Cost benefits of an all-in-one carbon accounting solution.
Carbon accounting is a key pillar for a global net zero transition. Without accurate carbon accounting, your targets won’t be as effective. Then, there’s the question of compliance – reporting inconsistencies or inaccurate environmental data can lead to financial and reputational risks.
An all-in-one carbon accounting solution helps address data collection and analysis challenges across the value chain. But even the best platforms require reliable, high-quality data inputs. That’s where solutions like comundo come in – ensuring your energy and emissions data is as accurate as possible.
The best carbon accounting solutions take a comprehensive approach, bringing all the data and insights in one place. That’s all the more important for large enterprises with global operations and multiple subsidiaries/holdings.
However, such solutions don’t come cheap. Depending on the size and niche of your business, you can expect to pay anywhere from a few thousand to well over 100,000 Euros a year. To maximise this investment, businesses need seamless integrations and precise data sources to drive better decision-making and compliance. We’ll explore them all in this article.
What makes an all-in-one carbon accounting solution different?
When you set out to look for a carbon accounting solution for your business, you’ll come across many choices. Not every solution is comprehensive enough, which can lead to gaps in reporting accuracy and regulatory compliance.
For starters, an all-in-one carbon accounting solution would be designed to cover all three scopes of emissions as per the Greenhouse Gas (GHG) Protocol. That means it can collect and process data related to direct emissions as well as indirect emissions (such as those from suppliers, partners, and consumers).
But that’s not the only differentiator. Here’s what else you may get with an all-inclusive carbon accounting and management solution:
- Real-time data: Fast, secure, and real-time data collection from different sources like enterprise systems and third-party databases.
- Global context: Designed to be used in different markets and regions worldwide, with relevant emission factors to take a localised approach to carbon footprinting.
- Integrations: Easy, seamless integration with existing systems, tools, and other environmental accounting platforms to gather and share data.
- Built-in compliance: Awareness of local and international environmental reporting standards to prepare environmental, social, and governance (ESG) reports quickly and accurately.
Cost benefits of using a comprehensive carbon accounting solution
Investing in an all-in-one carbon accounting solution is an expensive endeavour. However, it has financial benefits compared to investing in several different solutions for specific carbon reporting requirements. That said, even the most advanced tools need reliable data streams to unlock their full potential.
Here’s how comprehensive carbon accounting software is cost-effective:
Operational efficiency
Imagine having one platform for collecting data from your vendors, another for processing, and a third for tracking the progress of your carbon initiatives. That’s a lot of work and resources.
Now, imagine having a single platform that does all of the above. It integrates with your resource management systems to collect Scope 1 data, energy data systems to collect Scope 2 emissions, and supply chain management systems to collect information on indirect emissions.
However, having one platform doesn’t mean all data challenges are solved automatically. A platform is only as good as the data it processes. That’s why leveraging high-quality data sources ensures businesses aren’t making decisions based on inaccuracies or incomplete information.
Fewer licenses
Another place you’ll save money is licensing. Instead of buying licensing for different solutions, you only need one or two. That also saves you the hassle of maintaining multiple contracts and meeting renewal deadlines. Additionally, integrating external API ensures that businesses don’t need multiple data sources for specific reporting needs – streamlining costs even further.
No resource or data duplication
Your ESG teams won’t have productivity loss as they’ll be working with a single platform. Having multiple platforms can risk resource duplication. Similarly, you risk data duplication when different tools use the same data.
In contrast, a unified carbon accounting platform makes things easier with one dashboard that all relevant personnel can use. It also brings all the data in one place, preventing duplication and inconsistency. Yet, ensuring data accuracy from the start remains crucial, which is why companies use dedicated APIs alongside their core platform.
Even more savings – can a good carbon accounting solution be cost-effective?
We’ve already discussed how an all-in-one carbon accounting solution offers cost benefits compared to having multiple niche solutions. However, even the best platform won’t deliver maximum value if the underlying data is unreliable. That’s where high-quality integrations play a key role.
Embracing carbon accounting and management (using the right tools) creates opportunities for businesses to save money or make more of it. The investment in the technology may even pay for itself in the long run through these savings and growth opportunities.
Here’s how:
High-quality data = right initiatives = cost efficiency
When it comes to carbon management, high-quality data is the key, and that’s exactly where many businesses run into hurdles. The data either doesn’t exist or isn’t quite complete or accurate. Multiple factors are behind it, including the lack of the right technology to gather and sort data (particularly unstructured data).
A solid carbon accounting solution with advanced data processing capabilities and quality checks can make a huge difference. That data can guide leadership's decisions to reduce emissions and increase efficiency. That, in turn, translates into savings.
Many companies worldwide have reduced operational costs with their environmental initiatives. Unilever, the global FMCG giant, has introduced carbon-saving initiatives across different markets that can arguably also result in operational savings. For instance, electric trucks were introduced in several markets to transport goods. Similarly, in India, they’re optimising logistic routes to save time and costs of transporting goods.
Avoiding compliance risks and penalties
Another way a viable carbon accounting solution, backed by precise data, can save businesses money is compliance. Large companies worldwide, especially the European Union, must report their environmental impact through detailed ESG reporting frameworks.
While there aren’t caps on businesses in terms of emissions (with certain exceptions), they’re expected to report their carbon footprint honestly and accurately. Any discrepancies uncovered during an audit may lead to non-compliance and any fines that come with it.
Even if there aren’t any financial penalties or they’re insignificant, businesses found guilty of reporting inaccurate data may face reputational damage. And that can be much more significant and long-lasting than a fine, considering how the general public and investors are becoming pro-environment.
New opportunities in the sustainability economy
Carbon emissions data can reveal opportunities to tackle inefficiencies and tap into new products or markets. That can bring more revenue and growth.
One example is Unilever, which tracked its water usage and initiated programs to reduce consumption by 50%. By leveraging detailed, accurate data, they also identified new opportunities to create products for consumers that bring down water usage, especially in water-stressed markets. From dry detergents to freshen-up clothes without a wash cycle to quick rinse conditioners, these products turned a sustainability pain point into new profitable lines of products.
As awareness about climate-related risks increases, sustainability has also become a key consideration for investors and consumers. In fact, detailed, accurate, and verified sustainability data is key to earning investor trust. A Deloitte study found that 83% of institutional investors consider sustainability information in their investment decisions.
Invest in the right solutions and the best data
Carbon accounting technologies have come a long way. What was nearly impossible a decade ago is now a matter of clicks with such solutions. You don’t need dedicated accountants or climate scientists working with your company’s data. But you do need the best data inputs to ensure your reporting is reliable.
This is just the beginning, as things are about to improve. With advancements in AI, carbon accounting will become even more seamless and intuitive. These technologies are also traversing into initiatives and goals-tracking territory, further increasing accountability for businesses.
But all of this begins when you invest in not just the best platforms but also the most reliable data sources. Take the time to research the tools on the market, their capabilities, and, most importantly, how verifiable data sources can ensure the highest accuracy in your reporting.
