Main carbon accounting standards in 2024

Carbon accounting has emerged as a crucial process for businesses aiming to enhance sustainability by tracking and managing their greenhouse gas (GHG) emissions. The increasing demand for corporate transparency, driven by stakeholders, including regulators, investors, and customers, makes carbon accounting more vital than ever.

A KPMG paper published in April 2023 shows that businesses are increasingly required to quantify their emissions to meet regulatory demands and satisfy investors and consumers prioritising environmental responsibility.

Businesses face regulatory requirements, reputational risks, and opportunities in a world transitioning towards a low-carbon economy. To help you navigate this complex landscape, this article explores the key carbon accounting standards businesses must be aware of in 2024, along with the role of carbon management software in achieving compliance and maximising impact.

What is carbon accounting?

Carbon accounting refers to measuring, reducing, and reporting GHG emissions produced directly and indirectly by an organisation. This method allows businesses to understand their carbon footprint, which is critical for setting reduction targets and tracking progress toward sustainability goals. 

By categorising emissions into different scopes, carbon accounting helps businesses understand their environmental impact more comprehensively:

• Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles or on-site fuel combustion).
• Scope 2: Indirect emissions from purchased energy such as electricity, steam, heating, and cooling.
• Scope 3: Other indirect emissions that occur throughout the value chain, including emissions from suppliers, business travel, waste, and product use by consumers.

This categorisation is essential for accurate carbon reporting, allowing organisations to manage their emissions and enhance their sustainability performance.

Carbon reporting is critical to managing GHG emissions, complying with regulations, and maintaining stakeholder credibility. It is pivotal in achieving sustainability goals, aligning business practices with climate-related regulations, and demonstrating corporate responsibility. Moreover, it serves as a basis for organisations to identify areas where they can reduce emissions, improve operational efficiency, and enhance their overall environmental performance.

Main carbon accounting standards

In 2024, several essential carbon accounting standards provide frameworks for measuring, managing, and reporting GHG emissions. These standards guide companies in quantifying their emissions and ensure consistency, comparability, and transparency across industries.

Greenhouse Gas Protocol (GHG Protocol)

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used carbon accounting framework, developed by the World Resources Institute and the World Business Council for Sustainable Development. Established in 1998, it provides internationally recognised standards for measuring and reporting GHG emissions, making it a critical tool for businesses globally.

The GHG Protocol is divided into two essential standards:

1. Corporate accounting and reporting standard: This is a step-by-step guide for organisations to quantify and report their GHG emissions across Scopes 1, 2, and 3.

• For instance, companies in the manufacturing sector often use this standard to quantify emissions from direct energy usage (Scope 1), purchased electricity (Scope 2), and their supply chains (Scope 3). This framework enables better comparison and benchmarking for corporate sustainability.
  

2. Project quantification standard: Focuses on measuring and reporting emissions reductions from GHG mitigation projects. Examples include renewable energy installations, efficiency improvements, or carbon reduction projects. These projects are quantified against a baseline scenario, allowing organisations to calculate the exact reductions in GHG emissions.

• For instance, projects like insetting or renewable energy development use this standard to accurately measure the emissions avoided or removed compared to traditional energy sources or carbon offsetting.

The GHG Protocol is essential for understanding a company’s carbon footprint, ensuring regulatory compliance, and participating in carbon markets. Its global recognition makes it indispensable for companies of all sizes across industries.

Partnership for Carbon Accounting Financials (PCAF)

The Partnership for Carbon Accounting Financials (PCAF) initiative focuses specifically on financial institutions. It helps them measure and disclose the GHG emissions associated with loans and investments.

As the financial sector significantly funds carbon-intensive industries, it faces unique challenges in measuring its indirect emissions. PCAF provides a standardised methodology for accounting for these emissions, enabling financial institutions to assess their environmental impact and manage climate-related risks.

PCAF complements the GHG Protocol by offering additional guidance tailored to financial institutions, helping them report the emissions tied to their portfolios. This standard has gained traction as investors increasingly demand transparency and accountability regarding financed emissions.

Task Force on Climate-related Financial Disclosures (TCFD)

The Task Force on Climate-related Financial Disclosures (TCFD) was established to improve transparency around climate-related financial risks. Its recommendations guide companies in disclosing their governance, strategy, risk management, and metrics related to climate change.

While the TCFD was not a carbon accounting standard, it supported frameworks like the GHG Protocol by encouraging transparency in how companies report their emissions and manage climate-related risks.

The SDS now provides a more comprehensive and detailed framework for ESG reporting, risk management, and climate-related financial disclosures, ensuring that businesses continue to disclose their carbon footprint and address the economic risks and opportunities associated with climate change.

Bilan Carbone 

The Bilan Carbone methodology is a French carbon accounting tool designed to help organisations assess their emissions comprehensively. It covers emissions across Scopes 1, 2, and 3 and is particularly relevant for businesses operating in France, as it aligns with national regulations to reduce carbon emissions: today, over 500 French companies and public organisations use it to meet regulatory requirements.

Here is how to calculate it: 

Companies should first define their operational boundaries and gather relevant activity data, such as energy consumption and transport figures. They then apply specific emission factors to convert these activities into carbon dioxide equivalents (CO₂).

For example, 1 kWh of electricity in France emits about 0.06 kg of CO₂. By multiplying the activity data by emission factors, companies obtain their total carbon footprint, which they can then analyse to identify opportunities for emissions reductions.

Bilan Carbone helps companies comply with local regulations while enhancing their sustainability efforts. For companies operating internationally, it can be a valuable tool for aligning their carbon accounting practices with regional expectations.

What is the ISO standard for carbon accounting?

The ISO 14064 standard is part of the ISO 14000 family of environmental management standards and provides a comprehensive framework for quantifying, reporting, and verifying GHG emissions and removals. 

The standard is divided into three parts:

1. ISO 14064-1: Outlines requirements for organisational-level GHG inventories.
2. ISO 14064-2: Focuses on GHG emissions reductions or removals at the project level.
3. ISO 14064-3: Provides guidance for verifying GHG assertions to ensure accuracy.

ISO 14064 enhances the credibility of carbon accounting practices by providing clear guidelines and verification procedures. It also supports third-party verification, which is critical for businesses seeking to ensure the reliability and transparency of their emissions data.

How to select the right carbon accounting standard?

Choosing the right carbon accounting standard depends on various factors, including the company's size and complexity, industry, and sustainability goals. 

Here is how to do it:

1. Assess your company’s size and complexity:
   • Larger companies with complex operations may require more detailed reporting and industry-specific standards, such as the GHG Protocol or ISO 14064.
   • Smaller companies may benefit from more straightforward frameworks but must ensure compliance with relevant regulations.

2. Identify industry-specific requirements:
   • Some industries, such as finance or energy, have unique emissions profiles and regulatory obligations. For example, financial institutions may find PCAF the most relevant standard due to its focus on financed emissions. 

3. Evaluate standards’ alignment with your sustainability goals:
   • Companies should choose a standard that supports their long-term sustainability objectives and targets, such as achieving net-zero emissions.

4. Consider stakeholder expectations:
   • Engaging with stakeholders, including investors, customers, and regulatory bodies, is essential for selecting a standard that meets their expectations. For example, stakeholders might prefer a company to follow globally recognised frameworks like the GHG Protocol or ISO 14064 to ensure transparency and accountability.

Leveraging carbon management software to comply with carbon accounting standards

Carbon management software is pivotal in helping businesses comply with carbon accounting standards. These tools streamline the data collection, analysis, and reporting processes, making it easier for companies to manage their emissions effectively.

Key features of carbon management software include:

• Integration with existing systems to facilitate comprehensive data collection.
• User-friendly interfaces for accurate data entry and reporting.
• Advanced analytics for tracking emissions and progress toward reduction targets.
• Support for multiple standards like GHG Protocol and ISO 14064, ensuring that companies can meet various regulatory and reporting requirements.

These tools automate the carbon accounting process, save time, reduce errors, and give businesses the insights they need to advance sustainability initiatives. 

Plan A’s award-winning platform is an excellent choice for businesses looking to excel in carbon management. It offers cutting-edge technology and expert support to achieve ambitious net-zero goals.

Carbon accounting will remain critical to corporate sustainability in 2024, driven by growing regulatory requirements and stakeholder expectations. Businesses can ensure they accurately measure and report emissions by understanding and implementing critical standards like the GHG Protocol, PCAF, TCFD, Bilan Carbone, and ISO 14064.

Moreover, leveraging carbon management software can streamline the process, improve data accuracy, and enhance reporting capabilities, allowing companies to focus on their sustainability goals.

Adopting the proper carbon accounting standard helps companies comply with regulations. It enables them to drive meaningful change in their carbon management practices, ultimately contributing to global efforts to combat climate change and achieve net-zero targets.

Start calculating and reporting on your carbon emissions with our carbon management software. Book a demo today.‍