Environmental concerns are increasingly pivotal, leading businesses globally to focus on carbon emissions accounting. The CSRD’s recent standards mandate more rigorous, transparent carbon accounting practices. ESG FinTech company Greenomy recently delved into carbon accounting’s essence and its connection with ESRS requirements. It also highlighted traditional carbon accounting challenges and how companies can align with these new standards.
Carbon accounting is an organized method for companies to measure, manage, and report their greenhouse gas (GHG) emissions. This encompasses tracking and quantifying emissions from various operational sources, including CO2, methane (CH4), Nitrous oxide (N2O), and other GHGs. The objective is twofold: accurate measurement and calculation of emissions, and using this data for informed decision-making to reduce carbon footprints.
Emissions are classified into three scopes:
- Scope 1: Direct emissions from company-owned or managed sources.
- Scope 2: Indirect emissions from purchased energy.
- Scope 3: Indirect emissions from the value chain, including upstream and downstream activities.
Collectively, these form the organisation’s GHG emissions footprint.
Carbon Accounting’s Role in CSRD Compliance
The CSRD’s ESRS stresses the importance of climate-related disclosures, specifically in Standard E1-Climate Change. Companies must provide detailed information on their GHG emissions across all scopes and outline their climate change strategies. This standardisation across the EU enhances the consistency and reliability of environmental reporting.
Recent surveys show that most companies still rely on Excel for carbon accounting, often assisted by external consultants. While familiar, this method has drawbacks like being laborious, error-prone, and lacking real-time tracking. As sustainability reporting advances, carbon accounting methodologies must evolve to meet these challenges.
Achieving EU Legislation Compliance in Carbon Accounting
To comply with EU carbon accounting legislation, companies have two options:
- Enhance traditional methods, like using specialised data collection tools for more efficient Excel-based calculations.
- Integrate advanced carbon accounting software for automated data collection, calculations, and reporting, offering real-time tracking and improved auditability.
As CSRD ushers in a new era of sustainability reporting, reevaluating carbon accounting methods is crucial. Companies must adapt to meet regulatory demands and contribute to a sustainable future. Greenomy, a key player in this field, is part of the Carbon Accounting Alliance, advocating for industry-wide challenges and best practices. For more information on Greenomy’s carbon accounting solutions, contact their experts.
Read the full story here.
Keep up with all the latest FinTech news here.
Copyright © 2023 FinTech Global