How carbon accounting helps you understand and reduce your carbon footprint

Today’s carbon accounting methods paint a clear picture of how your business affects the planet, helping you make informed decisions to achieve net zero.
Today’s carbon accounting methods paint a clear picture of how your business affects the planet, helping you make informed decisions to achieve net zero.
01 February 2024 •

If you have ever walked on the beach, you have likely noticed the trail of footprints you leave behind. You may have even stopped to marvel at the contours of your foot’s imprint in the sand. Humans have always left a mark on the environment, but it is not only in recent history that the impact of our actions is not immediately visible. Whether we drive a car, fly in a plane, or even turn on a light, each choice we make represents another step that can leave a lasting imprint on the planet and its delicate ecosystems. But we can not simply turn around and see the trail we leave behind.

This problem is even more complex in the business world. Every company knows they impact the environment, but getting a good look at their carbon footprint is not easy. There are so many moving parts – so many trails to follow. Many business leaders determined to make their operations more sustainable have had to rely on secondary sources using generalized values and assumptions. That is changing. Now even global companies with countless supply chains can leverage state-of-the-art carbon accounting methods to gather and analyze comprehensive, granular, and verified data about their greenhouse gas (GHG) emissions – and be able to compare data between suppliers and see how they stack up against their peers.

Compared to financial accounting, carbon accounting is a relatively new discipline, but it quickly became an essential tool for managing sustainable business operations. With climate change making itself felt across the globe, understanding our impact so that we can do something about it has never been more critical. Let’s look at how the increased visibility and insights we learn from today’s carbon accounting methods and reporting can help us see the indelible mark we leave on the environment so that we can take new, more sustainable steps going forward.

What is carbon accounting?

What is carbon accounting?

Also known as carbon reporting or GHG accounting, carbon accounting is the process of quantifying GHG emissions. It allows you to calculate your carbon footprint and understand the source of your emissions. This information is essential for reporting your environmental impact to governments and stakeholders, not to mention reducing or eliminating emissions and bolstering your brand image.

Today’s most sophisticated systems run like financial accounting software, but instead of economic data, they measure, track, analyze, and report GHG emissions and the underlying energy and fuel consumption. The standard metric for carbon accounting is the carbon dioxide equivalent (CO2e). That is because carbon dioxide (CO2) may be the most important GHG, but it is not the only one. Gases like methane and nitrous oxide also cause global warming. CO2e represents a sum of all the warming impacts of the different GHG gases in a single figure.

A comprehensive carbon accounting report includes Scope 1, Scope 2, and Scope 3 emissions (more on that below). Gathering the data required for this remains a challenge. In particular, Scope 3 emissions – a large part of your company’s carbon footprint – can be tricky to calculate because they usually originate in areas outside your direct control.

The process of carbon accounting is inherently complex, with multiple methods needed to cover every link in the supply chain. It requires sophisticated solutions to manage vast amounts of data from a multitude of sources. Software-based carbon accounting tools streamline and speed up data collection and analysis, using automated data tracking systems, cutting-edge carbon calculators, and other tools to facilitate real-time monitoring and more accurate reporting.

Why is carbon accounting important?

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Sources: Harvard Business School, Capital Group, Nielsen IQ

You may think the answer to this question is obvious: to reduce your carbon footprint. While taking inventory of your GHG emissions is essential for any business that wants to minimize them, measuring and reporting your carbon footprint can also create competitive advantages. For some companies, it may even be mandatory.

Sustainability reporting has become a legal requirement in many parts of the world. Carbon accounting is, therefore, a valuable and essential method for meeting these climate reporting obligations and laying the foundation to satisfy future legislation.

Carbon accounting and transparent carbon reporting can also deliver unexpected and often underutilized business benefits. First, calculating your carbon footprint allows you to pinpoint emissions hotspots, areas of wastage, and other inefficiencies. These methods can identify cost-saving opportunities, for instance, related to fuel or energy consumption. By eliminating inefficiency and optimizing processes, you will reduce your carbon footprint while improving your bottom line.

In today’s highly competitive environment, savvy businesses have found that measuring their carbon footprint can add value. Carbon reporting demonstrates climate action, which can boost a brand’s image. Being open and honest about your efforts to reduce emissions, backed by hard data, can help a company stand out from the crowd, building brand loyalty and attracting increasingly socially responsible consumers, employees, and investors. For example, carbon accounting methods provide a transparent way for investors to assess companies’ environmental performance and align their portfolios with environmentally responsible values.

How to calculate your carbon footprint

How to calculate carbon accounting?

Carbon accounting is all about data. You need to be able to both collect and process data on your company’s purchases and activities in order to calculate your carbon emissions. This means identifying and calculating both your direct and indirect emissions.

Direct emissions (Scope 1) result from your own or controlled sources, such as company-owned vehicles and facilities. Indirect emissions result from upstream and downstream activities, such as purchased electricity and energy consumption (Scope 2) and purchased goods, services, transport, or business travel (Scope 3). It is Scope 3 that is the most difficult to collect and calculate.

By accounting for all of these emissions, you can estimate your carbon footprint. It is important to note that the accuracy of your carbon report depends on the quality of your carbon accounting methods.

Thankfully, the latest tools, like the DHL GoGreen Dashboard, leverage big data and interconnected networks to calculate GHG emissions at a granular level. For example, we can calculate the carbon footprint of a single shipment or product, outputting metrics like absolute CO2e emissions, emission intensity, and energy use, along with detailed reports and breakdowns.

The DHL GoGreen Dashboard collects data across all DHL business units (e.g., Supply Chain, Global Forwarding, and Express), consolidating it all in one place. And it is in line with ISO 14083, which establishes a common methodology for quantifying and reporting GHG emissions arising from transport chain operations, and the Global Logistics Emissions Council Framework, a globally recognized method for calculating and reporting logistics emissions that was a core element used to develop the ISO standard. Our customizable platform makes carbon emission insights available quickly and easily, creating a smooth and streamlined reporting process.

DHL GoGreen Dashboard

Source: DHL GoGreen Dashboard
Source: DHL GoGreen Dashboard

Carbon accounting – seeing is believing

Management guru Peter Drucker is often quoted as saying, “If you can not measure it, you can not manage it.” That is not so easy in a globalized world. Measuring and managing GHG emissions can seem daunting for companies with multi-faceted operations and complicated supply chains.

Carbon accounting is the first step on the path to carbon reduction and high-impact climate action – and a necessary one if you want to achieve net-zero emissions. With the ability to see your carbon footprint clearly, you can learn how to lighten your imprint on the environment.

This story was first published on DHL Delivered and was republished with permission.