As businesses around the world seek to reduce their carbon footprint and meet their sustainability goals, choosing the right carbon accounting software has become more important than ever. With so many options available in the market, it can be challenging to determine which tool is the best fit for your organisation.
What are the absolute must-haves for an efficient carbon reporting tool?
To help you gain a better understanding of carbon accounting software, we'll explore the top five things to look for when you're evaluating your options. From scalability to audit-readiness, we'll cover the essential features that make for an efficient and effective carbon tool. Whether you're just starting your sustainability journey or looking to upgrade your existing software, we'll help you make an informed decision.
What is carbon accounting software?
Carbon accounting software is a tool that helps organisations measure, track, and report their carbon emissions. It collects data from various sources, such as:
- energy meters
- supplier invoices
- internal systems
- transportation logs
- and more
It then calculates the amount of carbon dioxide and other greenhouse gases (GHGs) that are released into the atmosphere from these sources.
The software helps organisations to identify their carbon footprint and develop strategies to reduce their impact on the environment. It also enables them to comply with carbon reporting regulations and communicate their sustainability efforts to stakeholders.
As pressure from legislators, investors, customers and other stakeholders grows around the topic of sustainability, carbon accounting software has become increasingly popular as more businesses seek to address their environmental impact and become more sustainable.
What are the benefits of using carbon accounting software for carbon reporting?
Investing in carbon accounting software will help your organisation achieve your sustainability goals, reduce costs, and enhance your reputation. How does it do this?
- It allows for accurate and reliable measurement of carbon emissions, providing a clear understanding of your organisation's carbon footprint. This data can help identify areas of high emissions, enabling targeted reductions and improved efficiency.
- It simplifies the carbon reporting process, automating calculations and data management, saving time and reducing the risk of errors.
- It helps ensure compliance with carbon regulations and standards, avoiding fines or reputational damage.
- It can improve stakeholder engagement by demonstrating a company's commitment to sustainability and providing transparency around their environmental impact.
A key point to remember is that software tools (as opposed to spreadsheets) empower organizations to do more with their data than just meet reporting requirements. The right software tools structure data so that it can also be mined for insights that inform efficiency improvements or even innovation opportunities. This data can also be used to generate metrics to inform internal and external stakeholders. Use cases can be as diverse as providing qualitative evidence of business performance improvements or internal benchmarking to invigorate initiatives designed to encourage behaviour change.
The five must-have features of carbon accounting software
There are dozens of options available in carbon accounting software and it can be challenging to know what features are must-haves for current and future needs. When you've got your options lined up, make sure they tick all five of these boxes:
1. Capturing source data
As companies go deeper and broader with their emission sources, especially for Scope 3 emissions, the number of data sources and the complexity of data collection increases. However, don’t fall into the trap of simplifying by forgoing source data (i.e. data collected directly from your supply chain) in favour of extrapolations or estimates based on financial spend.
Estimates can help with an early assessment of materiality but are insufficient for more detailed planning and carbon reduction efforts. For example – if benchmarking performance between comparable suppliers, an estimate based on financial spend using generic industry spend factors will only tell you which supplier is more cost efficient. You have no real basis for emission comparison and are blind to which supplier (for example) may be using fossil fuels or renewables.
The best software tools facilitate the collection of the necessary source information, ideally directly from the relevant parties and systems.
2. Flexible data input
To capture source data your system must be very flexible with regards to how it deals with incoming data. The challenge companies face is that there is not a set standard for carbon data, let alone agreement on file types. As a result, data comes through as a mix invoices, meter readings, exports from internal system, or supplier provided CSV files.
To solve this, some systems require data in fixed templates. However, this typically increases the administrative burden with time spent manually coping data across, introduces the risk of errors, and is less transparent during an audit.
We recommend systems that support a variety of data collection technique that can adapt to multiple file types and formats. Data collection options should include spreadsheets, surveys, manual entry, and direct system integrations.
3. Workflow management
It is common for financial systems to enforce a workflow aligned with key tasks and user roles. For example, your bookkeeper may load a bill, which is picked up by an internal manager for approval, then someone on the finance team makes payment and reconciles against cash.
Similarly, the best carbon management tools enforce these internal controls around data collection and for annual reviews. This helps keep the team on track, reduces the potential for errors, and helps create a data trail that can be referenced during audit. Software without a workflow is only marginally better than a spreadsheet.
4. Centralised knowledge
The sustainability manager is working hard to gather information from across the business, reaching out to suppliers and various stakeholders to keep data flowing in an orderly fashion. But what would you do if this person were to unexpectedly leave the business?
Excel has been a commonly used carbon accounting tool. The problem with Excel and many software solutions are that they don’t inherently allow for corporate knowledge; there’s no documentation around policies and procedures. The methodology behind the collection, analysis and reporting of emissions data must be recorded in full and in context or the business will be at risk should the internal expert(s) move on.
Look for a system that enables recording processes and methods of data collection as well as the ability to capture notes alongside incoming data.
Finally, you want a solution that is able to meet audit requirements, such as version control, data traceability, and compliance with relevant standards. Auditors should be able to easily verify the accuracy and reliability of the emissions data, ensuring that it's valid and trustworthy.
Additionally, audit-ready software provides a clear audit trail, making it easier to trace emissions data back to the source and identify any discrepancies or errors.
Auditors are Users whose role should have been considered in the design process. A simple way to check is to ask if there is a clearly defined User role for audit or assurance. Also ask to see the software from an Auditor’s perspective. There should be reports, extracts, and other documentation which show the software has clearly supports this function.
If you're serious about reducing your organisation's GHGs and planning for continual carbon emission reductions, you can see how carbon accounting software is a vital tool. When evaluating carbon accounting software options, always keep these five essential features in mind:
- Capturing source data
- Flexible data input
- Workflow management
- Centralised knowledge
If the solution you eventually choose has all five of these features, you're on your way to effectively measuring, managing, and reducing your organisation's GHGs to keep it on track for Net Zero and contributing to a more sustainable future.
Our carbon accounting software, CSR, is rigorous, reliable, and audit ready. Book a demo to see it in action.