This blog post is adapted from Sustain.Life’s original.
Today, consumers and stakeholders of all kinds want transparency when it comes to a company’s environmental impact—especially as climate change continues to be a topic of concern. We’re seeing each of these stakeholders consistently demand companies prove better alignment with carbon reduction trajectories that meet the goals set out in the Paris Agreement.
There is no pathway to keep global warming to less than 1.5°C without abating emissions in industrial supply chains. A Rocky Mountain Institute report found that the average company’s supply-chain greenhouse gas (GHG) emissions are 5.5 times higher than the direct emissions from its own assets and operations.
That’s where GHG carbon accounting comes in. GHG carbon accounting should be utilized to accurately measure a company’s supply-chain carbon impacts, providing visibility and incentives for it to make more climate-friendly product-specification and purchasing decisions.
What is Carbon Accounting?
Carbon accounting is a process in which companies quantify their GHG emissions—providing a better understanding on how their business contributes to climate change and set goals to limit their emissions. Carbon accounting can also serve as the foundation for climate change pledges like carbon neutrality and net-zero.
Whether you’re tackling deforestation or energy consumption in your supply chain, it’s likely that greenhouse gas emissions will be a major environmental impact for your company. Industrial companies play a critical role in reducing emissions within the carbon budget set by the scientific community—but by how much should a company reduce its carbon emissions?
Other terms for carbon accounting include emissions accounting, greenhouse gas accounting, greenhouse gas inventory, carbon footprint, carbon or GHG inventory, emissions inventory, or carbon management.
Why is Carbon Accounting Important?
Climate change is not slowing down. Companies need to desperately manage their carbon footprint to mitigate the effects of climate change and reduce emissions. Doing so is also good for business. With stakeholder demand focusing on environmental contributions, it is now table stakes for nearly every industry to get on board with finding a plan to reduce their carbon footprint.
Consumers are demanding greener, more responsible products and supply chains. Investors are attaching financial value to sustainable environmental, social, and governance (ESG) performance. Employees also are looking at a company’s climate action and sustainability when considering job opportunities. And government policies and regulations are coming into the mix requiring businesses to disclose their emissions.
How Can You Get Started With Carbon Accounting?
Carbon accounting can be challenging and may require outside experts or tools to get the job done. The overarching goal is to calculate GHG emissions across all emissions scopes, then convert those outputs to CO2 equivalent (MT CO2e).
Start with the following steps:
1. Look at scope 1 (direct) and scope 2 (indirect) emissions, which reflect emissions from the energy a business consumes.
2. Once you’ve understood energy-related emissions, it’s time to look at scope 3 emissions, which can make up to over 90% of a company’s emissions impact. These indirect emissions are harder to measure, but they represent emissions from all activities that support a company’s operations like the supply chain, service providers, customers, and employees.
3. Once emissions are accounted for, it’s important to continuously measure while working towards carbon reduction targets.
How Can Avetta Help?
Avetta has worked with hundreds of companies looking to transform their carbon footprint and sustain their ESG goals. We provide ESG transparency and management solution that are tailored for specific business needs, including:
- Guided ESG Compliance à helping clients and suppliers navigate new processes to assess ESG maturity, track progress, and take guided actions to become more sustainable
- Flexibility à pioneering Sustainability & ESG services enable dynamic assessments tailored to supplier specific ESG needs and targets
- Responsible Sourcing à offering the ability to easily discover and qualify sustainable and diverse suppliers from the largest network
- Single Platform Efficiency à enabling centralized management of all supply chain compliance: sustainability, safety, liability, financial, cyber, and more