As global economies shift towards leveraging embedded carbon in trade decisions, carbon accounting has become essential for businesses to ensure trade continuity and compliance. However, accurate tracking isn’t straightforward. Manual carbon accounting methods—like spreadsheets, paper logs, or disconnected data sources—often lead to errors, inefficiencies, and compliance risks. Carbon accounting software can solve this dilemma.
A report by IBM showed that adopting carbon accounting software helped the company cut down its annual carbon dioxide emissions by 30%, illustrating the substantial impact of the software on emission reductions. Unilever noted a cost reduction of $200 million over three years after integrating carbon management software into their operations. However, many companies—especially those new to the process—make mistakes that lead to inaccurate reporting, regulatory issues, or even financial penalties.
In this blog, we’ll highlight common mistakes in carbon accounting software and how to avoid them, ensuring effective use and compliance with global standards when using a carbon accounting software.
1. Not updating operational boundaries in the carbon accounting software
One of businesses’ biggest mistakes while using a carbon accounting software is failing to update their operational boundaries regularly. If your company undergoes changes like mergers, acquisitions, or shifts in control, your carbon accounting system should reflect these updates. If your data doesn’t reflect your current operations, your emissions reports will be inaccurate, leading to non-compliance.
How to fix it: Set up regular reminders for reviewing and updating your boundaries annually or after any major business changes within the software.
2. Using different carbon accounting methods each year
Inconsistent methodologies across reporting periods can create confusion and lead to errors in your emissions data. This often happens when companies switch between different carbon accounting standards. Lack of consistency can lead to discrepancies in your reports and affect the credibility of your sustainability efforts.
How to fix it: Stick to a recognized carbon accounting standard such as the GHG Protocol or ISO 14064. Ensure your carbon accounting software follows these frameworks consistently across reporting periods.
3. Skipping materiality assessments
Over time, business activities change, and so do key emission sources. Not conducting regular materiality assessments implies overlooking major emissions categories or misallocating your carbon footprint. Underreporting emissions can result in inaccurate reporting and legal issues.
How to fix it: Use your carbon accounting software to conduct annual materiality assessments, focusing on the largest and most significant sources of emissions in your operations.
4. Using outdated emission factors
Emission factors (EFs) are updated regularly by governments and industry bodies. Many businesses fail to update these figures in their carbon accounting software, leading to incorrect emissions calculations. Using outdated factors means your emissions reports will be inaccurate, affecting compliance and sustainability efforts.
How to fix it: Regularly update the emission factors in your software to reflect the most recent data from national or industry sources. For example, the Indian Government Grid’s EF is updated annually—make sure you’re using the latest version.
5. Collecting incomplete or incorrect data
Carbon accounting is only as good as the data you feed into the system. Using estimates, outdated information, or incomplete data will result in inaccurate calculations. Poor data collection can lead to incorrect emissions reports, regulatory penalties, or missed reduction opportunities.
How to fix it: Automate data collection using features in your carbon accounting software and regularly validate data inputs to ensure accuracy.
6. Not having a recalculation policy
Operational changes, like expanding facilities or introducing new technologies, require recalculating your emissions baseline. Many companies skip this step, leading to inconsistent results. Without recalculations, your emissions data may no longer reflect reality, which affects long-term sustainability goals.
How to fix it: Set up a recalculation policy within your carbon accounting software to automatically adjust your data when operational changes occur.
7. Ignoring Monitoring, Reporting, and Verification (MRV) processes
A structured MRV framework ensures your emissions tracking and reporting are reliable and verifiable. Many businesses skip this step, resulting in data that isn’t audit-ready. Inaccurate or unverifiable reports can damage your company’s reputation and lead to compliance failures.
How to fix it: Implement MRV processes within your carbon accounting software to monitor emissions continuously and prepare for audits.
How The Sustainability Cloud can help?
Avoiding these mistakes is key to running a successful, compliant, and accurate carbon accounting system. As regulations around emissions tracking tighten, investing time in understanding and optimizing your carbon accounting software will help you stay ahead. The Sustainability Cloud offers the best carbon accounting software for transparent and auditable accounting of Scope 1, 2, and 3 emissions, aligned with GHG protocol and PACT standards. The software will keep you ahead of your competitors by giving timely reminders, regular monitoring, and enhanced transparency.
By using the TSC software, your business can contribute to sustainability goals while also meeting regulatory requirements—setting the stage for future growth and success.
