Carbon accounting software is a specialized platform that helps businesses track, calculate, and manage their greenhouse gas emissions and carbon footprint, facilitating environmental reporting, sustainability goals, and compliance with emissions regulations. It streamlines data collection, analysis, and reporting to promote transparency and enhance investor confidence.
As the climate crisis accelerates and we transition from a voluntary to a regulated reporting landscape, manual carbon accounting is no longer a viable option. Demand has grown for a digitized solution for accurate and reliable emissions disclosure.
The good news is that many organizations around the world already report carbon data; The bad news is they do it in so many disparate ways that it makes a comparison between companies exceptionally difficult.
The marketplace has made great strides recently towards standardization to streamline the reporting of carbon emissions and mitigate the very real financial risks associated with its management. But a critical first step is establishing a fundamental understanding of what carbon accounting software is today - an accessible solution to the many carbon reporting issues we currently face. So, let's break it down:
What is carbon accounting software?
At a high level, carbon accounting software is designed to help organizations manage and quantify their carbon emissions. With the right accounting solution, companies can accurately track emissions data and collect the necessary information to begin strategically reducing or completely eliminating carbon emissions. (also known as decarbonization).
To add context to the relatively new industry of carbon accounting software, we need to distinguish between a carbon accounting vs. an ESG (Environmental, Social, and Governance) solution.
Carbon accounting software is based on the Greenhouse Gas Protocol (GHGP). Additionally, the term “carbon” is used as an umbrella term, as deemed by the GHGP, to account for many types of emissions, including:
- Nitrous oxide
- Hexafluoride, etc.
Companies that invest in audit-ready carbon accounting software are better equipped to collect and manage their data, disclose their carbon footprints to relevant stakeholders, apply business analytics for decarbonization strategies and establish Science-based Targets (SBTi), and manage ongoing compliance-related and supply chain issues.
What features to look for in carbon accounting software
The right features can make or break a carbon accounting solution. Emissions regulation is a nuanced undertaking for any organization attempting to manage its carbon footprint responsibly, and that’s often determined by many factors, including different regional guidelines.
Accurate vetting carbon accounting software relies on knowing what features/assets to look for. Below, we list some of the most important aspects to think through as you make a purchasing decision:
Unified auditing: A workflow that streamlines the carbon management and sustainability reporting process is a must. Consider how automated or prone to manipulation a vendor's calculation process is and its auditing methodologies.
Sustainability market experience: Due to the ever-evolving landscape emissions accounting can be, industry track record matters. Relevant industry experience, know-how, and a long-term approach to sustainable solutions shouldn’t be overlooked as part of a holistic list of purchasing criteria, particularly as it is often baked into solutions and product roadmaps.
Relevant industry partnerships: A list of carbon accounting solutions alone isn’t enough. Consider vetting a provider’s ecosystem of industry partnerships. It’s a strong indicator of industry knowledge, current and future support capability, and the ability to cater to current and future climate change and emissions needs.
Reporting and analytics: Emissions data, benchmark reporting, or energy consumption rates form a critical part of the reporting and analytics features any carbon accounting software should offer. This way, organizations can establish frameworks that work toward carbon reduction and garner results.
Personalized support: As mentioned previously, software features alone are hardly enough for organizations to reach emissions milestones and mitigate expenditures. A worthy carbon accounting solution will provide personalized advice and real-time support according to industry, region, and other specifications influenced by regional guidelines.
The 10 best carbon accounting software of 2023
As the carbon accounting space evolves, so does its list of vendors. Here’s our current list of the top ten in the space.
Persefoni, a leading carbon accounting platform for climate disclosure, is recognized by Forrester as a leader in carbon accounting and sustainability software. With a commitment to accuracy, transparency, and efficiency, Persefoni simplifies carbon footprint calculations through its GHGP- and PCAF-aligned Calculation Engine, covering scopes 1, 2, and 3. The platform integrates emission factors and collaboration tools, ensuring transparency via its Carbon Activity Ledger and utilizing AI for error and anomaly detection.
Persefoni’s Sustainability Advisory Board comprises global industry leaders involved in outlining disclosure standards, including the Founding Chairman of SASB, a Secretariat of the TCFD, and key participants in PCAF, the EU, and other organizations around the world driving change. As carbon accounting software, Persefoni serves both enterprise and SMB markets in an effort to democratize access to emissions control with a standardized approach and streamline Scope 3 data collection/management/analysis.
Moreover, Persefoni boasts strategic relationships with global industry leaders, including, but not limited to:
Persefoni is proven scalable, boasts enterprise-grade support, and is built to uphold the transparency and accountability practices many Fortune 500 organizations use to their advantage.
2. Microsoft Sustainability Cloud
Microsoft's Sustainability Cloud, set to be released on June 1, is an extension of Microsoft's long-held dedication to sustainable endeavors. It will allow companies to record, report, and reduce their environmental impact with Microsoft's Sustainability Manager upon its release. Microsoft says it will allow customers to amplify progress and transform business through environmental, social, and governance (ESG) capabilities.
Microsoft's Sustainability Cloud already has a series of heavy-hitting partnerships. The Sustainability Cloud interprets data from the whole spectrum of ESG, which may damage the granularity of its carbon accounting data and subsequent insights it may be able to provide. It may lend itself more to the mid-market/SMB customer, but it is too early to tell.
3. Net Zero Cloud by Salesforce
Net Zero Cloud showcases Salesforce CEO Marc Benioff's longtime commitment to addressing climate change. It's an emissions accounting product built on Salesforce's automation, language support, and integration features. While this can be a strength and lend itself to useful emissions reporting features, it also comes with limitations due to its reliance on its existing data schema, which wasn't built for accounting.
Net Zero Cloud does come with a robust list of partners like Accenture and several others in the enterprise space. While there have been mixed reports on the overall scalability of the tool, its dashboard functionality is solid.
4. IBM Environmental Intelligence Suite
IBM’s acquisition of Envizi comes together to form the IBM Environmental Intelligence Suite as mostly legacy software aimed at managing swaths of data. As an emissions management solution, it offers basic climate risk analytics with the help of IBM AI capabilities.
A large part of IBM’s offering is focused on risk analysis and response efforts. Its features help organizations monitor disruptive climate conditions as it aims to operationalize carbon accounting.
As ESG performance and risk management software, Sphera approaches emissions management through an integration lens focused on safety and liability reduction. It’s in the business of elevating organizational safety as a way to build trust and a positive environmental reputation.
Sphera seeks to eliminate information silos by centralizing reporting, data, and management tools for teams to work on safety and sustainability efforts. Sphera is part of The Blackstone Group and leverages its earlier acquisition of thinkstep in 2019.
6. Sinai Technologies
Sinai Technologies emphasizes decarbonization through its modeling and planning capabilities. Its customers can reduce emissions to meet milestones and harness growth while controlling greenhouse gas output.
Whether organizations opt for a solution like Sinai Technologies depends largely on the number of resources they’re willing to invest. Its suite of tools and functionalities may not be as accessible as other alternatives. Yet its limited features might not be a relevant downside if organizations are already invested in a decarbonization-led approach.
Managing carbon emissions across supply chains and arriving at a net zero carbon world is no small feat. Yet it’s Emitwise’s North Star in its approach to carbon accounting. Much like other competitors in the space, Emitwise offers a centralized data management solution for teams to get a handle on their carbon agenda.
Emitwise is not as well funded as many of the other vendors in this space, and one of the top five things you should consider when investing in enterprise software. It is also smaller in terms of staff and lacks the breadth of partnerships that Persefoni and other vendors have.
Greenly, headquartered in France, focuses on carbon-tracking solutions for SMBs. It automates and integrates data analysis with third-party solutions to enable clients to reduce their GHG emissions.
However, Greenly doesn’t win as many points for enterprise-grade accounting needs, as its limited scalability caters primarily to a European audience. Nevertheless, it equips SMBs with the ability to calculate emissions across scopes 1, 2, and 3 and offers climate expert support upon request.
With roots in New Zealand and founded in 1994, U.S.-based Diligent is a governance, risk, and compliance software company designed for executives, non-profits, and governments. It acquired the legacy Limerick, Ireland-based ESG vendor Accuvio in August 2021. Originating in 2009, Accuvio was a broad ESG with less than a handful of employees.
Diligent and Accuvio aim to strengthen governance by streamlining the connection between risk, compliance, cost savings, and auditing from a single platform. It also provides "climate leadership certification", sustainability and ESG reporting, and compliance management tools. However, for some organizations, it may leave much to be desired where carbon emissions calculations and performance monitoring are concerned.
Yet another software solution that’s entered the market rather recently, Sweep is a carbon emissions management tool that’s built with an emphasis on collaborative features. That is, it focuses on equipping teams with the ability to track and assign tasks while they visualize key data in one centralized system.
However, depending on your needs, Sweep falls short in the key management features that matter, namely sustainability experience, advanced reporting, and the ability to scale. Yet, for a business needing accessible greenhouse gas emissions management with sensible pricing, Sweep may be a viable option.
Carbon accounting software: Beyond the basics
Carbon emissions control is an ongoing issue that current and future organizations must consider as part of their bottom line. As regulations change and reduction targets grow stringent in an effort to mitigate climate change, end-to-end emissions accounting systems now form an integral part of a data-driven solution for growth-oriented organizations.
This is where the number one climate disclosure and carbon management solution comes in as an all-in-one solution to your sustainability data needs.
Frequently Asked Questions (FAQs)
How do I choose a carbon accounting software?
When choosing carbon accounting software, prioritize solutions that provide audit-grade data, automate data collection, and offer investor-grade disclosures to meet reporting requirements and enhance transparency for stakeholders. These features ensure reliable emissions tracking, streamline processes, and facilitate credible communication with investors and other stakeholders.
What is a carbon accounting tool?
A carbon accounting tool is a software application or platform designed to measure, track, and manage an organization's carbon emissions and environmental impacts. It helps businesses and institutions calculate their greenhouse gas emissions, often using data from various sources such as energy consumption, transportation, and production processes. The tool provides insights and reports to support sustainability efforts, set emission reduction targets, and comply with environmental regulations.
What is the most widely used carbon accounting method?
The Greenhouse Gas Protocol is considered the most widely used carbon accounting method globally. It sets the standard for companies to measure, manage, and report their greenhouse gas emissions. With its comprehensive framework, the Greenhouse Gas Protocol provides a robust foundation for organizations looking to track and reduce their carbon footprint efficiently.
How much does carbon accounting cost?
The cost of carbon accounting can vary depending on the size of the organization, the complexity of its operations, the chosen software or service provider, and the level of detail required in the analysis. It can range from a few thousand to tens of thousands of dollars per year for smaller businesses, while larger corporations may incur higher costs.
What is an example of carbon accounting?
An example of carbon accounting is a manufacturing company using a carbon accounting tool to track its greenhouse gas emissions from various sources, such as energy usage, transportation, and production processes. The company analyzes the data to identify emission hotspots, set reduction targets, and generate reports to communicate its environmental performance to stakeholders.
Is carbon accounting the same as financial accounting?
Yes and No. Carbon accounting focuses on measuring and reporting greenhouse gas emissions and environmental impacts of an organization's activities, while financial accounting deals with recording and reporting financial transactions, income, expenses, and profits of a business. Both types of accounting serve different purposes and use different methodologies and frameworks. However, carbon accounting should be treated with the same rigor as financial accounting, ensuring that businesses report decision-useful data to investors and stakeholders , enabling them to assess their climate-related risks and opportunities.