Tech Solutions Are Available
Updated:
May 28, 2024
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Overview
In this lesson, we explore how carbon accounting software like Persefoni streamlines SEC disclosure readiness. The software converts business activities into carbon data, automating complex calculations with emissions factors and input data to generate a transparent carbon activity ledger for regulatory reporting, internal management, and future disclosures.
Let’s take a closer look at how carbon accounting software like Persefoni can accelerate your company’s disclosure readiness.
As previously mentioned, in order to arrive at your carbon footprint (for SEC disclosure purposes or otherwise), you’ll need to convert your business activities into carbon data. While this conversion may seem shrouded in mystery, it’s helpful to remember that at its highest simplification, this conversion is a math equation.
Input data X emissions factors = carbon-equivalent footprint data (CO2E)
Input data includes measurements of business activities such as volume of raw materials produced, airline miles flown, or electricity purchased. The activity data required is based on the emission category you are looking to calculate. This is data you likely already track from an operations or finance perspective. However, if data is not available, estimates can be used to fill in gaps - this is a common practice for companies new to carbon accounting.
Emissions factors serve as ‘multipliers’ of sorts that convert each activity into a carbon emission equivalent, using standards such as those set forth by the GHG Protocol. These also differ based on the data available and the calculation method being applied.
Carbon footprint data, then, is the aggregate output of these calculations which can be used to track and manage emissions internally, and to satisfy disclosure requirements like the proposed SEC Climate Disclosure Rule.
Now, this calculation may seem simple when observed as illustrated above at the individual transaction level. However, just as with financial accounting, the complexity lies in the volume: applying millions of transactions to tens of thousands of emission factions, all while also maintaining data integrity and internal controls. This innate complexity exists whether a company has an internal team dedicated to carbon management, or engages external consultants, or both.
As a complement to your internal teams or consultants, Persefoni’s software ingests your input data, sources the appropriate emissions factor for each activity, and automates the calculations of your carbon data. This results in a traceable and transparently calculated carbon activity ledger that serves as your single source of truth for all things carbon-related. The data from this ledger can then be utilized by your internal teams and consultants as needed, and even passed through for regulatory reporting via our automated integration with Workiva or to other 3rd party reporting solutions.
Coming back to the SEC disclosure pillars, Persefoni will generate the footprint data required for your company’s Metrics & Targets disclosures, as well as a comprehensive carbon data ledger that can help you manage your climate risks and opportunities, inform your Governance, Strategy, and Risk Management activities, facilitate assurance of your GHG emissions data, and craft future disclosures.
