What is Carbon Accounting?
Carbon Accounting: Understanding Your Company’s Greenhouse Gas (GHG) Emissions
Carbon accounting measures a company’s greenhouse gas (GHG) emissions—those produced directly from its operations and indirectly through its value chain. This includes direct emissions from activities like burning fossil fuels (e.g., fuel for company vehicles) and indirect emissions from electricity use, transporting goods, and purchasing products or services from suppliers.
If you’re measuring emissions for the first time, you’ll start with a baseline emissions assessment to establish where your company currently stands.
Are There Standards for Carbon Accounting?
Yes! The GHG Protocol provides the most widely used carbon accounting standards. Nearly every other framework is based on the GHG Protocol, setting out what to include and offering methods to follow (even if your data isn’t perfect—because nobody’s is!).
The Basics of Greenhouse Gases (GHGs)
You don’t need a science degree to understand GHGs. The main greenhouse gases contributing to climate change include water vapor (H₂O), carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), and ozone (O₃). By tracking GHG emissions, companies can measure their contribution to global warming and take action to reduce it.
In carbon accounting, you’re measuring the quantity of GHGs emitted from business activities, expressed in kg of CO₂-e (carbon dioxide equivalent). This metric consolidates emissions from different gases into a single, comparable unit—much like converting multiple currencies into one for streamlined reporting across a global company.
How to Know What to Account For
The GHG Protocol divides emissions into three ‘scopes’ to differentiate between direct and indirect emissions:
- Scope 1 Emissions: Direct GHG emissions from sources owned or controlled by the company, like fuel combustion from company vehicles, gas stoves, or boilers.
- Scope 2 Emissions: Indirect emissions from purchased electricity or other utilities like steam, heat, or cooling. These emissions, from electricity generation or heating, account for a significant portion of global GHG emissions, driving efforts to shift toward renewable energy.
- Scope 3 Emissions: Indirect emissions from sources not owned or controlled by the company but resulting from its activities, such as emissions from suppliers in the value chain. Scope 3 emissions are typically the largest, accounting for around 80-90% of a company’s emissions, making them crucial to measure for effective emissions reduction.
Understanding these scopes helps you see the full picture of their emissions and identify where action can make the most impact.
This handy diagram from the GHG Protocol outlines the three scopes and the categories of activities
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