Measuring business carbon emissions is the foundation for real corporate climate action. Only with good data and insights will companies be able to implement strategies that benefit the people, profit, and planet.
But measurement is not straightforward, and not all approaches are equal. The right measurement should be comprehensive in nature and robust. It should allow companies and stakeholders to trust the numbers to see what the next steps are in their business sustainability journey—whether that is deep-diving into hotspots to better understand where emissions come from, setting a net-zero goal, preparing for an external audit and certification, complying with reporting obligations or purchasing carbon offsets.
NetNada helps Australian businesses and global organisations—like Zip Payments, Merivale, and URM—measure, report, and act on emissions throughout their supply chains. In this guide, we uncover and explain what companies using NetNada need to know about carbon measurement—from understanding what data is needed to the different frameworks that are followed.
Before we dive in, it is essential that you understand some base concepts and terminology. If you are already proficient in carbon accounting feel free to skip this section but you can always refer to all the terminology used by visiting our Carbon Glossary.
Carbon dioxide equivalent (CO2e) - business activities emit more than just CO2 such as water vapour and methane which is a potent greenhouse gas that contributes to global warming. To include non-CO2 greenhouse gases while still keeping things simple, the term CO2e is used by carbon accountants to combine all emissions into a single metric.
The GHG Protocol Corporate Accounting and Reporting Standard (GHG Protocol) - this protocol provides the requirements and guidance for companies and other organisations preparing a corporate-level GHG emissions inventory. NetNada embeds the standard into its software so you can trust the decisions we make in regard to measuring your emissions.
Emission Scopes - The Greenhouse Gas Protocol categorises emissions by Scope to facilitate how businesses understand how their emissions are generated, reported, and reduced.
It is important to note that Scope 3 is where all new reporting frameworks are focusing on and where you should spend your resources—it often represents more than 80% of a company’s total emissions. The best way to tackle Scope 3 measurement is to quickly understand which suppliers are contributing to your emissions and work on improving how they are tackling their own sustainability and carbon emissions. A transparent supply chain is half the journey to a sustainable one.
Reporting standards - one of the most challenging parts of carbon accounting or sustainability is knowing how to disclose or report your numbers. Large companies accounting for two-thirds of global public market capitalisation already participate and submit carbon emissions inventories through voluntary disclosure frameworks such as TCFD and CDP. However, far more detailed mandatory reporting standards are emerging on a national/regional basis (AUS, US, EU, UK) under the ISSB. While it might feel like an alphabet soup of acronyms, NetNada carbon experts can guide you in understanding which reporting framework is relevant for you.
An advantage of software for employees leading the measuring process is that it can bring and organise data from you multiple places into a single place: ERP and accounting systems, travel apps, utility bills, staff surveys, and so on.
NetNada’s software and our carbon experts detect anomalies and flag expected emissions sources not included in your import data. We regularly works with auditing firms to help our clients carbon account audited and ready for stringent 3rd party certifications such as Climate Active or CDP submissions. Looking ahead to where verification and reporting are going, NetNada allows you to invite auditors and external verifiers to the platform.
Finally, It’s important carbon accounting solutions solve the problem of emissions interpretability and why emissions totals change over time. This can happen not only because of reductions but methodology or macro changes such as grid improvements. We ensure that you’re able to keep incorporating the latest science into your measurements by keeping our databases up to date.
Carbon accounting as per The Greenhouse Gas Protocol (and incorporated into NetNada) calculates an organisation’s greenhouse gas (GHG) emissions using a combination of two methodologies: spend-based and activity-based. The hybrid methodology used in NetNada when measuring emissions combines spend-based and activity-based methods.
The carbon footprint of the business is modeled using the proprietary NetNada algorithm which identifies emissions by various categories based on accounting data and a calculator available inside the software.
This approach is based on an environmentally extended input–output method, which combines environmental data with traditional financial flow data from national and regional economic accounts.
Spend-based method of calculating GHG emissions takes the financial value (of a purchased good or service and multiplies it by an emission factor – the amount of emissions produced per financial unit – resulting in an estimate of the emissions produced.
Spend-based emission factors are typically derived from so-called environmentally extended input-output (EEIO) models that depict the flow of resources between different sectors of the economy. Based on this, one can calculate the average amount of emissions associated with each unit of money paid to a company in some specific industry and region.
There are around 344 categories - all with different emissions factors that spending can be allocated to. Categories have different emission intensities and therefore impact your total footprint based on the allocation of spending. For example, a dollar spent on company car repairs does not equal a dollar spent on legal services.
NetNada system holds ISAPC categories as well as Climate Active categories when it comes to the allocation of spending for carbon accounting purposes.
Since spend-based methods’ emission factors are built on the industry average greenhouse gas emissions levels, spend-based calculations can lack specificity.
For example: if you buy a chair, a spend-based approach would only factor in that you bought a piece of furniture, and wouldn’t account for whether the chair was made of iron or wood.
The activity-based method uses data to specify how many units of a particular product or material a company has purchased. For example, this could be litres of fuel, kilograms of textile, etc.
If we identify activities in your business such as flying or employee commute, NetNada offers in-built calculators and smart forms to gather and process relevant data. This will ensure that your team can focus more on implementing solutions rather than requesting data from several departments and staff.
NetNada platform facilitates activity-based measurement for flights, waste, employee commutes, and events.
Like the spend-based method, the activity-based method also uses emissions factors to determine an activity’s emissions output. In carbon accounting, activity data it’s not as readily available as spend-based data, and can be time-consuming to gather.
Thus, the hybrid model methodology is recommended by the Greenhouse Gas Protocol, the most widely-used carbon calculation standard that has been incorporated into NetNada
NetNada pragmatic approach involves using a spend-based method to identify relevant hotspots in your business and then improve where it is needed using activity-based data
As you consider how to calculate your carbon emissions for your whole business and the right balance of approaches to use, ensuring you have all the data is crucial. Traditionally, there were trade offs between capturing every tonne, kilo, and gram of carbon and creating meaningful business climate action.
Today, with carbon accounting software like NetNada, it is possible to measure everything to achieve a complete carbon measurement and then spend time improving certain aspects through activity-based methods.
While we advocate for using the best method that meets your goals and internal resources, you will want to ensure that your carbon inventory is:
Traditional ways to achieve these results involved a mix of in-house climate teams and consultants - even then the process can take months and lack data interoperability.
Good software is also reinforced with human support—who can help you understand complex legislation, source clean power, and navigate the carbon credits market. NetNada’s teams of climate strategy, carbon data, and policy experts are here to help.
If you have any questions please get in touch.
