Carbon Accounting

Carbon accounting is an accounting method to count, inventory, track, and report your organization's greenhouse gas (GHG) emissions. This is also known as your carbon footprint. For most companies, the established, global accounting unit for carbon is the greenhouse gas carbon dioxide (CO2), and "carbon equivalents" (CO2e or CO2eq), the sum of carbon plus other emissions like methane converted into carbon.

Carbon accounting, often synonymous with greenhouse gas (GHG) accounting, is a vital technique utilized by analysts and management teams to quantify an organization’s carbon emissions.

Distinguishing between direct and indirect emissions, it involves assessing various activities such as energy consumption, transportation, and manufacturing processes.

With regulatory bodies mandating emissions disclosure, accurate carbon accounting is crucial for compliance and transparency.

Any effective system of greenhouse gas (GHG) accounting needs to measure each company’s supply-chain carbon impacts accurately, providing visibility and incentives for it to make more climate-friendly product-specification and purchasing decisions. The authors’ recent HBR article, “Accounting for Climate Change” (Nov-Dec 2021), noted how the current dominant system for carbon accounting, the GHG Protocol, misses this critical point by allowing companies to guestimate upstream and downstream emissions.