Take your sustainability efforts to the next level with carbon accounting. Here’s everything you need to know about getting started.

More and more employers and employees alike have begun considering their impact on the planet both while at home and while traveling for work. If you’re among them, you may have come across a range of phrases and terms that can seem complicated at first. Carbon credits? Carbon offsetting? Carbon accounting? You thought you were simply supposed to lower your carbon footprint, through making more sustainable choices.

As any savvy businessperson knows, though, in order to make smart business decisions, you often need data to back up those decisions. That’s where carbon accounting comes in. Carbon accounting helps you better get ahold of your company’s true carbon footprint, regardless of your company’s size, so you can make decisions accordingly.

Here’s what you need to know about carbon accounting for your business.

What is Carbon Accounting?

Carbon accounting is simply a means of tracking and recording how much carbon your organization emits and is responsible for. Sometimes, carbon accounting is also referred to as greenhouse gas accounting.

In carbon accounting, your emissions correlate with a financial value. That value can then be used to determine how much you may need to spend on carbon offsetting. The money set aside for use in carbon offsetting will then be used to buy carbon credits. These then go on to fund carbon reduction initiatives. Carbon credits can be traded publicly or privately.

What Kind of Data Do You Track in Carbon Accounting?

While there are various methodologies that come into play in carbon accounting, the best approach is always a comprehensive one.

Using emissions categories, a comprehensive carbon accounting strategy will account for indirect and direct emissions. Indirect emissions include electricity and power purchased for use, purchased goods and services, waste generated, employee commuting, transportation, and business travel, among others. Direct emissions, meanwhile, refers to the emissions directly produced by your facilities and/or vehicles.

Typically, carbon accounting uses one of two methodologies, either a spend-based methodology or an activity-based methodology.

The former looks at the amount of emissions stemming from a product or service. Then, it multiplies the total spend on that product or service with the emissions resulting from that product or service. This results in a final estimated emissions total. However, this methodology is considered highly generalized and isn’t as specific and reliable as others.

The other, most popular methodology, the activity-based methodology, is similar. The biggest difference is that it narrows down on actual individual purchases of a product or service and the emissions resulting thereof, rather than the total spend.

Some companies use a combined methodology that incorporates elements of both the spend-based and activity-based methodologies. The benefit of this? You get the speed and convenience of the spend-based methodology with some of the specificity of the activity-based methodology.

Is Carbon Accounting Worth It?

Yes, carbon accounting, while sometimes time-consuming and tricky to navigate, at least at first, when you’re determining what data to track and as you’re attempting to compile as accurate and comprehensive data as possible, is very worth it. Carbon accounting comes with myriad benefits. It can ultimately make your company more sustainable, more profitable and more popular.

For example, it not only helps you make better decisions in order to lessen the amount of carbon emissions your organization produces. It also can help you show a record of your emissions in instances where you might be legally required to show such a record, or in instances where you’re attempting to obtain some sort of third-party certification. Even if you’re not legally required to produce climate impact reports at the current moment, much of the world is working toward these legalities. You may need to think of these sooner than you think.

Results of Carbon Accounting

Once you begin tracking your carbon emissions and developing a carbon accounting process, you may also be able to more easily see inefficiencies in your processes and areas where you can easily reduce emissions in previously unforeseen ways.

Additionally, carbon accounting can allow you to better share with your stakeholders, team members, and clients or customers concrete numbers related to your carbon emissions and sustainability efforts. This is important for several reasons.

For one, it’s consistently becoming a fact that more customers and consumers want to shop with environmentally-conscious brands. However, just saying you’re sustainable isn’t good enough. To avoid greenwashing, consumers want proof, and carbon accounting gives you that proof.

Consumers are rewarding these brands that have that proof in their wallets, too. The above-linked McKinsey study shows that “products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% [for] products that made no such claims.”

Similarly, employees likewise want to see genuine commitment to sustainability, and they’re rewarding employers who display this commitment with a greater level of loyalty and higher retention rates. Deloitte found that nearly 70% of employees expressed a desire for their organizations to increase their sustainability efforts. Nearly 30% of talent looking at potential job offers said they would factor an organization’s sustainability into their decision. Meanwhile, about 25% of respondents said they would consider switching organizations in order to work for a more sustainable company.

Need Help Getting Started?

While business travel emissions are just one tiny part of the puzzle when it comes to carbon accounting, it’s still one that’s worth your attention, especially if your team travels frequently. Luckily, working with a Travel Management Company can help make accounting for your business travel emissions easier. As we track your data and point out areas where you have room for sustainable improvement. Getting that comprehensive, complete carbon emissions data becomes as simple as a chat with your Travel Manager.

Learn more about what JTB Business Travel can do for you and our sustainability-focused resources for Executives.