Carbon accounting · cited
How carbon accounting software works: data in, inventory out
Carbon accounting software multiplies activity data by emission factors and organises the result by scope, with the working kept.
This page follows the data through each step, cited to the method behind it.
The process
Six steps, in order
The method underneath almost every product is the GHG Protocol Corporate Standard.
| Step | What happens | What the tool stores |
|---|---|---|
| 1 · Boundary | Entities, sites and operations are set in or out | The consolidation approach and exclusions |
| 2 · Activity data | Energy, fuel, travel, freight, waste and purchases are collected | Source document and unit |
| 3 · Emission factors | Each activity gets the factor for its type, place and year | Factor, version and year |
| 4 · Calculation | Activity × factor, summed by Scope 1, 2 and each Scope 3 category | The method used per category |
| 5 · Audit trail | Every change is recorded | Who changed what, and why |
| 6 · Outputs | SECR, UK SRS S2, PPN 006 and CDP views of one inventory | The inventory, not a copy of it |
Calculation methods
Activity, spend and hybrid
Activity-based calculation multiplies a physical quantity by an emission factor. Spend-based calculation multiplies money spent by an average factor, and is easier to run from accounts but less specific.
The GHG Protocol’s Scope 3 calculation guidance ranks methods from most to least specific: supplier-specific, hybrid, average-data and spend-based.
Good software lets the method differ by category and records which one produced each figure; the spend-based case has its own page, spend-based carbon accounting software.
Emission factors
The factor year matches the activity year
For UK activity the factors are usually the government’s conversion factors, published once a year by DESNZ.
The factor year should match the year of the activity data, so a tool must store the version it used with each figure. The factor values for the current year are on carbon accounting software and the set itself on GHG conversion factors.
UK SRS S2 requires location-based Scope 2; the GHG Protocol Scope 2 Guidance asks for market-based as well where contractual instruments exist.
This page describes the method. It rates no product.
Frequently asked
How it works, answered
How does carbon accounting software work?
It fixes the reporting boundary, collects activity data, applies an emission factor to each activity, sums the results by Scope 1, Scope 2 and the Scope 3 categories, and keeps the source, method and factor version behind every figure.
Disclosures are views of that one inventory.
What data does carbon accounting software need?
Activity data: energy and fuel use, travel, freight, waste and purchases, in physical units where you have them and spend where you do not.
It also needs the boundary: which entities, sites and operations are in, under which consolidation approach.
What is the difference between activity-based and spend-based calculation?
Activity-based multiplies a physical quantity, such as kilowatt-hours, by an emission factor.
Spend-based multiplies money spent by an average factor and is less specific.
The GHG Protocol ranks Scope 3 methods from most to least specific: supplier-specific, hybrid, average-data, then spend-based.
Which emission factors does the software use?
For UK activity, usually the government’s conversion factors published once a year by DESNZ.
The factor year should match the activity year, not the year of reporting.
UK SRS S2 prescribes no factors.
How does the software cover Scope 2?
UK SRS S2 requires location-based Scope 2.
The GHG Protocol’s Scope 2 Guidance asks for both location-based and market-based figures where contractual instruments exist, so a tool should hold both.
Can the software replace a carbon accountant?
No. It applies the method; people decide the boundary, the methods per Scope 3 category and any restatement.
The tool should show its working so a reviewer can follow it.
Sources
Primary sources
Every requirement on this page traces to the provision listed here.
- GHG Protocol (WRI, WBCSD)A Corporate Accounting and Reporting Standard
Boundaries, the five principles and the inventory itself.
- GHG ProtocolCorporate Value Chain (Scope 3) Standard
All Scope 3 accounted for; exclusions disclosed and justified.
- GHG ProtocolTechnical Guidance for Calculating Scope 3 Emissions
Supplier-specific, hybrid, average-data and spend-based methods.
- GHG ProtocolScope 2 Guidance
Location-based and market-based Scope 2.
- Department for Energy Security and Net ZeroGovernment conversion factors for company reporting of greenhouse gas emissions
The annual UK factors for UK activity.
- Department for Business and TradeUK SRS S2 Climate-related Disclosures (PDF), ¶29(a)
Gross Scope 1, 2 and 3 and location-based Scope 2.