Five challenges and tips for beginners in carbon accounting services
Five challenges and tips for beginners in carbon accounting services
A net zero strategy is a growing priority for businesses; however, it’s still a relatively new concept, meaning companies often encounter challenges. While carbon management strategies vary between organizations, there are some common complications that each will likely face. If your organization is assessing its carbon reduction initiatives, make sure you’re prepared for the following potential pitfalls.
Challenge one: Data gaps and inconsistencies
The first challenge often faced during a carbon footprint analysis is data gaps and inconsistencies. Businesses can experience difficulty in gathering correct and complete figures for emissions calculations, particularly for Scope 3 aspects, including supply chain activities and product use.
Combatting this challenge in carbon footprint reduction may involve a “screening” method. This allows companies to define the breadth and limits of their carbon accounting and calculate their emissions. For instance, they might use spend-based figures from their financial accounting rather than the kwh consumed. They can estimate their employees’ commuting consumption by using industry averages. These methods provide the necessary insights into the primary sources of a company’s carbon emissions. Once they have some loose figures, they can focus on improving the data for their key emissions sources, moving from spend-based figures to activity data and from industry averages to primary data from the company.
Challenge two: The complexity of Scope 3 emissions
Another common hurdle in an environmental impact analysis is the complexity of Scope 3 emissions. Charting and calculating these emissions across the value chain can be overwhelming, especially when engaging suppliers or perceiving subsequential results.
Businesses can address this challenge by prioritizing the Scope 3 categories that are the biggest contributors to their carbon footprint. They can cooperate with their main suppliers to access advice, assistance, and tools for reporting emissions data or any information needed to estimate them.
Challenge three: A lack of internal expertise
Organizations often lack the required technical know-how or resources to put the GHG protocol in place. This can result in confusion, mistakes, and delays being drawn out for years.
Sustainability consulting services come in to provide teams with training to put these measures in place. While ESG consulting is incredibly valuable, it’s still important that teams understand the process themselves. This means being able to interpret results and use insights to bring carbon reduction initiatives to life. With a decent understanding of the processes, teams will be equipped to build capacity over time for Scopes 1 and 2 as well as 3. At this point, sustainability consulting services can be brought in to develop the team’s skills, which could facilitate the carbon accounting work being adopted in-house.
Carbon accounting starts with a decision surrounding the company’s consolidation approach, the boundaries of the accounting exercise and establishing all relevant GHG emissions sources. If organisations are to refrain from drawing out mistakes, they must make the right decisions from the get-go. For this reason, carbon footprint consulting is strongly recommended at this stage.
Challenge four: Ensuring accuracy and avoiding double counting
Unclear operational and organizational boundaries, misinterpretation of the GHG protocol or inadequate conversion factors can lead to double-counting and inaccuracy.
Avoiding these challenges means following the GHG Protocol’s guidelines for putting these boundaries in place (e.g., equity share vs. control approach), developing an exhaustive emissions sources inventory and establishing a solid work methodology. With clear documentation and tools, monitoring data sources and calculations becomes a lot easier.
Challenge five: Recording methodology
Finally, companies often don’t record their carbon accounting methodology or the source of the conversion emission factors. This includes the raw data, industry averages’ sources, how proxy data was calculated, etc. In a few months, it’s likely the information won’t be remembered or someone else will be working on the account and will need to understand the process. Not only is recording methodology essential for keeping track of everything, but it’s also a requirement for submitting targets for approval (e.g., Climate Science-Based-Targets). Therefore, the methodology should remain clear and consistent for years to come, and all changes and the reasons behind such should be registered. This also helps explain your GHG inventory to stakeholders, such as regulators, investors, auditors and customers.
Overcome carbon footprint analysis challenges with Oakdene Hollins
Circular economy consulting firm Oakdene Hollins can help you overcome various carbon accounting challenges. Let’s future-proof your business together.