What are the main reasons companies should track their carbon emissions?

Here are the main reasons why all companies should track their carbon emissions: Ethical and environmental imperatives; Societal expectations for sustainable practices; Consumer demand for sustainable practices; Regulatory requirements driving carbon tracking; Benefits of carbon tracking for corporate reputation; Attracting investment through carbon tracking.

What are Scope 1, Scope 2, and Scope 3 emissions?

Scope 1 emissions encompass direct emissions originating from sources owned or controlled by your company. Scope 2 emissions are indirect emissions stemming from the generation of purchased electricity, heat, or steam the company uses. Scope 3 emissions are all indirect emissions in the reporting company's upstream and downstream activities.

What does carbon tracking mean, and how to succeed?

Q: What is carbon tracking?

Carbon tracking is like keeping a diary of the carbon dioxide a company releases into the atmosphere. It's a systematic process where organisations record, measure, and study all the carbon emissions from their business activities, including manufacturing processes and employee travel.

Q: Why is carbon tracking essential for businesses?

Tracking your carbon footprint isn't just a good idea—it's becoming essential for businesses looking to stay ahead and do their part to protect the environment while safeguarding their future.

Q: What are the key components of carbon accounting?

Understanding the fundamental principles of carbon accounting is like unlocking the secrets to mastering carbon tracking. First, it's all about knowing your emissions sources. You've got to identify every nook and cranny where carbon emissions are in your operations, whether from burning fuel in your factory or jet-setting for business meetings. Next step: collecting data. Solid methods are needed to collect all the relevant information accurately. That's where emission factors come in.

Carbon tracking allows businesses to keep tabs on how much carbon they release into the atmosphere. Why does that matter? Picture this: increasingly, people are becoming aware of how our actions affect the environment. Governments are also tightening the screws with regulations to curb carbon emissions.

So, tracking your carbon footprint isn't just a good idea—it's becoming essential for businesses looking to stay ahead and do their part to protect the environment while safeguarding their future.

Carbon tracking is like a GPS guiding companies towards global sustainability goals. Knowing where you stand with carbon emissions can tailor your strategies to cut down, be more efficient, and become a sustainability leader. So, if you're ready to learn how to nail carbon tracking and steer your business towards data-driven decisions, you're in the right place. This article provides more details.

What is carbon tracking?

Carbon tracking is like keeping a diary of the carbon dioxide a company releases into the atmosphere. It's a systematic process where organisations record, measure, and study all the carbon emissions from their business activities, including manufacturing processes and employee travel.

Now, why bother with all this carbon tracking? Well, imagine you're on a journey to reduce your carbon footprint. You need a map to know where you're starting from and where you want to go. That's precisely what carbon tracking does. It helps companies set clear targets for reducing emissions and then track their progress towards those goals.

Plus, it's not just about keeping your scorecard clean. Carbon tracking is critical for telling the world and stakeholders how sustainable your business is. It's like showcasing your eco-credentials in a sustainability report, which is increasingly essential for building trust with customers, investors, and regulators alike.

Modern companies use carbon tracking software to manage their net-zero journey.

Key principles of carbon accounting

Understanding the fundamental principles of carbon accounting is like unlocking the secrets to mastering carbon tracking. First, it's all about knowing your emissions sources. You've got to identify every nook and cranny where carbon emissions are in your operations, whether from burning fuel in your factory or jet-setting for business meetings.

Next step: collecting data. Solid methods are needed to collect all the relevant information accurately. Just like in cooking, you need the right ingredients. That's where emission factors come in. They're like the recipe for calculating your carbon emissions.

Using the right emissions factors ensures your numbers are spot-on, giving you an accurate picture of your environmental impact. So, when it comes to carbon accounting, it's all about thoroughness, precision, and grounded in science to get it right.

Understanding emission scopes

Here is what you need to know to understand emission scopes:

Emission scope	Detail
Scope 1 emissions:	This encompasses direct emissions originating from sources owned or controlled by your company. Examples include the combustion of fuels in company vehicles, on-site boilers, and other facilities. Scope 1 emissions are within the immediate operational boundary of the organisation.
Scope 2 emissions:	These are indirect emissions stemming from the generation of purchased electricity, heat, or steam the company uses. While the company doesn't directly control the generation process, these emissions result from its consumption of externally supplied energy sources.
Scope 3 emissions:	Value chain emissions are all indirect emissions in the reporting company's upstream and downstream activities. They are associated with extracting and producing purchased materials, transporting purchased fuels, and customers’ use and disposal of sold products and services.
Scope 1 emissions:	This encompasses direct emissions originating from sources owned or controlled by your company. Examples include the combustion of fuels in company vehicles, on-site boilers, and other facilities. Scope 1 emissions are within the immediate operational boundary of the organisation.

Scopes 1, 2, 3 according to the GHG Protocol.Credit: Plan A — Scopes 1, 2, 3 according to the GHG Protocol.
Credit: Plan A

Why should all companies track their carbon emissions?

Here are the main reasons why all companies should track their carbon emissions:

Benefit	Explanation
Ethical and environmental imperatives	In an era where climate change poses an existential imperative, companies bear a moral duty to mitigate their impact. Implementing robust carbon management practices upholds ethical standards and is pivotal in mitigating climate change.
Societal expectations for sustainable practices	With a heightened societal consciousness towards environmental issues, consumers increasingly demand transparency from businesses regarding their ecological footprint. Companies can cultivate a positive brand image and foster lasting customer trust and loyalty here.
Consumer demand for sustainable practices	In response to evolving consumer preferences, there's a noticeable shift towards supporting businesses that exhibit environmental stewardship. Embracing carbon tracking and sustainability measures is a strategic imperative for companies seeking to remain relevant and competitive.
Regulatory requirements driving carbon tracking	As global awareness of environmental challenges grows, regulatory bodies enact more stringent mandates to address corporate carbon emissions. Compliance with these regulations necessitates adopting comprehensive carbon tracking systems, positioning companies to navigate regulatory complexities while demonstrating their commitment to environmental responsibility.
Benefits of carbon tracking for corporate reputation	Effectively managing carbon emissions isn't merely about meeting regulatory standards. It's about safeguarding and enhancing corporate reputation. Companies that proactively track their carbon footprint signal stakeholders their dedication to sustainability and attract positive attention from investors, customers, and potential talent.
Attracting investment through carbon tracking	[Environmental, social, and governance (ESG)](https://plana.earth/glossary/environment-social-governance-esg) considerations play a pivotal role in decision-making. Companies embracing carbon tracking and demonstrating a commitment to sustainability are perceived as less risky investments, appealing to investors seeking financial returns and positive environmental impact.
Improving competitive advantage through carbon tracking	Beyond regulatory compliance, carbon tracking offers tangible business benefits. By identifying areas for emissions reduction and resource efficiency, companies can streamline operations, cut costs, and gain a competitive edge in the market.

Remember that sustainability isn't just about doing what's right; it's about driving innovation and long-term profitability in a rapidly changing business landscape.

Best practices for successful carbon tracking

To effectively track and reduce carbon emissions, companies must implement best practices that ensure accurate measurement and management of their footprints. This involves calculating direct emissions with precision and engaging the entire supply chain to account for indirect emissions. By following these practices, businesses can develop strategies that enhance sustainability and improve operational efficiency.

Effective calculation of carbon emissions

Companies can follow a straightforward formula that accounts for fuel consumption and emission factors to calculate carbon emissions accurately.

Example of calculation for company vehicles:

To demonstrate the calculation of carbon emissions from company vehicles, let's consider the following formula:

CO₂ emissions (kg) = Fuel consumption (litres) x Emission factor (kg CO₂/liter)

Suppose a company operates a diesel-powered truck that consumes 1,000 litres of diesel fuel over a period. The emission factor for diesel is approximately 2.68 kg CO₂ per litre.

Using the formula, CO₂ emissions are 1,000 litres x 2.68 kg CO₂/litre, or 2,680 kg CO₂.

This calculation reveals that the truck emitted 2,680 kilograms of CO₂ during the measured period. The total emissions from the company's fleet can be determined by repeating this calculation for each vehicle. Then, companies can gain insights into their environmental impact and effectively develop strategies to reduce emissions.

Engaging the supply chain

Another best practice for successful carbon tracking is engaging the supply chain.

This step is crucial for tracking Scope 3 emissions, including all indirect emissions not covered in Scopes 1 and 2. Collaborating with suppliers remains crucial for companies with extensive supply chains to obtain accurate and thorough data.

Key challenge of supplier engagement

One of the primary challenges in supplier data collection is ensuring consistency and reliability across diverse sources. Standardised data collection and reporting tools can promote uniformity and streamline the process. Additionally, engaging suppliers through workshops and training sessions can enhance understanding and cooperation, ultimately facilitating more accurate emissions reporting.

Advancements in technology offer other promising solutions for tracking Scope 3 emissions. Carbon accounting platforms like Plan A provide a centralised system for collecting and analysing data from multiple suppliers. In contrast, with its immutable ledger system, blockchain technology promotes transparency and traceability throughout the supply chain, bolstering credibility in emissions reporting.

Carbon tracking has become essential for businesses aiming to stay competitive and meet growing environmental expectations. By systematically measuring and managing carbon emissions, companies can ensure compliance with regulations, build trust with consumers, and attract investment. Effective carbon tracking also offers a strategic advantage, enabling businesses to identify opportunities for cost savings and efficiency improvements. By adopting best practices, such as engaging the supply chain and accurately calculating emissions, companies can make informed decisions supporting sustainability and long-term profitability.