In 2022, our firm was approached with a question… “Could Bookkeeping Fusion track an organization's Carbon Accounting as part of the bookkeeping process?”
At that time, I had no idea what Carbon Accounting even meant, never mind how to do it or why any organization would want to do it in the first place. Thus began my journey to learn more about carbon accounting, determine if it could add value to our customers, understand what was involved in the process, and ultimately discover the cost to achieve ‘net-zero emissions’ and be certified as ‘carbon neutral’.
Carbon Accounting Defined
" Where Financial Accounting measures and tracks the financial performance of a business, Carbon Accounting is a framework to measure and track how much greenhouse gas an organization emits. Another term for this process is calculating the ‘Carbon Footprint’ as it attempts to determine an entity's impact on carbon emissions."
Why Be Carbon Neutral?
I discovered four reasons why an organization should consider Carbon Accounting:
1) Regulations
At a recent Canadian conference for Chartered Professional Accountants of Canada there was a focus on ESG reporting which stands for Environmental, Social, and Governance. New regulations are being introduced that will require corporations to report on their impact beyond traditional financial information.
A key piece of the Environmental reporting regulation is the calculation of an organizations total carbon emissions. With the old mantra that “what’s measured is treasured”, the organization now has a benchmark from which to set goals and plan to reduce that footprint in the future.
2) Marketing
More and more businesses are marketing themselves as ‘net-zero’ or ‘carbon neutral’ or pledging to reach that goal at a specified date in the future. Trend or not, we are all aware that these types of sustainable commitments along with recognized certifications (examples: organic, fair trade, recycled, etc.) do indeed impact the purchasing decisions of consumers.
3) Cost Savings
Tracking carbon emissions can reduce costs and increase organizational efficiency and effectiveness. Energy costs are included in most business activities and result in large expenses for any business, reducing energy usage will directly reduce costs.
4) Philanthropy
I’m a believer in giving back to make the world a better place. Reducing an organizations carbon footprint can have a positive impact on the world by a) reducing environmental pollution and improving community health b) increase technological innovation and creating new jobs as well as c) helping to avoid the consequences of climate change.
The Scope of the Carbon Footprint
Ok, so how does this apply to Bookkeeping Fusion? We’re not a manufacturing or logistics business and subsequently don’t directly burn fossil fuels. We don’t own a boiler, backup generator, travel for business, or even have any corporate owned vehicles that burn gasoline. So, carbon emissions are zero right?
Wrong! Fusion does purchase energy in the form of Electricity and Natural Gas for our office location. In addition, purchases from Suppliers, services to Customers, and even our staff commuting to our office result in additional carbon emissions.
The
GHG Protocol is a framework developed to measure a carbon footprint and is considered by many the current reporting standard. It defines three different Scopes:
• Scope 1 – Direct emissions (example: corporate owned vehicles)
• Scope 2 – Indirect emissions (example: purchased energy)
• Scope 3 – Upstream and Downstream activities (example: staff commuting)
Well, this is starting to get complicated and at this point I realized I was going to need some help…
Hire a Carbon Consultant
After doing some research I discovered that one of our Suppliers had recently gone through this process and used a US based consulting firm that specialized in Small and Medium sized businesses in the professional services and technology industry.
After a couple meetings with Rye Strategy they patiently took the time to answer my numerous questions and we decided to move forward with their team.
Collect the Data
Before a footprint can be calculated, data must be gathered and while some of the information can be obtained from a good bookkeeping system, much of the information will not have been collected yet.
Rye Strategy put together a framework of information they needed which helped us start the process of collecting the data. When we had questions they were extremely helpful to provide explanations and walk us through the details.
In our situation, we worked with our landlord (square footage of office space) and our employees (vehicle commuting and use of their home office space). We calculated the transportation and deliveries our customers made to and from our office. We didn’t have to contact any of our suppliers, however, with larger operations I expect this would be required.
Carbon Footprint Results
Rye Strategy completed the calculations and provided us with a professional presentation detailing our Carbon Balance Sheet (Footprint), Mitigation Strategies, and Next Steps.
In our situation, the largest contributor of carbon emissions came from the following:
1. Software Services used in bookkeeping
2. Energy purchases for our head office
3. Employee commuting and customer deliveries
As bookkeepers, we don’t think about using energy outside of our office, however, we use specialty cloud based software such as QuickBooks, Dext, Google, TaxFolder, Microsoft, Karbon, etc. that all use Servers located outside of our office. Energy must, therefore, be used in other parts of North America or even Overseas to support our business.
Management Analysis
Now that we have this information, what can or should we do about it?
1) It was insightful to understand how minimizing our carbon footprint could also impact our bottom line. Our head office recently switched to LED overhead lighting and while that reduced our energy bill it also reduced our carbon footprint at the same time.
2) It was comforting to know that we were already doing a lot of things well! For example, our focus on a paperless office environment and having customers electronically submit receipts reduces the amount of wasted time for customers to travel to our location and spend money on gasoline.
3) So, what can we do to improve further? Rye Strategy provided a number of key mitigation strategies including using a programmable or smart thermostat to minimize heating or cooling costs after office hours. We already offer a hybrid work environment, however, every additional day staff work from home would reduce employee commuting even further.
4) While it doesn’t make sense for us to pursue Carbon ‘Insetting’ at this time (example: in-house capital projects that improve Fusion’s operations to further reduce emissions), we were curious about purchasing Carbon ‘Offsets’.
Carbon Offsetting
I personally have an interest in philanthropy and enjoy giving to organizations that meet social needs other businesses can’t or don’t provide. However, the big question when it comes to giving is always, “how much of my money will actually go to where they claim it will go”?
• Certification – Have the carbon offsets been certified by a recognized standard to ensure quality (Gold Standard, Climate Action Reserve, etc.)?
• Audits – Are offset projects validated and verified by third party auditors?
• Verification – that the project has indeed been completed and emissions actually reduced?
• Additionality – did your money spent on the project actually reduce carbon emissions?
As I was researching these topics, it also occurred to me that while planting a forest in northern ‘unoccupied’ Canada might reduce carbon in the atmosphere, it may not benefit humanity in any other tangible way. The UN’s
13 rules for Sustainable Development provide another set of criteria that I was interested in applying to our carbon offset project choices and include:
• No Poverty
• Good Health
• Clean Water
• Sustainable Communities
Purchasing Carbon Credits
At Fusion we had a staff meeting to discuss what was important to us when investing in carbon offset projects:
• Start local – are there local projects available?
• Diversification – let’s not put all of our eggs in one basket
• Cost – what was the cost relative to the benefits?
We decided to partner with both
Cool Effect in the United States and
Planetair in Canada which both had a high standard for Certifications, Audits, Verifications, and Additionality. Also, many of the projects supported local communities to reduce poverty, promote health, and grow local economies.
The projects we chose had a cost of between $15-$30 Canadian per metric tonne of CO2 offset, and included:
• Planetair’s Canada-Nature Portfolio that includes partnership with Nature Conservancy Canada to protect nature across Canada including a local project in Manitoba
• Cool Effect’s Doo Doo Does More project that captures Methane through the installation of household biogas plants in India
• Cool Effect’s Seeing the Forest for the Trees is a community based project in Mexico to help residents preserve and grow biomass in their standing forests.
Conclusion
In the end, Fusion decided to invest in three times the required carbon offsets. We received a Certificate from both Cool Effect and Planetair detailing our total tonnes of CO2 offset and Rye Strategy presented us with their Carbon Negative Gold Certification for 2022.
We plan on keeping track of our carbon footprint and helping other small businesses to do the same. If you’re interested in learning more about how Bookkeeping Fusion can help your business measure and manage its carbon footprint, feel free to
contact us.
