Why is carbon accounting important? Here are a few of the key benefits.
January 4, 2023
What is carbon accounting?
It might sound boring, but at Zevero we think carbon accounting is powerful and incredibly interesting. Carbon accounting is the process of measuring the greenhouse gas (GHG) emissions a company produces. It quantifies physical amounts of both direct and indirect GHG emissions. These emissions are broken down into Scopes 1, 2 and 3 - you can read more about those here. Carbon accounting helps companies understand their entire environmental impact, and more specifically what the emissions are from each part of their business.
Benefits of carbon accounting
So now that we have a better understanding of what carbon accounting is and we know it’s simply calculating a company’s entire carbon footprint, let’s look at what the benefits are to a company.
Firstly, and most importantly, carbon accounting has a number of environmental benefits. It gives you a holistic view of your company, helping you understand which part of your business is responsible for the most damage. That way you’re not focused on tackling the small parts of your business with low impact.
Let’s put it in the context of financial accounting. If you were spending £1,000 a month on personal outgoings, you would probably want a detailed breakdown of what you’re spending and where. You might then realise that you’re spending 85% of your money on eating out and decide that in the future, you will eat out less. Saving £10 a month on that Netflix subscription may have little impact if there are other problem areas, such as eating out, that can be tackled first. Similarly, carbon accounting allows you to understand the biggest sources of your carbon emissions to help you reduce what matters.
For example, 6% of IKEA’s total climate impact currently comes from the glue that they use in their furniture. To achieve their goal of halving their climate footprint by 2030, IKEA has announced that they will use more materials with a low climate footprint and promote sustainable choices. This will hopefully include bio-based or renewable based glues. Without doing accurate carbon accounting IKEA would never have known that just glue would have such a large impact. We told you carbon accounting is powerful.
Not only is reducing carbon emissions a positive environmental decision, but reducing GHG emissions in problem areas usually leads to increased efficiency and cost-effective processes for businesses. Teams can use the data to actively collaborate and work towards reducing their emissions, for example by switching to renewables.
Recently, our work with Stink Studios found that 85% of their emissions came from business travel. In response, they are looking to reduce their emissions from flights by 50% by the end of 2022. Not only does this allow Stink Studios to save money on the flights themselves, but they are also able to save money offsetting those very flights. Critically, it gives them the data they need to back up their assumptions and communicate to a client why they’re not flying to a meeting.
The economic benefits don’t just lie in saving money, but also helping companies de-risk future carbon prices. As emissions rise, the price of emitting GHG emissions into the atmosphere will increase. That means that while you can offset your emissions for as little as £15 per tonne now, prices in the future are likely to rise to £100+ per tonne. Understanding and reducing your emissions now will help cut costs in the future, whilst also saving the planet.
Since 2019, large UK companies have been required to publicly report on their UK energy use and greenhouse gas emissions within their Directors’ Report. While this is still on a voluntary basis for SMEs, there is no doubt that more and more companies will have to start calculating and reporting their emissions.
Social and branding impact
Sustainability is becoming an important issue for consumers, heavily influencing their decisions when choosing a business to work with or to buy from. It’s no longer a question of if a company should be reducing their emissions, but instead of when and how quickly. Measuring and reducing your emissions helps give that tick of approval you need to engage your customers.
Employees are also more attracted to companies that show a commitment to sustainability as they seek workplaces that align with their values. In a study, 65% of respondents said that they would be more likely to work for a company that had strong environmental policies.
With both consumers and employees valuing sustainability more than ever, understanding your business’ carbon impact has never been more important.
Benefits of using sustainability software for carbon accounting
Okay, so you’ve realised that you need to calculate your emissions, but now you’re thinking, what’s next? You’ll need a partner like Zevero to work with. There are a number of reasons why you should work with a company that offers you software too. Let’s have a look.
Time and money. Measuring emissions is a complex process, often taking up to 6-months at a time. With Zevero, we’ve built systems and software to help you calculate your emissions in weeks, not months. We help you automate the process of calculating your emissions, pulling data from the systems you already use, such as Shopify or Xero. This also allows us to track your emissions in real-time, not retrospectively.
Secondly, accuracy. Accuracy is crucial when it comes to calculating your emissions. Data collected manually with manual calculations has a higher chance of being incomplete due to human error.
Let’s look at the importance of accuracy in practice. In the US, emissions vary from state to state. In West Virginia, the emission factor is 0.89kgCO2e per KWh, whereas in California, it is just 0.19kg CO2e per KWh, a 4.5X difference.
Finally, Zevero’s dashboard helps you easily visualise your carbon emissions. Our key goal is not to just calculate your emissions, but empower you to understand and reduce your emissions.
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