Carbon Accounting – Benefits and Steps for SME's

Krishna Vansadia

Apr 22, 2018
Carbon Accounting – Benefits and Steps for SME's

What is Carbon Accounting?

Carbon accounting broadly refers to a process that facilitates measuring the amounts of carbon dioxide emitted by an entity. This entity could be nations, states, corporations, and individuals.

Why count, or account for carbon? There is consensus in the scientific community that carbon along with other green house gases plays a significant role in regulating the earth’s temperature.  In 2013, James Hansen and other scientists advocated 350 parts per million as a safe upper level of carbon in the atmosphere that would limit temperature rise to 1 degree celcius above pre-industrialization levels.  Though almost all of the world’s nations have become party to and have now signed the Paris Agreement of 2105, which attempts to limit temperature rise to 1.5 degrees celcius, carbon levels have now surpassed 400 ppm.  The exact effects of rising temperatures are unknown and increase with rising levels of carbon and other greenhouses gases.  These include rising sea levels, extreme and more variable weather along with changes in the availability of fresh water, changing growing seasons and agricultural impacts we don’t even yet fully understand. 

Clearly, there is a global political imperative and really emergency to reduce carbon and other greenhouse gas levels.  As nations and multinational companies with significant resources work to determine what actions they can and must take, what can the average company do, and why would companies take these steps? 

In addition to clear environmental imperatives, carbon accounting is increasingly required by governments, or by shareholders and/or investors.  Carbon accounting can play a material role in triple bottom line accounting, which has been growing in popularity in recent decades, in which companies measure peformance in terms of social and environmental impact in addition to traditional business economic indicators. Improvement in social end environmental performance has often gone hand in hand with increased economic performance, thugh a number of indicators such as productivity, and emplyee rentention and other HR factors.  Increasingly, improved environmnetal peformance provides marketing and other business benefits. 

 

Benefits of incorporating Carbon Accounting for Small and Medium Business Enterprises (SME’s)
 

  • Economic– Incorporating Carbon accounting can help SME’s identify business activities that use a lot of energy and so help reduce energy and resource use. Low costs can help set better pricing without affecting margins and hence can attract customers.
  • Social and Business Development- Be able to attract right talent and customers who believe in the mission and help grow together. Further help SME’s be more transparent about their business activities and its impact on environment. This not only gives an opportunity for a positive PR but also help develop trust and loyalty with customers
  • Environmental– Finally, would help SME’s become more environmental conscious by accounting their carbon emissions and taking active steps to mitigate these emissions.

 

What are the steps that companies can take to incorporate carbon accounting and achieve triple bottom line?

  1. Identify the parts of business that needs to be tracked for the emissions. Ideally this is undertaken for the operations of which a company has full control.
  2. Identify which activities release greenhouse gas emissions. For this step it would be ideal to differentiate activities between core and axillary activities. Some sample axillary activities that cause Green House Gas (GHG) emissions could include utilities, waste disposal/recycling and travel.
  3. Collect data to calculate the GHG emissions for the activities identified earlier. The quality of data collected is important to ensure that the measurement of emissions is as accurate as possible.
  4. Convert the data to calculate the greenhouse gas emissions associated with each activity. The collected data needs to be converted into emission factors. Data x Emission Factor = Greenhouse gas emissions. Resource that can be used to do this is DECC/Defra’s GHG conversion factors. Annually updated emission factors are available for free on the Defra website.
  5. Set emission reduction targets and continue to monitor emissions. Now that the activities emitting maximum GHG are identified, ways can be identified to mitigate these emissions. This step cannot only be environmentally friendly but can also help SME to save money and be more competitive. Additional help on how to set a target can be obtained from a Government’s guidance on how to measure and report greenhouse gas emissions.  https://www.epa.gov/ghgreporting
  6. Report emissions. If the above steps are performed and substantial savings and reductions are noted, reporting emissions is a good PR opportunity to gain transparency and loyalty from customers.

Which resources are available for SME’s to incorporate carbon accounting and achieve triple bottom line?

Enterprise Carbon Accounting Software’s (ECA) and Carbon Accounting Consultants have helped facilitate SME’s to measure and report their emissions.

Some available ECA’s and their provider companies are listed below:

  • SAP Carbon Impact - SAP
  • Enablon GHG-MS - Enablon
  • The Enviance System – The Enviance
  • Hara Environmental and Energy Management Solution - Hara
  • IHS Greenhouse Gas Suite, Essential Suite - IHS
  • Energy & Emissions Management System – Johnson Control
  • ProcessMap EH&S Information Management System – The Process Map


In conclusion, Carbon Accounting for companies is not only about measuring, monitoring, benchmarking and reporting an organization’s Greenhouse Gas Emissions in a defined reporting period but also about taking accountability and mitigating one’s impact on the planet.  Inceasingly, informatoin and tools are available to support companies in measuring and managing their carbon footprint.  

 

Additional Resources:

[1] EPA GHG Reporting: https://www.epa.gov/ghgreporting

[2] Statement of Greenhouse Gas Emissions: http://publisher.wizness.com/reports/ups-more-of-what-matters/appendixes/statement-of-greenhouse-gas-emissions

[3] Carbon Accounting for Small Business: https://www.ifac.org/global-knowledge-gateway/sustainability/discussion/carbon-accounting-small-businesses-how

[4] Triple Bottom Line Approach: http://www.eco-business.com/news/the-smes-guide-to-benefitting-from-sustainability/ - http://www.eco-business.com/news/the-smes-guide-to-benefitting-from-sustainability/

[5] Successful examples of triple line: https://earth911.com/business-policy/triple-bottom-line-7-companies/ - https://earth911.com/business-policy/triple-bottom-line-7-companies/

 

Photo: GlobalChange.gov

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