The 2020 World Economic Forum provided a platform for many of the capitalist world’s influential actors to voice their thoughts on how we should act to shape our future. One of the more interesting points came from Prince Charles as he proposed ‘a paradigm shift’ in the way businesses account for their further-flung stakeholders. 

Concern for a firm’s actions and impact is not confined to the shareholder’s boardroom. The world at large has a stake in how business conducts itself, and how that conduct affects the world we live in. 

To build this new world, the Duke of Wales discussed the need for green taxes, for increased regulations that would curb the worst of our economic system’s excesses. The time to act is now, he called, if we are to create markets that are sustainable. 

The future King of England lent his weight to the push toward further regulating emissions. But what does that mean? And how is it to be accomplished? The first step comes in the form of carbon accounting.

What is Carbon Accounting? 

In its essence, carbon accounting is not complicated. Simply put, it is the calculation and monitoring of a firm’s emissions, bookkeeping for greenhouse gas production. 

These numbers, the account of a firm’s emissions, are often given in CO2e, or a carbon dioxide equivalent. 

Carbon accounting does, however, become more complicated when one considers the variety of ways a company can produce emissions. Emissions are accounted for over three scopes. 

Scope 1: All of a firm’s direct emissions. These are all emissions associated with burning – furnaces and fuels are an easy example – as well as their fugitive and process emissions. This includes leaks from pressurised equipment or the release of gases from industrial activities such as mining. 

Scope 2: Often, and perhaps confusingly, called ‘Indirect Emissions’. A company’s Scope 2 emissions come, most obviously, from electricity usage: running the lights, elevators and in-office appliances. 

Scope 3: Scope 3 is where it gets interesting, and the cause of the earlier mentioned confusion. The emissions from scope 3 are also indirect, they come from the sourcing of raw materials, from the transport of goods or workers to and from your site, from the creation of plastic packaging for your product. In short, they are the emissions caused, indirectly but definitively, by the wider mechanics of operating a business. 

(Interestingly, scope 3 emissions also include emissions produced in the use and lifecycle of the product once it has been sold to consumers. Car manufacturers, therefore, must account for the emissions of each car when it is in use and emitting on the car owner’s commute.)

How is Carbon Accounting currently conducted?

Currently, and in most instances, carbon accounting is a very messy, time-consuming process. 

The first step consists of collecting primary data and often this is done manually. The carbon accountant relays with a procurement manager for information on how much gas she or he purchased, or else this accountant interfaces with the facilities manager and collects data on on-site electricity spending. 

By and large, the first step of the process is done manually and is reliant on the latest figures available, usually monthly reports. 

Next, our accountant, using, what is hopefully the latest data on emissions factors, works out what all this raw data means in terms of emissions. They then convert the electricity or fuel expenditure data into the all-important CO2e number. 

The Introduction of SECR highlights how the disorganised system of carbon accounting can no longer afford to be so messy. 

There are a number of problems with this system. It is very manual. The collection of raw data is dependent on interdepartmental conversation and hinges on the constant availability of that data in the first place. 

It also trusts that our accountant, manually scrabbling together various and seemingly unconnected pieces of data, knows every element of his business and its operation. It trusts that they know what produces emissions and how much are produced.  

If they do accomplish all this correctly and our accountant’s maths is correct and as current as latest figures can be, then it is likely that his or her results are all offline. 

Emitwise Software: Streamlining your Carbon Accounts

All this is problematic in and of itself. Greenhouse gas emissions are raising the global temperature, threatening biodiversity, destabilising unpredictable habitats and undermining certain communities’ ways of life. 

In a bid to forestall these eventualities, Her Majesty’s Government has introduced the Streamlined Energy and Carbon Reporting initiative. The policy, shortened to SECR, compels businesses of a certain size to comply with the initiative’s carbon accounting regulations. (You can find out whether your business falls within SECR parameters here)

Any disparities and inaccuracies in the figures will, in this increasingly carbon regulated world, become far larger a problem for the smooth-running of the UK’s big firms. 

If your company falls within SECR parameters, you will have to become compliant with its established regulations. Inadequacies in your system of carbon accounting will not suffice as an excuse for non-compliance.

The Emitwise software is designed to eliminate inaccuracies. It is up-to-date with, and tailored to, the latest SECR regulations. It is fully integrated to your business’ chain of operation and therefore capable of calculating emissions as and when they are logged by your firm’s internal machine. It automates your data gathering and does so online.

Our software is the latest in integrated carbon accounting. It is the most advanced and efficient method of logging, viewing and modelling where emissions are coming from and where they might be reduced. 

If, as Prince Charles advocates, we find ourselves in a stringently carbon regulated economy, having access to Emitwise’s fully auditable accounting software will ensure your firm has made the transition – from this world to that greener, more transparent one – smoothly.