An Introduction

Climate disclosure and carbon accounting are new concepts for a lot of companies.

As pressure grows from climate information users to report on ESG metrics, companies and organizations are increasing their disclosure of climate data.

Terms to Know

Greenhouse Gas (GHG)

Greenhouse gasses (also known as GHGs) are gasses in the Earth's atmosphere that trap heat and warm the planet.

Carbon Footprint

Also known as a GHG inventory, a carbon footprint is the estimated quantity of greenhouse gasses emitted into the atmosphere by a company or entity. It is expressed in terms of carbon dioxide equivalent, or CO₂e.

ESG Metrics

Environmental, social, and governance (ESG) metrics are central factors in measuring the sustainability and ethical impact of a company. ESG covers a broad and expanding range of topics. Several terms are used interchangeably for ESG:

• Sustainability
• Corporate responsibility
• Corporate social responsibility

Climate Information Users

• End Users: Investors and other stakeholders such as the general public, senior executives, employees, customers, governments, and suppliers will consume and analyze disclosure information to make informed decisions.
  
• Regulators: Regulators are increasingly interested in sustainability information, with some moving to mandate it in accordance with standards and others using the information for regulatory purposes.

Climate Data Disclosure

Companies, cities, and financial institutions are increasing their publication of data, such as their greenhouse gas (GHG) emissions (their carbon footprint) and other metrics through voluntary, financial, and regulatory reporting.

‍IN SUMMARY

The demand for carbon accounting is coming from the information user. They're asking for extensive and transparent climate disclosure. Companies and organizations must now meet these expectations and provide more granular and accurate climate disclosures that are in line with the relevant standards and frameworks.

An Overview of Carbon Accounting

As knowledge of climate change has grown, so has the need for a means to calculate, analyze, measure, and report an organization’s greenhouse gas emissions in a way that is fully auditable.

Carbon accounting does just that.

Carbon accounting quantifies the amount of greenhouse gasses produced by a company or organization to provide a better understanding of their carbon footprint.

But going a bit further...

Carbon accounting also measures which part of a company's operation is responsible for the emissions.

The final output is a measurement of an organization’s emissions — both direct and indirect — given in terms of carbon dioxide equivalent (or CO₂e). This final output is known as the organization’s greenhouse gas inventory — or carbon footprint.

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