Carbon Accounting

Trend Definition 

What is the essence of this trend? What is its impact? 

• Essence: Carbon Accounting, or "greenhouse gas accounting“, systematically quantifies scope 1, 2, and 3 CO2 emissions to cover the entire value chain 
• Impact: Carbon Accounting allows companies to reach a high level of transparency regarding their emissions and enables them to identify areas and levers they need to tackle in order to reduce their emissions

Trend Drivers 

Why is this trend emerging now? What’s changing? 

• Stakeholder Expectations: Various stakeholders insist on transparency and sustainability regarding the emissions caused along the entire supply chain
• Decarbonisation Targets: Regulations aim at all scopes of emissions, therefore companies must ensure a profound knowledge regarding their emissions and the levers they need to pull to reach these targets
• Connectivity: Modern technologies enable companies to closely track the emissions they have caused and the ones already included in a product. This information can then be passed on to the next player in the supply chain

Use Cases 

How to apply this trend? 

• Software Enablement: One-stop-shop for transparency in emissions of all scopes 
  Example: The IBM Envizi ESG Suite enables companies to automatically collect, consolidate and analyse CO2 data, thereby providing procurement departments with full transparency regarding the emissions imported through procured goods and services
• Tailored Sustainability Strategy: Clear targets for suppliers 
  Example: Transparent insights allow procurement departments to set clear emission goals to its suppliers to reduce scope 3 emissions since they often account for more than 70% of the business’s carbon emissions

Procurement Relevance & Response Strategies 

How should Procurement adapt its Processes, Organisation, and Strategy?

• Procurement at the Core of Carbon Accounting: Procurement departments often have the biggest lever regarding reducing carbon emissions, therefore they must be at the centre of information exchange regarding all emission-related information
• Supplier Emission Reporting: Procurement departments should require suppliers to report detailed information on the emissions contained in the product