What is Carbon Accounting?

Carbon accounting is a critical tool that allows businesses to quantify the carbon emissions generated by their operations, helping them understand their environmental impact. It involves the measurement and tracking of carbon dioxide (CO2) and other greenhouse gases (GHG) emitted across various business activities, such as energy use, transportation, and waste production.

These emissions, often referred to as a “carbon footprint,” are calculated across three scopes:

Scope 1: Direct emissions from owned or controlled sources.
Scope 2: Indirect emissions from the generation of purchased electricity.
Scope 3: All other indirect emissions, including those from the supply chain and other external activities.

By identifying and understanding their emissions across these scopes, companies can pinpoint areas to reduce their carbon footprint, improve sustainability, and comply with evolving environmental regulations.

Why is Carbon Accounting Important

Carbon accounting is essential because it provides transparency around a company’s environmental impact. In a world increasingly concerned about climate change, stakeholders—including customers, investors, and regulators  demand more accountability.

Effective carbon accounting allows businesses to make informed decisions on how to reduce emissions, often leading to cost savings, innovation, and a better reputation. Additionally, companies with robust carbon accounting practices are better positioned to meet net-zero targets and avoid penalties from non-compliance with evolving environmental laws.

Why Should Companies Care About Carbon Accounting?

Companies that ignore carbon accounting risk falling behind in the race toward sustainability. Caring about carbon accounting means embracing long-term economic viability and competitive advantage. 

A well-implemented carbon accounting strategy can enhance a company’s brand, attract environmentally-conscious consumers, and even improve access to financing, as investors increasingly favor companies that demonstrate commitment to environmental, social, and governance (ESG) criteria.

As supply chains become more interconnected, companies are also under pressure to manage the emissions associated with their suppliers, leading to stronger business partnerships and reduced risks.

What Are the New Laws Around Carbon Accounting?

Australia has recently passed significant legislation regarding carbon accounting and climate-related reporting.

Here are the key points:

1. 1. Mandatory Climate Reporting: In 2025, large and medium-sized companies must disclose climate-related risks, opportunities, and greenhouse gas emissions across their value chains. This includes Scope 1, 2, and eventually Scope 3 emissions.
   2. Phased Implementation: The reporting requirements will be phased in based on company size:
      January 2025: Companies with over 500 employees, revenues over $500 million, or assets over $1 billion.
      July 2026: Medium-sized companies with 250+ employees, $200 million+ revenue, or $500 million+ assets.
      July 2027: Smaller companies with 100+ employees, $50 million+ revenue, or $25 million+ assets.
   3. Scenario Analysis: Companies must conduct scenario analyses to assess the impact of different climate futures on their business models. This includes high warming (2.5°C or higher) and low warming (1.5°C) scenarios.
   4. Net Zero Economy Authority: A new authority has been established to guide the economic transition to net zero emissions, including reskilling workers and coordinating with industry and investors.

These changes align with international standards set by the IFRS Foundation’s International Sustainability Standards Board (ISSB) and are designed to enhance transparency and accountability in corporate climate actions.

Are you ready to measure, manage and reduce your environmental impact?

As a TRACE-approved carbon accounting practitioner and B Corp Consultant, I am here to help your organisation navigate the complexities of mandatory climate reporting.

Here’s how I can support you:

Expert Guidance: Leverage my expertise in carbon accounting to ensure your reporting is accurate, comprehensive, and compliant with the latest regulations. I will guide you through the entire process, from initial assessment to final submission. By using spend and activity data, achieving an emissions measurement can be simple and straightforward.

Customised Solutions: Every organisation is unique. I will work closely with your team to develop tailored strategies aligning with your needs and goals. This includes identifying key areas of impact, setting realistic targets, and implementing effective measures to reduce your carbon footprint. Leveraging a software platform can reduce the measurement process from months to weeks or even days, making it more efficient and cost-effective.

Ongoing Support: Climate reporting is an ongoing process. I provide continuous support to help you stay on track, adapt to new requirements, and improve your sustainability performance over time. This includes regular check-ins, progress reviews, and updates on regulatory change. Using a software platform is also a much more affordable way to conduct a measurement due to the reduced consulting hours needed for the calculation itself.

Contact us today to complete your greenhouse gas calculations and offer advice on carbon reductions to your business.

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