Carbon Accounting Is Now Mission-Critical — and Technology Is Rising to the Occasion

As expected, the new Trump administration withdrew the U.S. from the Paris Climate Accord. But savvy business leaders — particularly at companies that operate globally and manage complex, multi-tier supply chains — are continuing their sustainability efforts apace. 

They understand that “immediate preparation is crucial” in light of a complex web of global regulatory and reporting requirements, from the impending Carbon Border Adjustment Mechanism to the EU’s Corporate Sustainability Reporting Directive (CSRD) and more. An estimated 149 countries have net zero targets — and back in the U.S., states have “awesome authority under the law … to advance climate action” regardless of federal policy.

The most forward-thinking business leaders — CEOs, CFOs and COOs in particular — aren’t just preparing for complex compliance and reporting dictates. They’re viewing their broader sustainability efforts, and carbon accounting in particular, as critical components of their strategies to drive long-term business growth and success. 

Carbon Accounting Is Mission-Critical

As organizations come under increasing regulatory pressure to take action, becoming more proficient at pinpointing sources of carbon and identifying opportunities to reduce emissions are now mission critical activities.

Regulatory requirements are complex across many jurisdictions around the world, and rolling out on different timetables. Every global company must understand these details. In addition, tracking and analyzing carbon accounting data across a complex supply chain can make it easier for companies to manage risk and reduce waste, contributing to sustainability goals and reducing costs.

Many companies correctly have come to see their sustainability efforts as key to bolstering industry leadership, fostering customer loyalty and spurring growth. A 2023 joint study from McKinsey and NielsenIQ found that products making environmental, social and governance (ESG)-related claims averaged 28% cumulative growth over a five-year period, versus 20% for products that made no such claims, and PwC’s 2024 Voice of the Consumer Survey found consumers willing to spend an average of 9.7% more on sustainably produced or sourced goods, even amid cost-of-living and inflationary concerns.

This is what carbon accounting is all about: quantifying the amount of greenhouse gases produced directly and indirectly from a business or organization’s activities within a defined set of boundaries. The Greenhouse Gas Protocol, which supplies the world’s most widely used greenhouse gas accounting standards, has categorized emissions into three “scopes”:

• Scope 1: Direct emissions from owned or controlled sources (such as company vehicles, on-site fuel combustion).
• Scope 2: Indirect emissions from purchased electricity, steam, heating and cooling.
• Scope 3: Indirect emissions throughout the supply chain, including supplier activities and customer use of products. Scope 3 is often seen as the most challenging to measure.

Ultimately, carbon accounting is the toolset and methodology that allows organizations to quantify their greenhouse gas emissions, understand their climate impact, and set goals and activate programs to reduce those emissions.

Emerging Tools and Technologies

Any carbon-accounting effort starts with, first, capturing the data associated with a company’s direct and indirect emissions. Next is measurement, or calculating the footprint of Scope 1, 2 and 3 emissions. With this foundation in place, companies can then report to various stakeholders, regulators and customers, and identify ways to reduce emissions and advance sustainability goals.

Historically, none of this has been easy. Yet certain familiar and deeply embedded technologies — such as enterprise resource planning (ERP) and supply chain management (SCM) applications — have evolved to capture emissions data, track impact, manage reduction efforts, and report to regulators. U.K. manufacturer Optima Systems, which makes and installs premium partitions and doors for projects around the world, is one example of a company using its core systems to capture and surface carbon values for all of its parts and jobs, and to apply continuous improvement principles to emissions reductions. 

No discussion of emerging technologies would be complete without touching on the potential of artificial intelligence. AI’s inherent ability to find patterns in huge datasets will help companies pinpoint the most important emissions signals in the data, then automate tailored reports, visualizations and dashboards that will ease compliance burdens and accelerate action.

Track, Measure and Mobilize 

Wherever a company may be in its carbon accounting efforts, it can learn from how others have tackled the issue. Following are some best practices.

• Awareness and risk assessment. Begin by understanding your exposure and compliance requirements across the regions you operate in.
• Collaboration across your supply chain. Work with suppliers to gather emissions data and use shared tools to calculate scope 3 emissions.
• Engaging technology partners. Use existing systems — such as ERP platforms, manufacturing execution systems (MES) and SCM applications— as a central repository for carbon data. Collaborate with technology providers and suppliers to gather and manage emissions information.
• Setting goals and communicating them. Establish clear sustainability objectives — whether aligned with net-zero targets or regulatory requirements — and communicate them often to the organization.
• Identifying and engaging internal champions. There is a groundswell of passionate, knowledgeable employees and partners who want to contribute to corporate sustainability efforts. Every organization has curious, passionate stakeholders, at all levels of experience, who want to engage. After all, making progress with carbon-accounting initiatives and broader sustainability efforts isn’t only about helping and equipping today’s business leaders. It’s about appealing to future generations of leaders who themselves have much at stake, and who want to be part of the solution.

Kerrie Jordan is group vice president, product management at Epicor.