Carbon Accounting Software: Five Basic Requirements

|  February 2, 2023

🕓 Reading time 7 minutes

Table of contents

1. What is carbon accounting? 

2. Who needs carbon accounting software?

3. Five relevant requirements for your carbon accounting software

3.1. Pure software or ready-to-use result?

3.2. Verified survey according to all three scopes

3.3 Consideration of recognized standards

3.4. Use of current and individual emission data

3.5. Understandable and usable data preparation

1. What is carbon accounting?

Carbon Accounting is the English term for CO2 accounting. It refers to the systematic recording of all direct and indirect CO2 emissions or greenhouse gases of a company. This determination of the annual greenhouse gas emissions for which the company is responsible is known as Corporate Carbon Footprint (CCF) The CCF provides emissions metrics that can be used to set targets, identify savings potential, and develop optimization measures.

To ensure high-quality and comparable data collection, Reporting standards created, such as the ESRS E1 in the context of the CSRD and the Carbon Accounting and Reporting Standard of the Greenhouse Gas Protocol. Interestingly, the standards divide corporate emissions into three scopes. The three scopes serve to distinguish between direct and indirect emissions in the calculation and reporting.

2. Who needs carbon accounting software?

The requirements for carbon accounting will be regulated from 2024 by the new EU directive Corporate Sustainability Reporting Directive (CSRD) greatly expanded. The new ESG reporting requires that corporate CO2 emissions and related disclosures be presented in the annual report. For this reason, many new companies require carbon accounting software for their carbon management and ESG reporting.

1. Companies affected by the CSRD

Many of the more than 50,000 companies across Europe affected by the CSRD have not yet considered carbon accounting. However, implementation will be mandatory for companies already subject to the NFRD starting with the 2024 reporting year. The directive will enter into force for the 2025 reporting year for large companies that meet two of the following three size criteria: more than 250 employees, €40 million in revenue, or €20 million in total assets. Starting with the 2026 reporting year, the scope will be expanded to include listed SMEs.

2. Companies affected by stakeholders

In addition to the direct legal obligation, increasingly stringent stakeholder requirements are also emerging. In the years following the introduction of the CSRD, cascading will also result in an indirect carbon accounting obligation for smaller companies, as they are affected via the supply chain.

3. Five relevant requirements for your carbon accounting software

1. Pure software or ready-to-use result?

First, the question arises as to whether pure software is actually the right solution for your company. If you already have extensive internal expertise and the appropriate specialists to operate it, a pure software solution may work.

In most cases, you as a company are faced with a new area of expertise without internal expertise. Your goal is to have your verified CO2 figures available to report and work with. From an economic perspective, it therefore usually makes sense to rely on a comprehensive service solution in carbon accounting, which is not just infrastructure, but a ready-to-use result In this case, all you need to do is send the required consumption values to the service provider. They will then carry out the data verification and CO2 calculation for you.

Especially when new to carbon accounting, the complex requirements, including data collection and materiality assessment, raise many questions. Therefore, when searching for a provider, ensure that you have a dedicated contact person with whom you can clarify these questions throughout the process.

At Green Vision Solutions, we work according to the Software+Service method. Our method is certified by TÜV RheinlandData transfer is facilitated via a user-friendly interface. In personalized kick-off sessions and clear onboarding videos, you will receive step-by-step explanations of data collection. Our team of Carbon Footprint Managers is available at any time to answer individual questions, then prepares and calculates your data and delivers your final results.

Excerpt from the Carbon Accounting Software from Green Vision Solutions

2. Verified survey according to all three scopes

The collection of key figures must be carried out according to acertified process and cover all three scopes. Considering only Scope 1 and 2 emissions is not sufficient.

Scope 3 considers emissions that result from your business activities but originate from a source owned or controlled by another party. This includes, among other things, energy consumption in rented properties or vehicles, the purchase of goods and services, waste disposal, water and wastewater, business travel, and employee commuting. Indirect emissions from these upstream or downstream activities in your value chain are therefore also direct emissions from another party.

3. Consideration of recognized standards

The recording must internationally recognized standards (GHG Protocol and ESRS) In particular, the collection of Scope 3 Emissions after the ESRS E1 Climate Change presents many companies with new challenges.

The decision as to which CO2 emissions from the 15 categories are recorded is relevant for the accounting effort and for the recognition of the key figures for standard-compliant reporting.

In particular, the approach regarding the Scope 3 Emissions For these reasons, it should be supported by experts. Our team at Green Vision Solutions will guide you through a standard-compliant process with manageable balancing effort. After our experts have narrowed down your needs, you simply submit the required consumption data.

4. Use of current and individual emission data

Wherever possible, the use of up-to-date and individual emissions data should be ensured. Only this will enable standard-compliant reporting and a verifiable reduction in your emissions.

Reporting CO2 figures serves as a check to determine whether emissions are actually being reduced. Ultimately, climate protection targets must be met. For this reason, it is essential to make your actual, individual emission hotspots transparent now. Average values, such as those provided by many real-time calculators, do not meet this requirement because they cannot demonstrate actual, individual savings potential.

At Green Vision Solutions, we contact your specific electricity and heat providers to use precise, individual emissions data in your carbon accounting. We also offer the option of submitting climate protection data from your suppliers and business partners. We incorporate this data into your calculations. The measures you implement will therefore directly reflect the results in your future carbon footprint. This is only possible because the individual calculation takes this data into account.

5. Understandable and usable data preparation

The data should be prepared in a way that is understandable and usable for internal monitoring, so that in addition to the actual reporting, you also have sound basis for the development of concrete measures offer.

The processing can, for example, be carried out in a Dashboard This allows you to track your total emissions, gain insight into your emission hotspots and savings potential, and receive a detailed breakdown of all partial emissions, energy consumption, and scopes.