Carbon accounting is on the rise. External pressures from regulations, customers, employees, and investors all have a role to play in widespread carbon accounting amongst companies.
According to Harvard Business Review, “About 90% of companies in the S&P 500 now issue some form of environmental, social, and governance (ESG) report, almost always including an estimate of the company’s GHG emissions.”
According to McKinsey, “The transformation of the global economy needed to achieve net-zero emissions by 2050 would be universal and significant, requiring $9.2 trillion in annual average spending on physical assets, $3.5 trillion more than today. To put it in comparable terms, that increase is equivalent to half of global corporate profits and one-quarter of total tax revenue in 2020.”
A portion of those trillions will get emissions and carbon accounting programs up and running.
But what’s that mean for your company specifically?
As part of the SEC’s proposed carbon disclosure rules (starting on page 372 of the report), estimates to measure emissions start in the mid-to-high-hundreds of thousands of dollars, depending on company size. If you have sticker shock, don’t worry just yet. There is a range of options for companies looking for ways to measure their emissions.
How to get started measuring your emissions
No matter your motivation—whether it’s to comply with regulations, maintain a competitive edge, meet customer and employee demands, or a genuine desire to help the planet—half the battle is getting started with a baseline. From there, you’ll work to manage and bring down those emissions.
There are three paths you can take to start measuring emissions:
1. hire a full-time sustainability professional on staff,
2. hire a sustainability consultant on retainer or for a finite amount of time, or
3. utilize sustainability software.
Let’s dive deeper into the pros and cons of each option.
Three ways to start carbon accounting
Cost: $51k – $135k (source)
Time to implement: Expect a new hire to take about six months to get familiar with your business and get measurements in place.
– ROI can be quick if they implement changes that make an impact on the environment and your bottom line.
– Dedicated ownership of this role creates accountability and continuity.
– An internal team’s expertise and leadership will grow as your program matures. If you want to be an industry leader, you’ll eventually need an internal team.
– Sustainability is a highly competitive job market. According to Business Insider, “job postings that required green skills increased 8% annually over the past five years, but the share of green talent grew by just 6%.”
– It will still likely require software or bespoke-built (i.e., costly) tools to support their job.
– It’s hard to determine the needs and special skills required for your business, so you could still need a consultant’s help to understand what you’re looking for.
– You’ll have to pay more as demand grows (it’s a great time to get a degree in sustainability!).
Hire a consultant
Cost: It really depends here, especially based on company size and scope of carbon accounting. But expect a consultant that will help measure your emissions to cost anywhere from $20K to $200K annually. Also, keep in mind that the SEC estimates over $600K for public companies to disclose publicly, which includes assurance and attestation.
Time to implement: Indefinite. If you go the consultant route, you’ll likely need to continue to pay them a retainer to keep your sustainability program up and running or until you implement an in-house solution.
– You’ll get top-tier, cutting-edge custom work, especially if you can afford to hire a blue-chip consultancy.
– Consultants get experience working with many types of businesses. That means they can apply their learnings to your business.
– High cost. Expensive retainer fees can mean you’ll need to pay until you feel you can transition their work to your team.
– Requires an in-house employee to properly scope and manage consultant deliverables.
Use sustainability software to calculate and track emissions
Cost: $12K for Sustain.Life, all the way up to $270K+ for a climatetech or sustainability software with similar features (for example, Salesforce’s Net Zero Cloud).
Time to implement: Minutes for initial estimations up to weeks and months for deeper calculations depending on the data available at your organization.
– Relative low cost to implement and scale.
– Range of options for estimate-based emissions screenings to get an immediate overall sense of your impact while you gather more specific data.
– Ability to automatically survey your suppliers to get an accurate picture of scope 3 emissions.
– Centralized, single source of truth that stays with your company, regardless if employees or consultants leave.
– Cutting-edge tech, rigor, and up-to-date methodologies.
– Saves on designing and developing bespoke and expensive internal software tools.
–You’ll need to decide who on your team is responsible, accountable, consulted, and informed (RACI model) to push your sustainability program forward and input data.
No matter how complex your business is or your motivation to engage in climate action, the writing is on the wall: soon all companies will need to do some form of carbon accounting. Sustainability software like Sustain.Life is an essential tool to measure and scale your carbon accounting.