ESG
Blog • • 6 minute read

Measuring Environmental Impact with Carbon Accounting Tools

Leverage carbon accounting solutions to adhere to emerging regulatory developments in sustainability.

In this blog

  1. What are carbon disclosures and carbon reporting?
  2. WWT's response to emerging regulations
  3. Challenges with ESG data
  4. Conclusion

In our previous article, we covered some of the recent major regulatory developments in the sustainability arena:  SEC Climate Disclosure Rules announced in March 2024 (as of publishing date, the SEC has paused the implementation of the climate disclosures rules); California Climate Disclosure Laws announced in November 2023; and the European Union's Corporate Sustainability Reporting Directive (CSRD).

With the SEC's push for detailed carbon disclosures, a new chapter unfolds where environmental responsibility is deeply entwined with our shared values. Effective strategies now must not only satisfy but also set the pace for standards like those of the Corporate Sustainability Reporting Directive (CSRD) in Europe and the Carbon Disclosure Project (CDP) globally, signifying a pledge to thoughtful governance and durable enterprise resilience.

 What are carbon disclosures and carbon reporting?

Carbon disclosures improve the awareness of the carbon footprint of the reporting entity (e.g. a company, bank, project or product), and it can identify opportunities to reduce emissions and mitigate climate risks. Carbon reporting is the process of calculating and disclosing the greenhouse gas (GHG) emissions of an entity. It involves carbon accounting (measuring the emissions resulting from an organization's operations and supply chain) and then reporting the results of the carbon accounting process. Carbon disclosure and carbon reporting help increase transparency and accountability in global climate action.

The reported data and information can take different forms, depending on the type of carbon accounting and the reporting requirements and context. For example, it could be the entire emissions inventory for a corporation or a product carbon footprint (PCF) for a specific product.

Carbon disclosures are important because having a standardized method to measure and report emissions allow companies to identify areas where they can reduce their carbon footprint and contribute to global emissions-reduction efforts.

 WWT's response to emerging regulations

Carbon accounting tools help measure and report carbon footprint (carbon emissions) in an orderly and consistent manner. Historically, many organizations have collected, and some still do, this data using spreadsheets cobbled together. Given the increased requirements to report and publicly disclose emissions, many organizations are now considering a move to a more robust, tailored platform to meet these needs, akin to those used in enterprise financial accounting. 

To meet our clients wherever they are in their ESG journey, and in response to the emerging regulations, we saw the need to offer carbon accounting solutions that best fit our clients' needs and maturity and help measure their carbon footprint.

We rigorously evaluate carbon accounting platforms based on functionality, economic terms, strategic alignment and technical fit. Our partnerships with leading vendors provide clients access to carbon measurement platforms, including:

Microsoft Sustainability Manager

Microsoft Sustainability Manager (MSM) provides automated data connections and calculations. MSM's advanced emissions accounting and calculation platform is based on Azure data lakes. Microsoft is using this as a launchpad for their new Sustainability Data Solutions in Fabric which means to break down data silos, with Azure and Power Platform tools familiar to users, by collecting data from across the organization into one comprehensive data lake of all data that touches ESG.

IBM Envizi

Envizi, developed in 2008, stands as one of the oldest carbon accounting and calculation platforms available. Supported by IBM's resources, this is a mature and trusted platform. The platform prioritizes real-time reporting and tracking, emphasizing automation and data ingestion processes to reduce the risk of inaccuracies.

Green Project Technologies

Green Project Technologies' (GPT) background has led to a focus on the private markets arena, where carbon measurement is a particular area of focus for General Partners since ESG-related risks and poor ESG performance are some of the main reasons limited partners walk away from investments. GPT's platform has helped more than 50 GPs directly engage with their portfolio for accurate primary emissions measurement, eliminate the risk of manual errors and inaccuracies, and automatically interface to reporting frameworks like EDCI, CSRD, UN PRI and CDP.

nZero

nZero focuses in-depth on the emissions of buildings with 24/7 carbon emissions tracking and measurement technology and predictive capabilities. This carbon management solution offers near real-time tracking and accounting, capturing hour-by-hour building emissions changes in an easy-to-use platform to help clients track, manage and report out their sustainability goals across Scopes 1, 2 and 3 on a granular level based on first-party data.

We will continue to evaluate, recommend and implement the most appropriate solution for clients based on their needs.

 Challenges with ESG data

Having implemented a carbon accounting package will ensure that an organization's carbon, and possibly water and waste-related data, is held in a structured, accessible and governed manner. But what about the rest of the organization's ESG data?

Sustainability data covers a broad range of areas. For example, environmental data includes energy & emissions data, water and waste volumes, biodiversity, and so on; social data includes diversity data and employee health and safety data; and governance data includes all the board-related data, risk management data, privacy or cyber breach data, and so on. 

ESG datasets have been historically housed in different places within an organization, with differing levels of data governance in place, in different forms and formats. Further, ensuring accuracy and consistency within ESG datasets remains a challenge.

 Why ESG data matters

  • Investor interest: Investors increasingly consider ESG factors when making investment decisions. Companies with strong ESG practices are often seen as more sustainable and resilient.
  • Risk management: ESG data helps companies identify and manage risks related to environmental and social issues. For instance, climate change risks can impact supply chains, operations, and financial stability.
  • Stakeholder expectations: Customers, employees and regulators expect companies to operate responsibly. ESG data provides insights into whether a company aligns with societal expectations.

When an organization successfully imports data from various disparate sources into a centralized, structured domain, they can then explore the development of AI models to extract valuable business insights.

Over time, ESG data and AI will become intertwined, shaping sustainable business practices and investment strategies. As organizations embrace responsible practices, AI will continue to play a pivotal role in this journey.

 Conclusion

In summary, recent regulatory developments in sustainability signal a new era of environmental responsibility. As organizations strive to meet these standards, carbon disclosures and reporting play a crucial role. By measuring and reporting greenhouse gas emissions, companies can enhance transparency and accountability and contribute to global emissions reduction efforts. Additionally, managing broader ESG data is essential for risk management and meeting stakeholder expectations.

For guidance on how to adopt any of the recent climate-related disclosure frameworks, contact us.