Simplifying carbon accounting
This article deals with the upcoming disclosure requirements related to carbon accounting, especially in relation to emission factors and the underlying complexity of calculating these and how. Solitwork’s Carbon Accounting solution can assist you in this process; not only in terms of saving time collecting the data, but much more to ensure compliance to the official requirements by generating trustworthy emission data.
We simplify carbon accounting via the use of structured rule settings, officially recognized emission factors and standard formulas/calculations!
Carbon Accounting Simply Explained
The environmental reporting on climate change requires, according to the Corporate Sustainability Reporting Directive (CSRD), disclosures on carbon emissions (CO2eq) related to scope 1, 2 and 3.
CO2eq are calculated as an input multiplied by an emission factor. The input can be more or less activity based, meaning that input will most likely exist via a combination of:
- Money (DKK, EUR, USD etc.)
- Kilo Watt Hours (KwH)
- Mega Watt Hours (MwH)
- Kilometers (Km)
- Kilos (Kg)
- Liters (L)
- Cubic Meters (M3)
- Etc.
Emission factors are issued from different protocols (e.g. the GHG Protocol) to transform inputs into CO2eq. In addition, they are also issued for specific:
- Categories (e.g. electricity)
- Geographical regions (e.g. Denmark)
- Sectors (e.g. energy)
The factors are normally updated yearly or at least when a new and updated calculation has been prepared.
Companies will be required to deal with these calculations to stay compliant with the CSRD.
Disclosure Requirements related to Carbon Accounting including Emission Factors
Complexity really arrives when dealing with several different inputs and categories relevant to several different emission factors, that might even change from one period to another. Additionally, the CSRD requests to calculate the scope 2 emissions using two separate methods:
- Location based; translating input (e.g. electricity) into CO2eq via e.g. the official Danish grid mix emission factor issued by the GHG protocol.
- Market based; translating input (e.g. electricity) into CO2eq via a specific emission factor related to a given certificate instrument, contract or supplier.
The market based method is complex, however, established to support companies reporting their green initiatives by investing into areas supporting the green transition.
Examples: renewable energy certificates, power purchase agreements, green energy tariffs etc.
Moreover, you are required to disclose not only the CO2eq emissions, but also the emission factors used, including explanations to the ones used but not included in a generally accepted framework.
The Benefits of Investing into a Carbon Accounting Tool
Thus calculating CO2eq emissions is no longer only a matter of input multiplied with a factor. Initially, it might be different from one legal organization to another and secondly, carbon accounting rules may consider both department, supplier and maybe even product/group of products.
With Solitwork’s Carbon Accounting application we have made it possible to create advanced rule settings, considering the different input parameters including the possibility to relate transactions to:
- Location based emission factors
and/or
- Market based emission factor, which can be added manually or as a “renewable percentage”
You can easily choose emission factors from the public database that we connect with, which currently has some 28,000 different emission factors and which is adding even more as they get published.
You will thus not only save time on collecting your data as our solution will automate your processes, but more importantly, you will stay confident within your numbers and ensure compliance!
We simplify carbon accounting by the use of structured rule settings, officially recognized emission factors and standard calculations/formulas!
Learn more at: www.solitwork.com
