Embracing Carbon Accounting: A Crucial Step for Modern Businesses
In today’s rapidly evolving business landscape, understanding your company’s environmental impact is more important than ever. As regulatory bodies increasingly mandate carbon accounting, businesses of all sizes must now track and manage their carbon emissions. This shift is especially critical for small businesses supplying goods and services to larger organisations, as these companies are now being held accountable for their entire supply chain’s environmental footprint. Failing to provide accurate emissions data could result in losing key contracts and being excluded from supply chains.
Fortunately, tools like Xero, integrated with advanced carbon accounting apps, make this process more accessible and affordable than ever before. What was once a time-consuming and costly endeavour is now streamlined, allowing businesses of all sizes to efficiently calculate and report their carbon emissions.
The Basics of Carbon Accounting
At its core, carbon accounting involves measuring your organisation’s greenhouse gas (GHG) emissions. This process quantifies the environmental impact of your business activities by calculating emissions based on specific data points, such as energy consumption and employee travel. The result is a comprehensive carbon footprint, which represents the total amount of GHGs produced by your operations.
Historically, calculating a carbon footprint required complex spreadsheets and considerable manual effort. However, innovative software solutions like Greenly, Ecologi (UK only), and Sumday are now available to automate this process from start to finish. These tools simplify the task of tracking emissions, ensuring businesses can meet compliance requirements with minimal hassle.
Understanding Carbon Footprint Scopes
When calculating your carbon footprint, emissions are categorised into three distinct scopes:
- Scope 1: Direct emissions from sources owned or controlled by your company, such as vehicles or generators.
- Scope 2: Indirect emissions from the production of electricity that your business consumes.
- Scope 3: Indirect emissions associated with your supply chain, including activities like business travel, third-party services, and employee commuting.
Why Measuring GHGs Matters
Greenhouse gas emissions are a significant driver of climate change, contributing to more frequent and severe weather events like floods, droughts, and heat waves. While GHGs occur naturally, human activities have drastically increased their concentration in the atmosphere, leading to harmful environmental impacts. By measuring and managing your GHG emissions, your business can play a crucial role in mitigating climate change.
Aligning with Global Standards
Carbon accounting can be complex, but global standards like the Greenhouse Gas (GHG) Protocol offer a consistent and comparable framework for businesses. Adhering to these standards ensures that your carbon accounting practices are accurate and credible, which is essential as more companies and investors prioritise environmental transparency.
Why Your Business Should Care
The transition to a low-carbon economy is being driven by legislation, as well as consumer and investor preferences. Carbon accounting is not just a compliance requirement; it’s a strategic tool for understanding and communicating your business’s environmental impact. Your carbon footprint is becoming a key metric that external stakeholders, including potential customers and investors, will evaluate when considering your business.
For instance, in Australia, the federal government is moving towards mandatory climate-related financial disclosures. While small businesses may not be directly required to report, those within the supply chains of larger businesses will need to provide accurate emissions data. Now is the time to get ahead of this curve, ensuring your business remains competitive in a low-carbon economy.
Getting Started with Carbon Accounting
The easiest way to begin your carbon accounting journey is by using a carbon accounting app from the Xero App Store. These apps securely connect to your Xero account, analyse your business data, and calculate your carbon footprint. They simplify the process, guiding you every step of the way and addressing any questions you might have.
Make Earth Day Count: Exclusive Promotions
In celebration of Earth Day on April 22, 2024, Xero has partnered with carbon accounting apps Greenly, Ecologi, and Sumday to offer special promotions:
- Greenly: Enjoy a 20% discount on all GHG reporting packages when you sign up using the promo code EARTHDAY. This offer is available from April 18, 2024, to June 30, 2024.
- Sumday: Get 50% off for three months when you start a free trial via the Xero App Store by May 30, 2024, and subscribe by June 30, 2024.
These limited-time offers provide an excellent opportunity to start your carbon accounting journey, helping your business contribute to a more sustainable future while staying ahead of regulatory requirements. Talk to us today to understand how your efforts can make a difference!