Carbon accounting is the process of measuring and reporting an organization's greenhouse gas (GHG) emissions.

Of course, despite the importance of measurement and reporting per se, the main goal of companies should be to reduce GHG emissions to a minimum and even to zero (see below on Net-Zero Standard).

Reporting Structure

All the different reporting framework uses the Greenhouse Gas Protocol (see here) as the standard for calculating emissions.

The GHG Protocol set Scope 1, 2, and 3:

Scope 1 - Direct emissions from the organization's facilities, and vehicles, as well as manufacturing processes.

Scope 2 - Indirect emissions from energy that the company uses but does not produce, such as purchased electricity.

Scope 3 - Indirect emissions in the value chain of a company.

Here you can find more information about the categories of each scope.

Here you can find more about the methodologies to estimate the emissions

While most companies focus on Scope 1 and 2 emissions as they are directly controllable, more firms are realizing the need to account for GHG emissions within their value chains to increase efficiency, reduce costs, and manage risks.

The report need to focus on materiality activities, depending on the type of business (see below Materiality analysis**)**. For example, for manufacturers, it includes purchasing goods and the use of sold products; For a property management company and landlord, goods and services and purchased energy; For construction firms, Scope 3 covers downstream use of a facility and upstream emissions from materials and suppliers.

<aside> 💡 Vert uses GHG Protocol methodology, which mean that the exported CSV file can be used for annual carbon footprint report.

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• ISO 14064 - A standard for GHG accounting that provides additional guidance on the design, development, management, reporting, and verification of GHG projects. Essentially, while the GHG Protocol is focused on emissions accounting, ISO 14064 provides a more comprehensive and standardized approach to GHG accounting and management.

GHG Reporting Frameworks

• Global Reporting Initiative (GRI) - Set of standards for reporting on environmental impacts, as well on other ESG objectives.
• The Carbon Disclosure Project (CDP) - A platform for voluntary annual reporting of cities and companies' performance on climate change, water security, and deforestation. The GHG Protocol is the basis for the reports on climate change.
• Streamlined Energy and Carbon Reporting (SECR) - Mandatory annual reporting for companies, in some countries, usually public companies above certain size.
• SBTi Net-Zero Standard - science-based framework for defining climate targets. A joint effort between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). SBTi employ a "top-down" approach by assigning carbon emissions targets to ensure compliance with the Paris Climate Agreement's goal of limiting global warming to 1.5°C. SBTi's Net Zero Standard, launched in October 2021, outlines the necessary requirements, including short- and long-term climate targets, and investment in carbon offset projects. Short term targets: Rapid emission reduction by 50% until 2030. Long term targets: Net Zero by 2050.

Beyond Reporting

• Set sustainability targets
• Materiality analysis: Determining on which issues the organization need to address and prioritize “the topics that have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society at large”. GRI G4 guidelines
• Establish management process including data collection: People! Recruiting or retraining staff for the mission. Next, to make reporting efficient, centralized data collection processes are recommended. It is better to collect data on a monthly or quarterly basis rather than once a year. When collecting data, it is important to use the following hierarchy: Primary data, which directly reflects the amount of a resource consumed, such as kWh of electricity used or liters of fuel consumed; Estimation based on secondary data, such as fuel costs, this method (of estimation based on costs) called spend based.
• Establish a base year for carbon reporting: To accurately track their progress towards net zero, companies must select a recent and representative base year for comparing data collected over time. The base year should be reflective of the company's current conditions, particularly if significant changes have been made to their operations in recent years.
• Audit: A third-party verification, which is essential to combat greenwashing and ensure transparency around environmental and social performance. This is being ratified across various measurement protocols.