Empowering C-Suite with carbon accounting solutions

C Suite executives can apply carbon accounting to achieve strategic objectives and strengthen bottom-line profits. 

Business leaders may recognise how critical carbon accounting is to complying with sustainability legislation and supporting emissions reduction plans. However, business leaders can apply emissions data to enhance benefits beyond compliance and sustainability. CFOs and senior executives can use carbon accounting to improve their business outcomes.

Carbon accounting refers to a process of calculating emissions emitted by an organisation. Similar to financial accounting, carbon accounting quantifies the impact of business processes, monitoring climate impact instead of financial impact. Carbon accounting is critical for businesses to recognise environmental impacts, ensure reporting requirements are achieved, and determine any opportunities for carbon reduction. 

Many companies are already under pressure to disclose carbon emissions, and new legislations are appearing. Regulations like the Corporate Sustainability Reporting Directive (CSRD) and the Streamlined Energy and Carbon Reporting (SECR) have mandated emission reporting for companies across multiple industries. This means carbon accounting is a necessity for many and a critical tool for CFOs managing the overall compliance process. 

Aside from compliance, CFOs can use carbon accounting to generate other benefits. Carbon accounting is a solution to reduce risk in business planning by removing any issues in record management and monitoring any possible problem areas. Rigorous carbon accounting enables risk-free auditing, which could show non-compliance or potential greenwashing without the necessary systems.

When companies use carbon accounting to determine emissions, the generated map of emissions hotspots can distinguish high energy areas, inefficient supplies and other supply chain challenges. This information can be applied to create cost-saving solutions, better supplier agreements and lower energy bills. According to McKinsey, these processes can improve profits by up to 60%.

This potential to be more efficient with compliance, reducing costs and lowering risk frees up resources and time for CFOs to apply in focusing on their overall financial strategy.

A detailed carbon emission profile can determine operational inefficiencies, providing targeted opportunities for improvements and cost reductions. By applying the detailed insights from carbon accounting, businesses can deliver measures such as investing in renewables or choosing low-risk service providers to generate a more efficient and resilient value chain.

Furthermore, businesses can attract and retain employees by applying sustainability measures and strategies revealed by carbon accounting. According to studies, 67% of employees are more willing to apply for jobs at sustainable businesses, and 68% are more willing to accept employment offers. By managing the development of carbon accounting-focused sustainability plans in recruitment and employer branding, COOs can decide how attractive their business is to potential talent. 

CEOs have a critical role in adopting and deploying carbon accounting processes. The leadership of the CEO is vital in aligning carbon accounting with the overall strategy, the culture and operations. Failing to adhere to decarbonisation plans will impact overall profitability. CEOs who deploy carbon accounting will empower businesses to achieve climate goals, build brand reputation and attract new talent. This enables leaders to strengthen the valuation of their organisation and improve shareholder expectations. A separate study from McKinsey discovered that investors are willing to pay 10% more for an organisation with a positive ESG strategy and record.