Beyond ESG compliance: How carbon reporting drives corporate sustainability

Organizations are under increasing pressure to make their business operations more sustainable and reduce their carbon footprint. And while the CSRD is the minimum expectation, many organizations are looking to the future and noticing the extra strategic value carbon reporting and carbon accounting can bring to the business, including cost savings, resilience, and more.

So, not only do you become more transparent about your carbon emissions (building trust in your local and global communities), but you can also enjoy the long-term benefits that go hand in hand.

What’s the difference between carbon reporting and carbon accounting?

Carbon reporting is the data shared with stakeholders, professional bodies, and customers — basically, anyone interested in learning more about your carbon emissions. This data is usually presented in a standardized format so key figures can be read easily.

Carbon accounting, on the other hand, is the process of monitoring greenhouse gas emissions. This process includes gathering details about direct emissions (Scope 1), indirect emissions (Scope 2), and other indirect emissions from your supply chain (Scope 3).

Suggested reading: A 2024 guide to Scope 3 carbon emissions (including, definition, examples, and more).

Four big benefits of carbon reporting

Who doesn’t love a benefit? Especially when the impact is potentially so far-reaching. Here are four of the biggest benefits to carbon reporting:

1. Enhancing transparency and accountability

Building trust is essential in today’s world. Investors, customers, and other stakeholders care about your sustainability efforts. According to Statista, 44% of consumers said they were more likely to buy from a brand with a clear commitment to sustainability.

By reporting emissions on demand, companies can verify their green actions, sidestepping any accusations of greenwashing. Carbon reporting allows companies to share that they’re taking real action against climate change.

2. Easily identify areas for improvement

Understanding exactly what emissions your company is producing, both directly and indirectly, helps you avoid any nasty surprises. You know exactly what you’re emitting, which means you can take actionable steps to improve and change.

Perhaps you identified a supplier with sustainability goals that don’t align with your own, meaning it might be time to start looking at new suppliers to help reduce your emissions further.

You need accurate and reliable data to identify areas for improvement and consistent carbon reporting is a great start.

3. Gives you a competitive advantage

E-commerce goods trading has never been more prevalent, meaning competition is fierce and the market is saturated. Companies are always looking for new ways to get their hands on a competitive advantage, and carbon reporting is one way to offer just that.

It’s not just about strategic pricing strategies and clever marketing campaigns; customers are more focused on the brand as a whole. If you’re known for your combative sustainable practices, you can build a robust reputation of trust, transparency, and sustainability, which can put your heads and shoulders above the competition.

4. Plan your budget more effectively

ESG data needs to work in tandem with your financial planning.

For example, your data might reveal issues with your product packaging and sustainability. And to improve it might mean making changes which also come with a financial cost.

Understanding the implications of any sustainability-driving initiatives can help you plan and stick to your budgets more accurately.

Six tips to implement an effective carbon reporting strategy

It’s all well and good talking about how transformative carbon reporting can be, but it’s meaningless if you don’t follow through and implement effective carbon reporting strategies form the get-go.

With that in mind, here are six tips when implementing a carbon reporting strategy.

1. First, understand the impact of carbon reporting on corporate sustainability
   Before you can enact real change, it’s important to understand the effect carbon reporting has on your corporate sustainability. What benefits will reporting emissions generate for your business? Being able to quantify this, particularly to stakeholders, ensures everyone is working towards the same goals from the very beginning.

2. Define your emission sources
   It’s time to map out all of your emission sources from Scope 1, Scope 2 and Scope 3 (if applicable). Before you start collecting data, you need a good understanding of which carbon sources to track.

Psst. Payhawk ESG reporting tool helps you track your Scope 3 carbon emissions on all card spend automatically.

3. Incorporate carbon reporting into your long-term sustainability planning

Sustainability planning must be part of your long-term corporate goals. It’s a cyclical, ongoing process to become more sustainable; it doesn’t happen overnight. You can make small changes immediately, but drastically reducing your carbon footprint is a strategy that requires long-term planning.

By aligning your sustainability goals with your long-term corporate goals, your sustainability practices become more focused.

Erik Stadigh co-founder & CEO at Lune, (a Payhawk partner), says:

My recommendation? Put the right processes in place before they’re mandated so that you can save time (and costs) later. If you don’t, you may have to work with consultants, which can be extremely costly.

4. Stay up-to-date with ESG regulations

As ESG standards evolve, so must you. To ensure compliance, you need to keep up with emerging industry-relevant frameworks and regulations (which can already sound like a big job). However, having a representative of each department in an internal ESG committee can ensure accountability throughout the ongoing process.

You should also use an expense management platform that includes features to track your card spend carbon emissions (like Payhawk), to make managing regulations easier and more automated. This way, you always remain compliant, meaning there are fewer things for you to worry about.

5. Innovate with advanced carbon reporting tech

The previous point moves us nicely onto this next tip: Use the right technology in your carbon reporting.

Not only does software like ours keep you up to date with ESG regulations, but it also removes the need to sit and manually calculate how much carbon John’s latest business travel emitted, which only drains your financial resources.

Our software calculates the carbon emissions for each expense directly from your business card spending. And maximises the efficiency and accuracy of your carbon data collection and analysis.

6. Continually measure the business benefits of reporting on your carbon emissions

Implementing carbon reduction strategies isn’t enough of a long-term strategy to achieve sustainability; that’s why it’s important to measure the benefits of your carbon reporting so you can realize a way forward.

It’s crucial to remain agile. This means continually identifying the risks climate change may have on your business and rectifying them before they have a lasting impact, i.e. the impact of more drastic weather on your facilities or shorter ski seasons due to impacting seasonal tourism.

Being able to accurately measure and report on the business benefits of carbon reporting — and any gaps in your roadmap — can keep everyone focused and motivated to look for new and better ways to reduce your business carbon footprint further.

As Veroniki Zerva Senior Manager of the CFO Program at Accounting For Sustainability explained in our previous webinar:

Gap analysis will help you determine what you have in place and what you need to do to close the gaps.

Overcoming the challenges of carbon reporting

Data accuracy is key when reporting your carbon emissions to the public. You want to build and maintain trust, proving that your organisation is not only compliant with ESG regulations, but also motivated to make a difference through actionable reporting and strategic planning.

At Payhawk, our ESG tracking tool makes reporting on your Scope 3 carbon emissions simple and straightforward (related to any corporate card spend) and integrates seamlessly with your business expense management processes. Employees just need to spend on their card as usual and submit their expenses digitally, and our tech will automatically calculate the CO2 generated for each business expense.

You and your finance team then have instant access to accurate, verified emissions data ready to report to stakeholders. Book a personalized demo today to learn more about our ESG reporting features and much more and see how they can directly help your business tackle growth and efficiency.