Introduction to Carbon Accounting

What is carbon accounting? 

Carbon accounting refers to measuring and reporting the amount of greenhouse gas emissions being released by an organisation into the atmosphere. This allows a company to quantify its climate impact and create measurable key performance targets. AGreenhouse gases are recorded in terms of carbon dioxide equivalent (CO2e).

Why should a company report their emissions? 

For a company to reduce its emissions, it first needs to understand where emissions are generated within its operations, otherwise the company will not be able to identify their carbon intensive areas of operations. Various governments now require companies and industries to disclose their emissions. A directive by the European Commission has mandated certain companies meeting a set of criteria to report their emissions by 2028. Then we have the Corporate Sustainability Reporting Directive setting the standard which will impact nearly 50,000 companies in the EU. There is also a UK equivalent, the Streamlined Energy and Carbon Reporting (SECR). 

What are the accounting standards for carbon emissions reporting? 

Greenhouse Gas Protocol

The Greenhouse Gas Protocol sets out the guidelines for companies and other organisations to prepare their GHG emissions reporting. The objective of this body is to create clarity on the requirements for entities engaging on the voluntary carbon market.

BSI PAS 2060

BSI PAS 2060 is the international standard defining the guidelines for reporting carbon neutrality. Using many of the GHG principles of accounting, the PAS 2060 guidelines detail the process of reporting and how offsetting can be applied to meet certain achievement milestones on the net zero journey. BSI PAS 2060 provides the basis of the measure, reduce, mitigate and communicate pathway for businesses to follow.

ISO 14060 Family

The International Organisation for Standardization (ISO) is a worldwide federation of national standards bodies. Technical committees prepare standards such as the ISO 14060 family of standards. The ISO 14060 family provides clarity and consistency for quantifying and validating or verifying GHG emissions to support sustainable development through a low-carbon economy and to benefit organisations worldwide.

What are the guidelines for communicating your carbon reporting effectively? 

CDP

Considered the gold standard for environmental disclosure, the CDP is a not-for-profit charity that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. The CDP encourages companies, cities and other authorities to disclose their emissions for a number of reasons. For corporations, the advantages are to increase transparency in reporting, and to showcase their commitment to environmental action. The CDP has created a centralised database containing the carbon reporting of numerous and various entities. 

SBTi

The Science Based Targets initiative provides guidelines on the different pathways that companies can take. Their Net Zero Standard is the guiding framework for companies to set targets aimed at reaching net zero by a certain date. They also set the guidance for a number of sectors and industries. One of the key benefits of reporting emissions is to be able to communicate and inform various stakeholders. The SBTi guides on how to communicate carbon reduction pathways in line with net zero.