Ten essential tips to overcome carbon accounting challenges

In today’s world, where sustainability commitments are more critical than ever, accurately measuring your organisation’s carbon footprint is crucial. Whether you’re preparing for mandatory reporting or proactively advancing your sustainability journey, effective carbon accounting is the foundation of responsible and strategic environmental stewardship. 

This article offers ten tips to help you avoid errors, costly mistakes and non-compliance in your carbon accounting efforts. 

What is carbon accounting? 

Carbon accounting measures an organisation's greenhouse gas (GHG) emissions, expressed in carbon dioxide equivalent units (CO2e). This measurement spans the entire business's operations and value chain and is commonly called its carbon footprint.  

The concept of CO2e allows for a unified measure of all GHGs, each with different global warming potentials (GWP), as determined by the Intergovernmental Panel on Climate Change (IPCC). The IPCC periodically updates these GWP values to reflect the latest scientific understanding.   

In Australia, the National Greenhouse and Energy Reporting Act 2007 (NGER Act 2007) provides a framework for carbon footprint measurement for the country’s largest GHG emitters but is limited to certain kinds of emissions. Globally, the GHG Protocol is the widely accepted standard for consistent and transparent carbon accounting covering all types of GHG emissions, including emissions throughout a business’ value chain.

It is also mandated by the International Sustainability Standards Board's (ISSB) Sustainability Disclosure Standard, IFRS S2, for Climate-related disclosures. 

Top 10 tips – common organisational errors in carbon accounting 

This list of tips can help your organisation overcome carbon accounting challenges and improve the accuracy and reliability of your sustainability reporting. 

  1. Ensure comprehensive data collection: Regularly verify that all necessary data is collected and complete. Implement checks to identify and address any gaps early in the process. 
  2. Document boundaries and methodologies: Clearly define and document the boundaries and methods used for carbon accounting. This ensures consistency and transparency in your reporting. 
  3. Specify units of measurement: Always specify the units of measurement for all data points. This helps avoid confusion and ensures accurate calculations. 
  4. Document information sources: Keep detailed records of all information sources, including emissions factors and estimates. This enhances the credibility and traceability of your data. 
  5. Support estimates with adequate data: Provide robust support for any estimates used in your carbon accounting. Use reliable data sources and methodologies to back up your calculations. 
  6. Avoid data duplication: Implement systems to check for and eliminate duplicate data entries. This helps maintain the accuracy and integrity of your carbon footprint calculations. 
  7. Ensure consistency over time: Compare current data with prior periods and explain inconsistencies. This helps identify trends and areas for improvement. 
  8. Understand system limitations: Be aware of your data systems' limitations and ensure that any issues with data extraction are understood and addressed. 
  9. Standardise reporting across segments: Strive for consistent reporting practices across different business segments and jurisdictions. This reduces inefficiencies and ensures comparability. 
  10. Aggregate data correctly: Ensure data is aggregated correctly, grouping only comparable data points. This prevents errors and enhances the reliability of your carbon accounting. 

Take action 

  1. How can you ensure data integrity by focusing on data quality indicators and maintaining thorough documentation throughout the emissions measurement process? What steps can you take to report data consistently and provide explanations for any discrepancies? 
  2. How can you effectively communicate your carbon accounting efforts with employees, suppliers, and shareholders?
  3. What roles and responsibilities should be clearly defined to manage the carbon accounting process effectively? 

The future of carbon accounting  

Accurate, reliable carbon accounting is essential for climate-related reporting. It is a key metric for understanding and managing an organisation’s environmental impact. Whether you’re a Group 1 entity required to comply with mandatory reporting or simply keen to understand your organisation's carbon footprint, mastering best-practice carbon accounting methodologies is essential. 

Government intervention, stricter regulations, and technological advancements have improved the transparency of financial reporting, making the provision of accurate carbon data as routine and anticipated as financial reporting. 

How BDO can help 

Whether you’re just starting out or well on your way, our national team of experts is here to support your sustainability efforts. We can help with everything from evaluating your current state to calculating your carbon footprint and developing your decarbonisation strategy. Contact us today. 

Learn how to measure your carbon footprint

Carbon Accounting Masterclass

In 2024, we conducted two rounds of masterclasses to teach interested individuals how to track their carbon emissions, including establishing organisational and operational boundaries and an overview of the different scopes of emissions. 

We’re looking to rerun these in March 2025. If you’d like to learn more about these classes or anything related to financial and sustainability reporting, register below.

REGISTER HERE