Carbon accounting is the systematic measurement, monitoring, and reporting of greenhouse gas (GHG) emissions across an organization. For companies pursuing science-based targets, accurate carbon accounting is foundational because it:

• Establishes a baseline: You can't manage what you don't measure
• Enables target-setting: Science-based targets require a clear baseline year and methodology
• Drives efficiency: Identifying emission hotspots enables targeted reduction strategies
• Demonstrates progress: Regular monitoring shows whether reduction efforts are working
• Supports compliance: CSRD and other regulations mandate accurate GHG reporting

Scope 1, 2, and 3 Emissions

The Greenhouse Gas Protocol divides emissions into three scopes:

Scope 1: Direct Emissions

Emissions from sources your company directly owns or operates. Examples include:

• Company-owned vehicles and equipment
• Furnaces and boilers in owned facilities
• Chemical reactions in manufacturing processes

Scope 2: Indirect Energy Emissions

Emissions from electricity, steam, or heat your company purchases. This includes:

• Purchased electricity for offices and facilities
• Purchased steam or hot water
• Purchased cooling

Scope 3: Other Indirect Emissions

All other indirect emissions in your value chain, including:

• Employee commuting and business travel
• Purchased goods and services
• Waste and wastewater
• Downstream use of sold products

Key Steps in Carbon Accounting

1. Define organizational boundaries: Decide whether to use equity share or operational control
2. Identify emission sources: Map all activities that generate emissions
3. Collect activity data: Gather consumption and operational data
4. Apply emission factors: Use IPCC or region-specific factors to convert activity data to emissions
5. Calculate and report: Sum emissions by scope and category
6. Verify and assure: Have calculations reviewed by internal or external auditors

Common Challenges

• Data availability: Especially for Scope 3, data may be scattered or incomplete
• Scope 3 complexity: Many categories, inconsistent supplier data, and estimation requirements
• Baseline year selection: Historical data quality and consistency affect baseline year choice
• Methodology consistency: Changes to calculation methods can make year-on-year comparisons difficult

Tools and Systems

Many organizations use specialized carbon accounting software to:

• Automate data collection from various systems
• Apply consistent emission factors
• Track changes over time
• Generate audit-ready reports
• Support scenario modeling for reduction strategies

Conclusion

Carbon accounting is not just a compliance exercise - it's a strategic capability that enables data-driven climate action. By implementing sound accounting practices, your organization can accurately measure emissions, set credible science-based targets, and demonstrate progress toward climate goals.