5 Common Mistakes Carbon Accounting Beginners Make (and How to Avoid Them)
Carbon accounting is essential for businesses aiming to track and reduce their greenhouse gas (GHG) emissions. However, beginners often encounter pitfalls that can lead to inaccurate reporting, regulatory non-compliance, or missed reduction opportunities. In this article, we introduce five common mistakes and how to avoid them.
1. Underestimating Scope 3 Emissions
Many companies focus only on their direct emissions (Scope 1) and purchased electricity (Scope 2) while neglecting Scope 3, which often represents the largest portion of their carbon footprint. Scope 3 includes emissions from suppliers, transportation, product use, and waste disposal—areas outside a company’s direct control but crucial for a complete carbon assessment.
For instance: A manufacturer initially measured only its factory’s emissions and electricity usage. However, after including Scope 3 emissions in its accounting exercise, it discovered that raw material extraction and transportation accounted for 85% of its total footprint. Without this information, its reduction efforts would have been misdirected.
How to avoid it: Use a comprehensive carbon accounting framework like the GHG Protocol to systematically assess Scope 3 emissions.
2. Relying on Generic Emission Factors
Emission factors provide a useful starting point. However, using generic data, such as global industry averages instead of company- or region-specific figures, can lead to significant inaccuracies.
For instance: A retail company used a global average emission factor for transportation when estimating emissions from its supply chain. However, after switching to region-specific emission factors, it found that its logistics emissions were 20% higher than originally reported due to differences in fuel efficiency and local grid carbon intensity.
How to avoid it: Where possible, collect primary data from suppliers, employees, distributors, and transport providers. Use databases such as DEFRA, the EPA, or industry- and product-specific LCA tools for more accurate emission factors.
3. Overlooking Data Gaps and Quality Issues
Poor data quality—such as missing, inconsistent, or estimated figures—can undermine the credibility of carbon accounting efforts. Many businesses struggle with incomplete supplier data or outdated assumptions.
For instance: A manufacturing firm estimated its electricity consumption for an entire year based on a single month’s bill. This created a 15% discrepancy when actual usage data from electricity meters was later reviewed, affecting reporting accuracy and reduction targets.
How to avoid it: Implement a rigorous data collection process with clear documentation standards. Regularly audit and validate data sources to ensure consistency over time.
4. Neglecting Operational Boundaries
This is a step that is often overlooked. Defining organisational and operational boundaries incorrectly can lead to omissions or double counting of emissions. Companies need to decide whether to use the equity share, financial control, or operational control approach to categorise their emissions correctly.
For instance: A multinational company initially excluded emissions from its joint ventures, assuming they fell outside its reporting scope. However, under the operational control approach, these emissions were part of its responsibility. This mistake delayed compliance with international reporting standards.
How to avoid it: Clearly define reporting boundaries from the outset using recognised methodologies such as the GHG Protocol. Engage stakeholders to ensure alignment with financial reporting structures.
5. Failing to Link Carbon Data to Business Strategy
This is probably the most common mistake we see at Oakdene Hollins. Many businesses treat carbon accounting as a compliance exercise rather than a strategic tool for decision-making, leading to missed opportunities for emissions reductions and cost savings.
For instance: A logistics company calculated its carbon footprint but did not use the data to inform fleet management. After incorporating emissions data into procurement decisions, it switched to hybrid vehicles and optimised routes, reducing fuel costs by 12% while lowering emissions.
How to avoid it: Use carbon data to drive operational efficiency, supply chain decisions, and investment strategies. Educate leadership teams on how emissions reductions align with cost savings and regulatory benefits.
Accurate and strategic carbon accounting is crucial for businesses committed to sustainability. Avoiding these common mistakes will undoubtedly help businesses build a solid foundation for emissions reduction, enhance their environmental impact, and strengthen business resilience—positioning themselves as leaders in the transition to a low-carbon economy.
Oakdene Hollins is here to help you establish the foundations of accurate and compliant carbon accounting. Our expertise ensures your business meets regulatory requirements, enhances transparency, and empowers you to achieve meaningful emissions reductions.