March 17, 2022

What Is Carbon Accounting?

What Is Carbon Accounting?
Contents

Carbon accounting is the process that organizations use to measure their greenhouse gas (GHG) emissions so they can fully understand their carbon footprint and set targets to reduce their emissions. This physical accounting is also referred to as the reporting entity's GHG inventory. The financial carbon accounting side refers to figures which are reported which gives a market value to quantifying emissions. 

If your organization wants to learn more about carbon accounting and solutions to count for and reduce emissions, then this is for you.

In this article, we’ll cover what you need to know about carbon accounting, scope emissions, and a brief description of how to utilize Net0's carbon accounting software to guide you along your net zero journey. 

Carbon accounting scopes

Scope 1 emissions

Scope 1 emissions are direct emissions from owned or controlled sources, by the reporting company, during a production process with items that they own and control. Examples of scope 1 emissions include boilers, furnaces, emissions from machinery and equipment, fuel combustion, and vehicles which use fuel. It's becoming mandatory in many regions to report scope 1 emissions.

Scope 2 emissions

Scope 2 emissions are indirect emissions from purchased sources that the reporting company has made, that come from the generation of purchased electric, heating, cooling, gas, steam, and electric vehicles. It's becoming compulsory in many regions to report scope 2 emissions.

Scope 3 emissions

Scope 3 emissions are all other indirect emissions that occur in a company’s value chain. There are 15 categories of scope 3 emissions that occur indirectly, (with regards to the reporting company), due to upstream and downstream activities throughout the value chain. Although these emissions occur on the outside of the reporting company's walls, they can be proactive in choosing resources, vendors, manufacturers, carriers, distributors, and creating the life cycle of the product, in order to have a stronger, more sustainable value chain. Please refer to our Scope 1, 2, and 3 Emissions article for a comprehensive understanding of direct and indirect emissions, upstream and downstream activities, and the 15 categories of scope 3. 

After being proactive in your supply chain strategy, collecting as much data as possible from the rest of the value chain after emissions have been made, will help you count for and offset any unavoidable emissions they have emitted or those uncounted for in the rest of the value chain. The 15 categories also included franchises, whose scope 1 and 2 emissions would have to be reported to the franchisor (as it would be their scope 3).

Scope 3 emissions are not obligatory until now but we'll tell you why you should report them.

scope 123 emissions value chain emissions flow chart


Carbon accounting in corporations

To comply with laws and regulations it is becoming the norm globally to report scope 1 and 2 emissions at the very least. Scope 3 value chain emissions are being reported now amongst supply chains that want to decrease their negative environmental impacts and stay competitive where consumers are turning to greener brands. Another motivation is that investors have been shifting their resources only to sustainable brands. In fact, the demand for ESG investment options has been escalating for years according to a study by the Harvard Business Review

Net0 is the only carbon accounting tool you'll need

Just like accountants that budget for the future, the intuitive AI in Net0's core helps businesses make proper and agile CO2 emission reduction strategies. Net0 is the only emissions management system you will need for your carbon accounting solution.

  1. Measure - Record all of your company's emissions and Net0 will data capture any invoices you upload with automation. The platform calculates all CO2 tonnage for you and categorizes it into the 3 scopes for you, with the information you provide it.
  2. Reduce - Track your carbon analytics over time for insights about all of your emissions sources. Getting the big picture all in one dashboard will make your carbon footprint clear and is the key to beginning the reduction strategy. 
  3. Offset - Until you eliminate CO2 emissions you can offset the ones within your targets that year. Net0 offers over 140 diverse offsetting projects in various regions that you can use carbon credits on to purchase contributions to life-changing programs like wind energy farms. 
  4. Report - Communicate to stakeholders where you are on your net zero journey with our investor-grade reports that can be downloaded in real-time.
  5. Certify - Look no further to get certified! Net0 includes hosted certificates of carbon neutrality and badges for you to put on premises and merchandise.
emissions management software


Related content

If you would like to learn more about how to manage your company's carbon emissions, please refer to these articles from our free library:

• Article:
10 Reasons Net0 Is the Best Carbon Accounting Platform
• Article:
Carbon Credits: Everything You Need to Know

Useful resources

The GHG Protocol: Net0 complies with all GHGP standards since it is the most commonly used method. Additionally, you can read our article, GHG Reporting and How Net0 Can Help. The GHGP is the perfect guide to understanding how to manage your GHG emissions. 

The CDP is an international non-profit organization that strives for a healthy planet and a thriving economy in the long term. Their platform discloses the most extensive amount of self-reported environmental data in the world.

The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact (UNGC), World Resources Institute (WRI), and the World Wide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments. They aim for target setting to be a standard business practice worldwide. They can also privately assess and approve companies' targets. In addition, they showcase companies through events, social media, and case studies to promote them for their best practices. SBTi also provides resources, workshops, and guidance to adopt target-setting strategies as a normalized part of business.

To conclude

Carbon accounting is important for the atmosphere, the earth, and regulations. Net0 is the only carbon management software you will need to calculate, analyze, reduce, report, and certify emissions.

Book a demo today to talk with an expert and experience the platform and how it can improve the way you do carbon accounting in your organization.

FAQs

  1. What is enterprise carbon accounting?

ECA is the process of collecting data, summarizing, and reporting that information to the government. Life cycle analyses are used in the methodology as a hybrid with financial accounting principles. The easiest way to do this in 2022 is with carbon accounting software.

  1. What is carbon credit accounting?

A carbon credit is equivalent to one ton of carbon dioxide expelled into the atmosphere. Carbon credits are certificates that allow a ton of CO2 to be emitted. The idea is that annually you set lower emissions targets so fewer credits will be granted to you, not an excuse to emit more.

  1. Why is carbon accounting important?

Carbon accounting is now becoming a requirement. As climate disasters increase and temperatures continue to rise, policies are being enforced all over the world to report scope 1 and 2 emissions at minimum, and scope 3 is preferred if you want to stay competitive amongst sustainable companies and become a carbon-neutral business yourself.

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FAQ

What’s the difference between gross zero and net zero?

Again, net zero is coming to a balance between emissions and those which have been removed from the atmosphere. Gross zero means stopping all emissions, period.

Again, net zero is coming to a balance between emissions and those which have been removed from the atmosphere. Gross zero means stopping all emissions, period.
How soon can we start?

You can usually start using the system within a week of contract signature. Book a call with us to start.

You can usually start using the system within a week of contract signature. Book a call with us to start.
Do you help with setting up the processes?

Yes, our team will help you set up the platform and provide you with guidance on how to use it.

Yes, our team will help you set up the platform and provide you with guidance on how to use it.
What type of clients have you successfully helped?

We work with companies from different industries, from professional services and tech businesses to construction companies and manufacturing sites.

We work with companies from different industries, from professional services and tech businesses to construction companies and manufacturing sites.
What sets Net0 apart from others on the market?

Net0 offers simplicity, automation, no-code integrations, and provides an activity-based approach meaning the calculations are done by co2e tonnage and not by how much money was spent on the activity that led to emissions.

Net0 offers simplicity, automation, no-code integrations, and provides an activity-based approach meaning the calculations are done by co2e tonnage and not by how much money was spent on the activity that led to emissions.
Why do companies choose to work with Net0?

Net0 is the most comprehensive solution to recording, measuring, tracking, offsetting, and certifying emissions all in one place and in minutes. Net0 also enables organizations to invite anyone they want to contribute to the dashboard, being all-inclusive and simple to use.

Net0 is the most comprehensive solution to recording, measuring, tracking, offsetting, and certifying emissions all in one place and in minutes. Net0 also enables organizations to invite anyone they want to contribute to the dashboard, being all-inclusive and simple to use.

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Make your business carbon neutral and start reaping the benefits of a green economy.

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