Carbon Accounting for Businesses: A Step-by-Step Guide
Written by Prime Financial Group - ESG Advisory
What is Carbon Accounting?
Sustainability reporting officially became mandatory in Australia as of January 1, 2025, as a means of measuring, managing, and reducing business carbon footprints. As the Government and investors increasingly prioritise environmental, social, and governance (ESG) factors, these new regulations are designed to hold businesses accountable for their contribution to climate change. At the same time, this presents an opportunity to position your organisation as a national sustainability leader to staff, clients, and investors.
Under these carbon accounting regulations, businesses will be required to prepare an annual sustainability report, disclosing climate-related risks, opportunities, strategy, and metrics. Compliance doesn’t need to be complicated. Check out our comprehensive step-by-step guide to carbon accounting for businesses in Australia.
Step-by-Step Guide
1. Understand the Basics
It is important to understand the key concepts of carbon accounting and sustainability reporting. Ensure you are well-informed and equipped with information relevant to your business, including who must comply and what is required.
2. Collect Data
Collect data from all sources of emissions and ensure the data you collect is accurate and comprehensive. This includes gathering data such as energy consumption, transportation, raw material usage, and other relevant activities across your business operations.
3. Calculate Your Carbon Footprint
Once data is collected, you can apply the calculations manually or through specialised software. This will include ranking your emissions under different scopes to ensure that you can report accurately when submitting your sustainability report.
4. Analyse Results
Once emissions are calculated, identify the risks, weaknesses, strengths, and opportunities from your data. Use the data to identify risks such as regulatory exposure or inefficiencies, and highlight any gaps in reporting or operational weaknesses. Look for strengths—areas where emissions are well-managed—and uncover opportunities for reduction, innovation, or long-term value creation.
5. Set Reduction Targets & Implement Strategies
Set measurable and realistic carbon reduction targets for your business. These goals should align with ESG compliance standards and should be communicated to employees. Create a comprehensive action plan addressing the sources of your emissions to reduce your carbon footprint.
6. Report and Communicate your Findings
Prepare your annual report to comply with carbon accounting legislation. Companies should produce a Sustainability Report that complies with the Australian Sustainability Reporting Standards (ASRS), which reflect international frameworks such as IFRS S1 and IFRS S2. These include climate-related risks, carbon emissions and energy and waste management. Communicate transparently and regularly to stakeholders about your action plan and reduction targets.
Understanding and navigating these new regulations can be complex, Prime Financial Group - ESG Advisory have a team of experts to guide and advise you every step of the way. They specialise in carbon accounting, and are equipped to help your business comply with regulations.
