Short Answer
Start with the information you already have.
For most SMEs, measuring a carbon footprint doesn’t require sophisticated software or a large consulting project. Much of the information you need is already sitting in your accounting records, utility bills and operating systems.
The objective of your first carbon footprint should be to establish a credible baseline—not to achieve perfect precision.
The CFO’s Perspective
If I were starting this exercise as a CFO, my first question wouldn’t be “What carbon accounting software should we buy?”
It would be:
“Where are we already spending money on energy and fuel?”
Your general ledger can provide an excellent roadmap.
Look for expenditures on natural gas, electricity, gasoline, diesel, propane and other fuels. Then identify the physical quantities associated with those costs—kilowatt-hours of electricity, cubic metres of natural gas and litres of fuel.
Those quantities can then be converted into greenhouse gas emissions using recognized emission factors.
In other words, carbon accounting often begins with information Finance already understands.
Five Practical Steps
1. Choose a baseline period.
A recent 12-month fiscal or calendar year is usually a practical starting point.
2. Gather your energy information.
Collect electricity, natural gas and other utility bills for the period.
3. Identify fuel consumption.
Include company vehicles, equipment and other fuel-consuming operations.
4. Separate Scope 1 and Scope 2 emissions.
Fuel burned directly by your business generally falls under Scope 1, while purchased electricity is generally Scope 2.
5. Calculate your initial footprint.
Apply recognized emission factors to the quantities consumed and document your assumptions and sources.
Don’t worry if some information is missing. Record the gaps and improve the process the next time around.
What About Scope 3?
You’ll hear a great deal about Scope 3 emissions—those associated with activities such as purchased materials, transportation, business travel and your supply chain.
They’re important, but don’t let their complexity prevent you from getting started.
For many SMEs, establishing a solid understanding of Scope 1 and Scope 2 provides a manageable first step before determining which Scope 3 categories are most relevant to the business.
Bottom Line
Carbon accounting doesn’t have to begin as a complicated sustainability exercise.
Start with the data you already have, establish a credible baseline and improve it over time.
That’s not very different from how good financial reporting systems are built.
Ask the Carbon CFO
Have a question about measuring your company’s carbon footprint?
Submit it through The Carbon Trail, and it may become a future edition of Ask the Carbon CFO.