How to choose the best carbon accounting software for your business

Published on
February 16, 2022
Carbon Accounting
How to choose the best carbon accounting software for your business

Looking for the best carbon accounting software? Before researching the options, you need to be clear about your business’s needs. Use our checklist to make sure you focus on the most important features for your company.

What is carbon accounting software?

As the world transitions to a net-zero economy, carbon accounting is becoming an essential practice—for businesses, the finance sector, and government bodies. Carbon accounting is the process of measuring all the greenhouse gas (GHG) emissions produced by a company, typically calculated as carbon dioxide equivalent (CO2e).

Software helps, and the best carbon accounting platforms can save companies significant time and resource in doing their calculations.

The checklist for carbon accounting software

There’s now a range of carbon accounting software available to help businesses. But quality varies and different features bring different kinds of benefits. Some features are more important than others, depending on your business’s needs and your reasons for calculating emissions.

We’ve put together a checklist to help you navigate which features to look for and what to ask in a product demo:

1. Check your reporting or target-setting requirements

Are you reporting your emissions to a stakeholder or a disclosure platform, or setting targets through a third party body?

Look at their requirements. Check whether you need an overall carbon footprint or a complete itemized emissions inventory. They will likely have a list of methodologies that they’ll accept, and instructions about how the data is itemized and categorized. Gather all these details so you can shortlist software that will help you comply.

If you don’t have external requirements, then follow our best practice tips for each factor below.

2. Which scopes?

Carbon accounting software can cover different emissions scopes.

Decide whether you need to calculate your direct operational emissions (Scope 1), emissions from purchased energy and electricity (Scope 2), indirect emissions in your upstream and downstream supply chain (Scope 3), or all three.

The answer may depend on your external reporting or target-setting requirements, but you should also consider where most of your emissions—and therefore your carbon-related risks—are likely to come from.

For most large companies, Scope 3 will be the biggest source of emissions by far. Tackling Scope 3 is essential, especially for companies and financiers in the most carbon-intensive value chains (oil and gas, metals and mining, agriculture, logistics).

3. How accurate?

In carbon accounting software, there can be trade-offs between speed, completeness, and accuracy. This is especially true with Scope 3 calculations. Getting accurate emissions data for the entire supply chain from end to end is extremely challenging.

Broad-based methods and estimates based on product, spend or revenue carry high risks of inaccuracy. But they’re easier and usually faster to calculate, so they’re commonly used by software providers whose main focus is Scopes 1 and 2. Those methods might give you an initial understanding of how Scope 3 contributes to your overall carbon footprint and indicate whether your science-based target needs to include your supply chain.

However, scrutiny on inaccurate emissions reporting increases year by year. If you’re serious about understanding and tackling the black boxes of carbon risk that might be hidden in your supply chains, then ensure the software you choose uses accurate activity-based methods and primary data sources for Scope 3 carbon accounting, wherever possible.

4. A one-off snapshot or ongoing tracking?

Do you need a one-off carbon emissions report (perhaps to benchmark your company’s performance or fulfil a specific request), or do you need to track emissions over time?

Ongoing carbon accounting helps companies measure progress against targets, evaluate sourcing and offsetting strategies, and report regularly. If this is what you’re looking for, think about how frequently you need an update; for example:

  • Do you have quarterly or annual reporting requirements?
  • How often do you review your procurement contracts?
  • Do you need constant, real-time tracking?

If you know you need a one-off report now, but you’re not yet sure about your longer-term carbon accounting plan, then choose software that offers both options. This will avoid the burden of setting up and integration with a new platform for when you decide to continue tracking your emissions.

5. Retrospective or forward-looking?

Most reporting frameworks ask for retrospective emissions inventories for the previous calendar or financial year. But if you want insights to inform immediate decisions as well as long-term strategies, you need forward-looking reports or real-time tracking (or near real-time, given current available technologies).

Knowing your estimated emissions in advance lets you quantify the associated regulatory, financial, or reputational impacts. And live tracking allows you to make time-sensitive decisions (for example, a logistics operator might swap a high-emitting vessel for a low-carbon one before a consignment gets underway).

6. Friendly formats and painless platforms?

Check the details about the technology and whether you’ll get your carbon report in a helpful format:

  • Does the software provide useful data visualizations, snapshots and summaries?
  • Can you export the data in different formats?
  • Is the platform cloud-based and cost-effective, or do you need to install and maintain clunky on-premise software?

Most companies will need access to clear quick summaries (to understand immediate areas of risk and opportunity) as well as itemized granular data (for transparency and auditing, and to take targeted action).

7. Benchmarks and ratings

To understand how your business’s carbon footprint compares to peers and competitors, look for carbon accounting software that benchmarks your CO2e output against industry averages. To make reducing your emissions and tracking progress easier, find software that rates products, assets, and suppliers, so you can compare options and work to improve your rating over time.

8. Integration and automation

Ask yourself:

  • Who will use the software internally?
  • Do you need your customers, purchasers, or financiers to access it?
  • What format is your raw data in?

Ensure the software can easily fit into your workflow and that there aren’t any unnecessary burdens on your teams. Consider whether you need a fully automated technical integration with your systems and data sources, or whether a semi-automated process is sufficient (for example, are you willing to do a one-click manual data dump as long as the remaining calculation process is fast and automatic?).

9. Certification and auditing

Just like financial accounts, carbon accounting should be auditable and verifiable. Reports need to be trusted by stakeholders and to survive greenwashing scrutiny. The software provider should use transparent methodologies, independent databases, and be able to give your emissions reports third-party certification.

10. Are you thinking long-term?

In 2022, there’s no doubt that carbon management needs to be part of any business strategy—from SMEs to multinationals. Examine your long-term as well as short-term needs. Check which legislative changes to expect in your—and your suppliers'—industry and geography (for example, mandatory disclosure, carbon pricing, and the EU Carbon Border Adjustment Mechanism).

With more regulation comes more risk, and a greater need for accuracy and comprehensive accounting across all scopes. Ensure your chosen software will help you get ahead of legislation. The more thorough and accurate your carbon accounting now, the better you can quantify and address the risks trickling down your supply chain.

11. Use the free demo wisely

Does the software provider offer a free demo? This is a great opportunity to dive into the features and get information that’s not available in marketing materials. Use the opportunity to understand the people behind the technology:

  • Do they understand your industry and its workflows? Can they give you any case studies?
  • Are there any new features they’re working on? How have they responded to customer feedback in the past?

Use the time to ensure this is a credible team that will give you the customer support you need.

You should now be ready to choose the best carbon accounting software for your business.

Are you in the commodities industry or a trade finance provider? CarbonChain can help you manage emissions, tackle risks, and stay resilient in the net-zero transition.

Take control of your net-zero transition with CarbonChain

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David Stefan
Written by
David Stefan
Head of Engineering

Need help measuring your Scope 3 emissions for your reporting? Get in touch with CarbonChain today.

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