Understanding Carbon Accounting
Carbon accounting is a structured approach that enables individuals, businesses, cities, and governments to assess and quantify their impact on the environment in terms of greenhouse gas emissions. It involves calculating the amount of greenhouse gas emitted by an organization, similar to how financial accounting quantifies the financial impact of business activities.
Carbon accounting is a process that helps organizations understand and quantify the amount of emissions generated by their everyday activities. By using standardized methodologies, organizations can identify the sources of emissions and develop strategies to reduce them. This proactive approach not only supports corporate sustainability objectives but also contributes to global climate change efforts. Continia Sustainability provides carbon accounting services that aid in identifying and monitoring harmful practices, thus helping organizations achieve their sustainability goals and combat climate change.
GHG Protocol
To address carbon accounting in the most standardized and comprehensive way possible, Continia Sustainability builds on the Greenhouse gas (GHG) Protocol, an internationally recognized standard for companies' calculation of CO2 emissions, which is recommended by the EU Commission and many other governmental and institutions at global level. Its standards are developed by the Greenhouse Gas Protocol Initiative, a collaboration between the World Business Council for Sustainable development (WBCSD) and the World Resource institute (WRI).
The GHG Protocol has established five accounting principles for reporting and accounting for carbon emissions in businesses:
- Relevance - make sure that the GHG inventory aligns with your company's emissions.
- Completeness - account for all GHG sources within the inventory boundary.
- Consistency - apply consistent methodologies and document changes to create meaningful emission comparisons over time.
- Transparency - address issues coherently with a clear audit trail, disclosing assumptions and referencing methodologies.
- Accuracy - quantify GHG emissions systematically to avoid over/underestimation.
To establish organizational boundaries
The first crucial step in carbon accounting is defining the organizational boundaries for reporting purposes. This determines what falls within your scope of accounting and what does not. There are two main approaches to setting these boundaries:
- Equity or ownership share - a company accounts for GHG emissions from operations based on its share in those operations. This reflects the economic risks and rewards associated with the operation, typically aligning with ownership percentage.
- Control - a company accounts for 100% of GHG emissions from operations it controls. Control can be determined through operational or financial criteria:
- Operational control means the company has full authority to introduce and implement operating policies at the operation, consistent with common reporting practices.
- Financial control is established if the company has the right to the majority of benefits and retains the majority risks and rewards of ownership, regardless of how these rights are conveyed.