Carbon Accounting 101: An Introduction to Calculating a Carbon Footprint
Most business owners understand that tracking every dollar – and tapping professional expertise on complex topics like taxes – can be essential to success. As we enter a new era of regulation and consumer awareness about climate impacts, a different kind of accounting is becoming a best practice for businesses of every size. Carbon accounting, especially done in partnership with experts like those at ClimateHound, can help both your company and our planet to thrive.
Calculating a carbon footprint is one of the most powerful first steps a company can take in addressing climate change.
What is carbon accounting?
Carbon accounting measures greenhouse gas (GHG) emissions, allowing companies to understand, compare, and manage their performance and overall contribution to climate change. The “carbon” in “carbon accounting” is a shorthand for the seven different greenhouse gases measured by the GHG Protocol, with which ClimateHound is aligned. Calculations generally show a company’s emissions in carbon dioxide equivalent (CO2e), a common unit of measurement that standardizes the contribution of each greenhouse gas to global warming.
Based on the Kyoto Protocol, which brought countries together to address climate change back in 1997, the GHG Protocol has standardized how to calculate emissions over the past twenty years with specific guidance for businesses, products, and even cities. The GHG Protocol defines which emissions these entities should be held accountable for, with nearly 600 pages of documentation covering how to approach various calculations depending on available data. For businesses, calculations are usually completed on an annual basis and result in a “carbon footprint” or “GHG inventory,” terms that are often used interchangeably.
Guided by the GHG Protocol
The GHG Protocol’s guiding principles – which ClimateHound embraces as well – are relevance, completeness, consistency, transparency, and accuracy. As part of its Corporate Standard, the GHG Protocol defines the three “scopes” of emissions that a business should calculate and is generally accountable for:
Scope 1:
Direct emissions from sources owned or controlled by a company, such as natural gas and burning fuel in vehicles
Scope 2:
Indirect emissions from purchased electricity and steam, such as for heating and cooling buildings
Scope 3:
Other indirect emissions such as upstream and downstream in the supply chain. There are actually fifteen categories underneath scope 3, including purchased goods and services, waste generation, employee commuting, and business travel.
Most businesses see the majority of their emissions in scope 3. This is particularly true for the food and beverage industry, where scope 3 emissions often account for more than 80 percent of a company’s total emissions because of the purchased goods and services required to manufacture, package, and distribute products.
Evolving best practices and industry considerations
The GHG Protocol is the foundation for how most organizations, including ClimateHound, measure emissions, but carbon accounting has been and continues to be refined by supplemental best-practices and industry-specific considerations from forward-thinking companies, working groups, and industry organizations. Organizations such as Beverage Industry Environmental Roundtable (BIER), International Wineries for Climate Action (IWCA), and the Brewers Association continue to guide improvements in data quality and focus on what’s most important for the food and beverage industry.
Carbon accounting for food and beverage businesses
Because ClimateHound is the only all-in-one sustainability platform focused exclusively on the food and beverage industry, our expertise makes carbon accounting more tailored and accessible for food and beverage businesses of all sizes, helping companies to get started not only measuring emissions but reducing their contribution to climate change and managing related risks and opportunities.
Calculating a carbon footprint is one of the most powerful first steps a company can take in addressing climate change, and it also helps with a company’s bottom line by finding ways to be more efficient with resources. Just as you rely on your accountant to keep you on track to your financial goals, ClimateHound is here to be your carbon accountant and keep you on track to your climate goals. We’re all in this together!