Why Carbon Accounting is Important for Your Business and How to Set it up

StrategyDriven Managing Your Business Article |Carbon accounting|Why Carbon Accounting is Important for Your Business and How to Set it upGreen accounting is an important managerial tool, whose implementation can benefit businesses now and in the future. Keep reading to discover why green accounting matters, what are the benefits, and how to implement it.

What’s carbon accounting?

Carbon accounting is the process of quantifying the environmental impact that a given entity emits. For example, carbon footprint calculators and national inventories use carbon accounting methods to determine the greenhouse emissions of organizations and entire countries.

Carbon accounting isn’t new in corporate settings, since environmental reports have been in place for a few decades. But as global sustainability concerns continue to grow, so does the need for businesses to become more accountable in this respect.

The development of platforms devoted to helping business owners decarbonize their company, like Greenly, confirms the growing importance of carbon accounting.

In this article, we’ll look at why green accounting matters and will offer a three-step carbon accounting guide to help you get started.

Why green accounting is important for your business

Improved decision making

Quantifying the environmental cost of business operations gives access to granular data relevant to both financial and environmental goals. With this information, decision makers can define or redefine the policies, practices, or operations that will bring the highest impact in the medium and long term.

A value-driven business

New values are emerging as a result of growing environmental concerns. Through green accounting, you can better align your business practices and corporate mission with current social values.

This can help highlight your contribution to sustainable community development and offer maximum transparency to all stakeholders.

Support your CSR strategy

Green accounting and corporate social responsibility are a natural match due to the importance they place on the true impact of business practices.

Thanks to its quantitative nature, green accounting can be a valuable tool that provides insights and facilitates decision making. Green accounting data can help determine how to best fine tune your CSR strategy, so that your business makes a valuable contribution to society while remaining profitable.

Better compliance

Implementing green accounting can facilitate compliance with regulatory requirements. Such requirements are only expected to become more stringent in years to come, so acting now is vital in order to build a future-ready business.

Three steps to set up green accounting

Essentially, the process of implementing green accounting in corporate settings involves setting up tools and practices that facilitate the systematic collection, organisation and reporting of data.

The first step is to determine where exactly your business is in the path towards full implementation. This means knowing where your business stands in terms of carbon dioxide emissions.

To do this, you can use one of the following green accounting methodologies:

  • The spend-based method, which estimates the carbon footprint of purchased products and services relative to their cost.
  • The activity-based method, which quantifies the emission output of each business activity.
  • The hybrid method, which combines spend and activity-based methodologies for better accuracy.

Secondly, become familiar with the Greenhouse Gas Protocol’s tools and standards, created to help organizations develop an accurate and comprehensive approach to measure emissions.

And third, choose the right tools. Dedicated software can simplify the green accounting set up process by:

  • Consolidating all your data in a single platform.
  • Using the latest technologies to reduce the risk of errors and miscalculations, which cost time and money.
  • Providing expert industry-specific recommendations on how to minimize your corporate carbon footprint.

Implementing green accounting can help your business stay relevant in a changing world. The keys to successful implementation are systematizing your approach to data collection, organization and reporting, and supporting your efforts with dedicated software tools.

Now is a good time to take the initiative and embrace green accounting to ensure your business is future ready.