Choosing the right carbon accounting software: 6 tips for enterprises

The world of carbon accounting is evolving fast. 

A few years ago, companies mainly wanted to use carbon accounting for “climate neutrality” certifications and carbon offsets. These days, a new landscape of regulations, voluntary reporting requirements, and decarbonization goals are driving buyer decisions. 

As a result, enterprise needs are becoming more complex and nuanced. The marketplace of possible solutions is growing to meet these needs, making finding the right software feel daunting. 

How can teams navigate their options and choose a solution that best meets their requirements?

Today, we’ll unpack six key tips to help you find and choose the best solution for your enterprise.

Tip #1. Know your carbon accounting requirements   

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The first tip to finding the right solution is to map out your carbon accounting project requirements in detail. Aligning priorities as an organization will allow you to anticipate the features you need. 

For instance, if you must comply with the CBAM regulation in the EU, you’ll need a solution that lets you track and report on the purchased quantity of imported production material, country of origin, and supplier information. 

What should you consider when listing your requirements? Let's take a look at the most important factors: 

• Use cases: your main needs for carbon accounting, whether that’s regulatory compliance, voluntary reporting frameworks, decarbonization planning, or a combination of applications.

• ‍Scope coverage: the level of detail required across Scopes 1-3. Some tools mainly support Scopes 1 and 2, so if you plan to report on Scope 3, ensure your solution actively supports this need.

• Inventory boundaries: the range of greenhouse gas effects, sources and sinks, and greenhouse gasses you need to account for.

• User expertise: the types of people who will use the solution and their current carbon accounting expertise. The more guidance the tool provides, the more accessible it will be to users with varying levels of knowledge.

• Budget: the budget you can allocate for carbon accounting, management, and reporting tools.

• Timeline: the amount of lead time you need for data outputs. For instance, if you need an initial report within the next 3 months, a turnkey solution might be ideal. An in-house solution might be appropriate if you’re just starting to collect data and have a longer time horizon.

• Stakeholders: a clear understanding of who is pushing this initiative. If it’s a priority for C-level, you’ll likely have more budget available and can pursue more comprehensive tools.

It’s also important to try to anticipate future needs. For example, Cozero account executive Simon Fürstenberg mentions two important use cases: strategic decarbonization planning and the calculation of Product Carbon Footprints.

You might start with a basic Corporate Carbon Footprint (CCF) now, but keep in mind you might later need a Product Carbon Footprint (PCF) to get a more comprehensive report. “Then you need another software,” he says. “But it would be better to have all of your CO2 data aggregated in one place and effectively use this data for your reduction pathway.”

Regardless of your particular use case, there’s a lot to consider. The bottom line is to anticipate your needs as best you can now, so you can save time and inconvenience later from adding or switching tools.

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Tip #2. Decide if software is your best option for carbon management

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The next tip is to consider whether you should use software or an alternative solution like in-house carbon accounting or carbon accounting via a consulting firm. 

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Keeping carbon accounting in-house

In Cozero’s experience, the in-house approach is often most appropriate when the activity you’re assessing is low complexity. An in-house approach often involves tools like Excel spreadsheets and manual data entry.

An in-house process might make sense if you’re mainly just calculating scope 1 and 2 emissions or have a smaller reporting period window. 

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Hiring a consultant for carbon accounting

Consultants can be appropriate when dealing with new, complex regulations on very tight deadlines. The big consulting firms have extensive experience working with large enterprises and have top talent available. 

The caveat is that while consultants will save you time on calculations, you’ll still spend time identifying and gathering data. Simon also points out that when companies use consultants for emission calculations, they usually have limited insights into the methodology. This makes it challenging to use outputs for anything other than pure reporting.  

“The consulting firm does the magic and provides the footprint, but the company doesn't get any insights,” reminds Simon . “So this is not helping them actually reduce and decarbonize.”

You can avoid these frustrations by collecting recommendations from peers and prioritizing consultants who help with decarbonization strategy, not just carbon accounting.

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Opting for carbon accounting software

Software can provide a middle ground, as analysis from initiative climate international confirms. Assuming the software meets your requirements, choosing a carbon accounting software can provide a time- and cost-efficient solution while still providing accurate data. 

Simon emphasizes that if you do opt for software, it’s important to strive to own or “internalize” your climate management. This way, you can integrate the knowledge and expertise into your company over the long term.

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Tip #3. Understand the types of carbon accounting software

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As you evaluate whether software can meet your requirements, it’s important to understand the main categories. The key types are:

• End-to-end carbon management vs. only carbon accounting: Carbon accounting tools come on a spectrum. Some providers, like Cozero, offer full carbon management capabilities, including decarbonization planning and reporting. Others provide calculations without in-depth analysis or scenario planning.

• Activity-based vs spend-based calculation method: Carbon accounting tools vary in accuracy depending on the method used. Activity-based methods like those used by Cozero rely on specific operational data (e.g., fuel usage) and precise emissions factors. Spend-based methods estimate emissions from financial expenditures and general emissions factors, which can be quicker but less precise. 

• Industry-specific vs generalized: Another major differentiator is whether a software serves a specific vertical or offers a general solution for many industries. Cozero, for example, focuses on the logistics and manufacturing industries.

A company’s website or product demo should help you know which categories apply to their tool. 

Tip #4. Prioritize industry-specific solutions when available

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More companies are opting for industry-specific solutions, according to 2023 research from Verdantix.

Simon Fürstenberg, Cozero account executive, agrees with this approach, saying, “it’s always a good idea to take an industry-specific solution.” 

Since Cozero focuses on logistics and manufacturing, the Cozero Climate Action Platform offers highly relevant capabilities for these verticals, including industry-focused emissions factor databases, tools for understanding thesupply chain, and automating sustainability reporting for industry frameworks and standards such as ISO14083 or CBAM.

In addition to the specific software features, Simon shares that Cozero’s team has extensive carbon management expertise in their focus on logistics and manufacturing industries. This allows Cozero’s product and success teams to help customers navigate complex regulatory demands and prioritize developing relevant future features, making the industry focus the perfect “value add.”

To identify the best carbon accounting solutions for your sector, you can seek recommendations from industry peers and ask providers whether they have relevant industry experience. For example, Vaayu could be a good option for retailers and Carbon Maps for the food industry. 

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Tip #5. Consider the benefits of end-to-end carbon management software

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Another major factor to consider is whether the software supports decarbonization planning and carbon management.

“End-to-end carbon management is huge value,” Simon explains. “With carbon emission calculations, you have a number, but it doesn't really help you to act. A solution like Cozero’s actually helps you go into your decarbonization planning, set your targets, and build a decarbonization strategy so you can reduce your emissions.”

This is important from multiple perspectives. With the changing regulatory landscape, carbon accounting is no longer just about calculating emissions but also about creating a climate transition plan and reducing emissions. In the coming years, governments will hold firms accountable for taking action in these areas due to legislation like the CSRD.

It’s also a matter of keeping up with your competition. Verdantix research from 2023 shows that 68% of companies surveyed identified net zero target-setting, pathways and forecasting as “high priority” or “very high priority.” 

Working with a carbon accounting platform that helps you strategize, plan, and manage your emissions is a powerful way to stay compliant and keep up with competition.

Features to look for in end-to-end carbon management include: 

• tools to help you identify carbon hotspots 
• forecasting tools to anticipate future emissions
• and reporting tools to keep stakeholders informed

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Before adopting a tool like this, having leadership on board is helpful. After all, integrating decarbonization efforts into your strategy and planning requires alignment with the company strategy.

Then again, the right carbon management software can provide you visibility into cost savings and business opportunities to show leadership the true value of these tools. 

“We always bring financial metrics into decarbonization planning,” Simon explains. “It’s very helpful to have the return on your climate investment in mind, especially if you’re in an industry like logistics that is very revenue driven.” For instance, if you’re deciding about decarbonization investments like switching to a renewable energy provider to power a warehouse, the right tool can help you know when this investment will pay off from a financial perspective.

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Tip #6. Make sure you have transparency in your accounting solution

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Lastly, consider how transparent your solution will be regarding emission calculations. This is especially important for regulations, as auditors require visibility into your methodology and calculations.

“In Cozero’s Climate Action Platform, whenever there is a calculation done, we transparently show the emission factor and the database,” Simon says. “This is very important for audits. The auditor can go into Cozero with an auditor account and verify the footprint.”

Not all providers give you this transparency. You will have the final calculations, but the methodology is not always available. To avoid this frustration, ask about the transparency of the calculations before becoming a customer.

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The best carbon accounting software for you

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So what’s the best carbon accounting software for your firm? At the end of the day, the right carbon accounting solution for you is one that meets your unique requirements, serves your industry, and helps you take real action on decarbonization.

We’re in an exciting time in the world of carbon management. Carbon accounting solutions like Cozero’s Climate Action Platform make it easier for companies to calculate emissions and drive key business results through actionable climate insights. And buyers are realizing that true carbon accounting means integrating sustainability into business strategy and taking climate action. 

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Resources

• initiative climate international. 2023. “Carbon Footprint Measurement: A Concise Guide for Companies and Their Lenders.” https://dwtyzx6upklss.cloudfront.net/Uploads/t/l/g/ici_carbon_footprint_measurement_september_2023vf_288998.pdf 
• ‌Verdantix. 2023. “Green Quadrant: Enterprise Carbon Management Software 2023.” Default. November 3, 2023. 
• https://www.verdantix.com/report/green-quadrant-enterprise-carbon-management-software-2023 
• ‌Science Based Targets Initiative. 2015. “Science Based Targets.” Sciencebasedtargets.org. 2015. https://sciencebasedtargets.org 

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