More and more companies are making net-zero or carbon-neutral pledges. But behind the headline-grabbing figures is a lot of complex data. Tracking emissions across business lines, suppliers and products, then reporting against various frameworks and regulations, might take a team armed only with spreadsheets months.
It is therefore little surprise that cash is pouring into tech solutions. Carbon accounting platforms attracted a record $970m (£774.5m) of investment in 2022, according to Sifted. Greenly, EcoVadis, Supercritical, Persefoni, Watershed and Plan A are among the best-known.
What is carbon accounting software?
Most software promises a streamlined, cloud-based way to calculate the carbon footprint of an organisation, product or supply chain. Mauro Cozzi, CEO of Emitwise, describes his company’s tool as providing “everything a sustainability manager would have been doing already in Excel or pivot tables in an easy-to-use platform, but with increased repeatability and without human error.”
The benefits, according to vendors, include faster accounting and reporting, clear audit trails and lower costs than bringing in consultants.
However, Hugo Kimber, CEO of carbon advisory firm Carbon Responsible, advises caution, saying many of these platforms are new and untested. “A lot of people have decided that climate tech is the next big thing,” he says. “There’s probably a lot less substance than there is noise in this market at the moment.”
For companies trying to deal with pressure from investors, avoid accusations of greenwashing and anticipate moves from regulators, the cost of getting carbon tracking wrong could be steep. How do you tell which tool is worth investing in?
Does every business need a carbon accounting platform?
First, consider if your firm actually needs one. “I only recommend SaaS tools to businesses that are multi-sited and have divisions that are spread geographically or are multi-jurisdictional,” says Mark Lumsdon-Taylor, a partner and ESG specialist at accountancy firm MHA. “If you’re just based in the UK with a single central facility, why invest so much money?”
There isn’t a one-size-fits-all for how you report your carbon emissions
Several providers, though, do target SMEs on a budget. While most are tight-lipped about fees, the cheapest start from around £300 per month.
If you are committed, there are several factors to consider. Most software should offer the same basic functionality: a way for users to enter or upload data, view it on dashboards and produce summary reports. However, what exactly is measured and how might vary widely.
“What a lot of organisations who don’t work sector agnostically don’t realise is that there isn’t a one-size-fits-all for how you report your carbon emissions,” says Ellen Salter, sustainability director at consultancy thinkBeyond.
For instance, construction firms must calculate the lifecycle carbon cost of specific buildings, while manufacturing businesses prioritise reporting by supplier. Companies might also want the flexibility to count up emissions by year, site or Greenhouse Gas Protocol Scope, and to report against a variety of international frameworks.
The need for sector-specific carbon accounting
A number of consultancies and enterprise software providers – including PwC, IBM, Salesforce and Microsoft – offer carbon tracking solutions that can be customised to your business. A more budget-friendly option might be adopting a sector-specific tool, such as CarbonCloud, which works with food and drink companies, or Trace, which targets the events industry.
George Roffey, chief sustainability officer at Centrus, is choosing a carbon accounting platform. He says the most impressive options have not just had experience in his firm’s sector but can also advise on forthcoming changes in regulation that might affect it.
In either case, the accounting method should be audit-grade and include a way to export data to avoid being locked into one tool. You should also consider how it will integrate with existing applications, such as broader ESG trackers or financial accounting software.
How transparent are carbon accounting tools?
Transparency is also vital. Vendors must provide details of any models, methods or data sets used to calculate your carbon emissions. That includes estimates, such as the ‘average’ energy use of an employee who works from home, which should be clearly labelled within the platform.
If you put rubbish in, you’re invariably going to get rubbish out the other end
Many platforms tout not just tracking capabilities but also the ability to visualise and manipulate data to make more informed decisions. Salter says her clients often find this invaluable to get senior leadership buy-in for sustainability decisions. “Carbon accounting, like climate change, is a very theoretical concept for a lot of people. Unless they can see it visually, they can find it very difficult to buy into the practical realities.”
She adds that a “solid” carbon accounting tool should give “the support and the ability to be able to manipulate the data to understand the ‘why’ behind it rather than the ‘what’ – which a lot of tools don’t actually do.”
For instance, rather than simply seeing that a particular site has high emissions, users should be able to explore the factors behind it in greater detail. More advanced platforms will also let users experiment with different variables – such as water use or transport methods – to see how they could affect the organisation’s overall footprint.
Should tools include carbon offsetting and reduction?
Experts urge caution about tools that claim to provide detailed guidelines on reducing emissions. Specialist advice is likely still needed to produce useful, tailored insight. Kimber says there should always be a human being behind a sustainability strategy so that firms are “not just left with some shiny portal that they shovel a whole load of data into and then a report comes spinning out of the back of it”.
Be more careful still when a provider offers carbon offsetting. Not only have the usefulness of such schemes been questioned but bundling such a service with a carbon accounting platform might incentivise providers to inflate emissions.
Finally, good carbon accounting vendors should provide training or upskilling for anyone who will use the platform. While many claim to be plug-and-play, users must know exactly what, why and when to enter data.
As Lumsdon-Taylor notes: “If you put rubbish in, you’re invariably going to get rubbish out the other end.”
