Small and medium-sized enterprises (SMEs) often feel like the quiet kid in the back of a classroom when it comes to carbon accounting. Not exactly the life of the party, right? In many parts of the world,  carbon accounting for SMEs is practically invisible. Governments are too busy making big corporations dance to the tune of mandatory environmental, social, and governance (ESG) reporting. Meanwhile, carbon footprint accounting for SMEs is left sitting on the sidelines. 

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A survey in the United Kingdom (UK) found that nine out of ten small businesses don’t even bother measuring their carbon footprint. Why? The usual suspects -  high costs and a lack of information. But let’s be real, if we’re serious about tackling the climate crisis head-on (which we should be!), SMEs need to get in the game. After all, small businesses make up 90% of the businesses globally. That’s a lot of untapped potential! 

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If you’re running an SME, consider this crash course in carbon accounting. We’ll delve into why you should care about your carbon footprint and how to start tracking it. Spoiler alert: it’s easier than you think.

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Is carbon reporting mandatory for SMEs?

Let’s get straight to it - no, carbon reporting is not mandatory for most SMEs.  The big guys are the ones under the microscope. 

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In the European Union (EU), the Corporate Sustainability Reporting Directive (CSRD) mostly targets large corporations, both domestic and foreign. So, if your small business is not publicly listed, you’re off the hook for now. However, if you are listed, mark your calendar - CSRD is coming your way starting January 1, 2026.

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Even though regulations in the EU and many other parts of the world don’t target SMEs directly, they can still catch you in their web through something called Scope 3 reporting requirements. Basically, if you’re in the supply chain of a large corporation that needs to report its emissions, they might ask you to provide data on your carbon footprint. 

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Imagine running a small cleaning business that provides services to a large corporation. Suddenly, you have to account for every drop of fuel your company vans use. Not exactly what you signed up for, right?

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Why should SMEs consider carbon accounting?

So, if you’re not legally required to do carbon accounting, why bother? Here’s why – there’s both a moral angle and a financial one.

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Voluntary compliance

Take the CSRD, for instance. While it doesn’t mandate reporting from SMEs, it encourages them to do so voluntarily. Voluntarily complying with regulations does two things: 

• It creates trust in your brand
• It prepares you for compliance should your business grow enough to come under the ESG reporting bracket (or if that bracket widens to include you)

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Accurate carbon target-setting

The biggest perk of carbon accounting? It helps you set realistic targets to reduce your carbon footprint. Again, we all need to do our part to combat global warming. With accurate data, you can figure out where to cut waste, save energy, and ditch those fossil fuels. Win-Win right?

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Satisfy customers and investors

If you thought carbon accounting was just for the tree huggers, think again. A whopping 71% of European consumers want to buy sustainable products. By measuring and sharing your carbon footprint, you’re showing that you care about sustainability -  and that 71% might just start caring about you, too. ‍

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Don’t forget investors. They’re increasingly looking at ESG data when deciding where to put their money, evidenced by the remarkable growth in ESG data markets. That means that businesses that embrace ESG reporting have a better shot at attracting investments.

Cost savings

Here’s where it really hits home - carbon footprint accounting can actually save you money. By tracking your greenhouse gas (GHG) emissions, you can spot ways to cut down on fuel and energy use, which means lower costs in the long run. Who doesn’t like saving a few bucks?

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How to get started with carbon accounting for SMEs?

Feeling a bit overwhelmed? Don’t worry; it’s totally normal. Running an SME is tough enough without adding carbon accounting to your to-do list. But here’s the good news: it doesn’t have to be complicated. Just take it one step at a time, and before you know it, you’ll be a carbon accounting pro. Here’s carbon accounting made simple for SMEs: 

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Analyse preparedness

Carbon accounting is only helpful if it’s accurate. So, it all comes down to the data. The first step is to analyse how ready your business is in terms of available data. Do you calculate energy consumption? Do you have information on fuel usage, for example, for company vehicles?

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Knowing what data you have readily available and what data you may need to collect will give you a glimpse into your overall preparedness for ESG reporting. 

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Choose a carbon accounting standard

There are various frameworks used for carbon accounting. The GHG Protocol is the most widely used standard in the corporate world. You can also find industry-specific standards for carbon accounting. 

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The ISO 14064, another commonly used standard based on the GHG Protocol, has two parts, one for estimating the emissions and the other for reduction and removal. The verified carbon standard (VERRA) is a voluntary carbon standard based on ISO 14064 Part 2. 

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Designate an ESG manager

Carbon accounting and ESG reporting are gradually becoming core components of finance and accounting. So, it’s only logical to have dedicated personnel to oversee it. If you have the means for it, hire a specialist who oversees carbon accounting and is knowledgeable of ESG reporting requirements and standards. You can also designate an existing employee to undertake these tasks and include ESG management in their job scope. 

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Use the right carbon accounting software

Finally, invest in some good carbon accounting software. The best carbon accounting software can help you process emissions-related data, thereby simplifying the process and producing reports that offer accurate insights. Make sure the software aligns with any reporting standards you’re following, whether they’re mandatory or voluntary. 

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How can comundo help?

When it comes to carbon accounting for SMEs, energy consumption is a big piece of the puzzle (we’re talking about Scope 1 and Scope 2 emissions under the GHG Protocol). That’s where comundo comes in. 

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Our plug-and-play solution automates the process of calculating energy use on company properties, giving you data based on actual consumption figures, not estimates. With our state-of-the-art technology, you can optimise energy usage to reduce emissions and lower your overall carbon footprint. 

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No more guesswork - just real numbers that help you make informed decisions, keep your stakeholders happy, and prepare you for the day when the CSRD comes knocking.

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FAQs

What are carbon accounting techniques?

Carbon accounting techniques measure, monitor, and report greenhouse gas emissions. These techniques involve quantifying the amount of carbon dioxide and other greenhouse gases an organisation releases through its activities. The GHG Protocol is the most widely used framework for businesses' carbon footprint accounting. 

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How to start carbon accounting?

To start carbon accounting, you need to follow a structured approach. First, establish a baseline by measuring your current emissions. This involves collecting data on energy consumption, fuel use, waste generation, and other relevant activities. Next, develop an emissions inventory, a comprehensive list of all your greenhouse gas sources. Then, analyse the inventory to identify significant contributors and set reduction targets. Finally, implement strategies to reduce emissions, and monitor progress regularly.

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What is the ISO for carbon accounting?

ISO 14064 is the international standard for carbon accounting. This standard provides guidelines for quantifying, reporting, and verifying greenhouse gas emissions. It covers three key areas: organisational emissions (ISO 14064-1), project emissions (ISO 14064-2), and validation and verification of greenhouse gas statements (ISO 14064-3). By adhering to ISO 14064, organisations can ensure the accuracy and credibility of their carbon accounting practices.

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