight climate change and stay ahead of regulation.
To know more about India’s carbon market, click here https://envintglobal.com/indias-carbon-market-potential-catalyst-for-sustainable-development/