Is your data ready for accurate carbon management?
Financial accounting has clear rules and standards. With the rise of carbon accounting regulations and auditing requirements, companies should approach carbon accounting with the same rigour as financial reporting. The process starts with having your data in order.
This article, contributed to by Emitwise’s Carbon Accounting Analyst, Michelle Steiner, will cover the importance of data collection, sourcing and formatting for streamlined carbon management. But first, let’s explore what information you need for an accurate carbon inventory in the first place.
What carbon data do you need to calculate your carbon footprint?
The data needed to measure carbon footprints is often readily available to companies. However, gaps in the easy-to-access information will need to be filled with secondary or modelled data.
While organisations can collect how much they spend on various goods and services, primary data can also be collected for all operational activities arising in owned or leased facilities and throughout the value chain.
Here are examples of primary data that can be sourced for several Greenhouse Gas Protocol emission categories:
- Stationary combustion: Units of fuel consumed in boilers or furnaces you own.
- Mobile combustion: Units of fuel consumed or distance travelled by company-owned vehicles.
- Fugitive emissions: Quantities of refrigerants topped up in your HVAC equipment.
- Purchased electricity, steam, heat and cooling: Units of energy purchased from third parties, percentage of renewables and supplier tariff names.
- Purchased goods and services: Amount spent on procurement and the weight of units purchased.
- Waste generated in operations: Weight of waste generated and the waste disposal routes (landfill, incineration, recycling).
- Business travel: Miles or KMs travelled by rail, air, or road with the origin and destination locations indicated.
- Downstream transportation & distribution: Distance travelled between production sites and customer facilities.
- Use of sold products: Product’s expected lifetime, energy consumption throughout its lifetime and usage data.
- End-of-life treatment of sold products: Distance travelled by products to end-of-life sites and the waste disposal method.
Where you can source this data from?
A good first step for individuals managing data collection processes is to map where the data can be sourced from and which individuals should be responsible for collecting it.
This internal mapping will enable an organisation to identify data gaps early and ensure stakeholders are accountable for data cleanliness and availability.
Due to the all-encompassing nature of carbon management across a company and its supply chain, data can be found in a range of systems and sourced from various stakeholders:
|Scopes 1 & 2||– Landlords|
– Facility Managers
– Office Managers
– HVAC Contractors
– Financial controllers
|– Meter Readings|
– Fleet, building and energy management tools
|Scope 3||– Procurement Managers|
– Finance Managers
– Logistic Partners
|– Purchase Orders|
– Accounting Software
– ERP systems
– Customer surveys
How does data readiness correlate to the calculation methodology?
The data quality will significantly influence the emission calculation methodologies an organisation can leverage.
A spend-based approach will be leveraged if only monetary values for goods and services can be collected. This high-level approach to measuring emissions will enable you to identify carbon hotspots but will limit the analysis when determining decarbonisation levers.
As monetary values are completed with product unit and weight data, organisations can benefit from the average data method. More granular emission factors will be selected in the emission assessment enabling firms to benefit from emissions data specific to their company purchases.
Scope 1 & 2
While data can be sourced on how much a company spends on electricity or fuel, efforts should be made to collect quantitative data on kWh consumed or KMs driven. A spend-based approach will be limited for calculating emissions from a company’s operations as the cost of energy and fuels can significantly vary throughout the year and not represent the actual emissions arising.
The quality of data collected from the value chain will vary depending on the maturity of a company’s sustainability journey. While spend values will help identify emissions hotspots, organisations should leverage physical unit data for procurement, waste, business travel and other upstream & downstream sources of emissions. The accuracy can be complemented with data from suppliers and customer surveys.
How do LCAs, supplier and product-level emission factors fit into the equation?
As we have seen, leveraging physical unit data improves the accuracy of your emissions assessment, as emissions can be calculated at a product level.
To further enhance its data foundations, organisations can complement their systemised data collection practices by providing life-cycle assessments (LCAs) and supplier-level emission factors.
LCAs are the analysis of the environmental impact generated by products or services from the first stages of material sourcing and production to their disposal and the end of life treatment.
These studies are particularly relevant for companies with products contributing to a significant share of their total emissions, allowing for a more specific emissions assessment.
Companies can also source emission factors from suppliers who have undertaken LCA studies for their products and services. Equipped with this data, procurement decisions are simplified when searching for the lowest-emissions providers.
However, those wishing to provide LCAs and supplier-specific emission factors should ensure they are frequently updated as manufacturing practices change every year, resulting in quickly outdated studies.
Additionally, companies enhancing their data foundations in such a way should request and provide the methodology underpinning the calculations of LCAs and emission factors. This evidence will facilitate the auditing process and ensure you can be transparent with your carbon reporting, similar to how finance teams prepare balance sheets that are easily understandable to senior leadership and shareholders.
How should you best format the data?
The sustainability leaders we work with structure their data consistently across financial and calendar years. This will ensure that data collection processes are repeatable, freeing time for sustainability teams to focus on analysis and project implementation.
Having consistent data across reporting periods also enables sustainability teams to analyse the year-on-year change in emissions for their product lines and facilities, just as a finance team would compare the gross margin of their products across quarters and financial years.
Manual data collection and transformation processes should be automated. Your teams can save valuable time when they do not have to sort PDFs, collect invoices or read meters.
Centralising your company’s activity data in data management systems will enable teams to pull data in a tabular format for carbon accounting and other data analysis projects.
Before structuring the data in a tabular format, a company should determine how they want to report its greenhouse gas emissions. If the desired reporting outcome maps emissions to specific facilities, business units or product lines, data points should be linked to these fields.
If a company is looking to manage carbon across its supply chain more effectively, mapping procurement data to the below categories could be beneficial.
- The facilities purchasing goods and services
- The purchase date
- The spend value and its currency
- The number of physical goods purchased or their weight
- The name of the supplier
- The description of the purchase
By collecting more data, a company can benefit from granular emissions results as the data points are leveraged to select emission factors pertinent to the supply chain activity.
Formatting data to suit your company’s reporting needs will help ensure it is used regularly to influence decision-making. It’s worth asking stakeholders outside sustainability teams how they would benefit from mapping it a certain way, thereby democratising carbon management across the company.
How can data collection be streamlined?
Accurately measuring greenhouse gas emissions and proactively working to reduce them requires organisations to collect the right data seamlessly.
A streamlined data collection process is made possible for organisations that diligently map activity data from their operations and supply chain to quantity or cost metrics in their data management systems.
- For operations: Mapping the type, quantity and cost of fuels to a specific company-owned vehicle.
- For supply chains: Mapping the cost, quantity, supplier and description of materials procured.
Those who have undergone a digital transformation process will significantly benefit from streamlining data collection from the various systems controlling operational and supply chain data.
Beyond having good foundations for data management, companies can reduce the time spent on data collection with managerial and technical solutions.
- Accountability: Individuals outside sustainability teams should be empowered and accountable for managing data collection systems. Buy-in can be created when the strategic importance of data collection projects is communicated to employees. There are many wider business benefits from carbon management that make that argument more compelling.
- Alignment: Data collection processes should be tailored to a company’s business strategy. By working backwards from the wider business goals, leaders should ensure that the collected data inputs will enable an analysis pertinent to the company’s strategy.
What to look for in a technical solution to support good data practice
- Exports: Technical teams can set up quarterly or monthly exports from data management systems. For example, an organisation looking to measure its business travel emissions can set up a monthly export of business travel data from SAP Concur. With the correct data structure initially set up, it will reduce the time spent collecting data in future periods.
- Integrations: By setting up connections between data management and data collection systems such as Emitwise Collect, data flows seamlessly across organisations. This continuous data provision enables companies to measure their emissions more frequently. By doing so, your organisation can be more proactive with its carbon management rather than being reactive to emissions data provided annually.
- Multi-user access: There’s no need for sustainability teams to be a conduit for every piece of data. In fact, a good system should let you set what data is needed and from where alongside the ability to track collection progress. To do that, multiple stakeholders will need to access the software.
Companies with a grip on their financial data can find opportunities to reduce costs and can easily be audited by third parties. The same can be said for companies proactively working to improve the quality of their carbon accounting data.
Data readiness is significantly correlated with a company’s ability to accurately measure its greenhouse gas emissions and take action to reduce them.
Having data collection systems and processes set up will streamline data collection and empower your employees to contribute to your Net Zero journey.