After anticipating the escalating risks associated with climate change, investors and the financial sector are becoming more and more insistent on an ESG plan and a roadmap to net-zero carbon emissions. Sustainability has moved to the forefront of the global discourse. Despite this, as per Forbes, only 60% of businesses have a sustainability strategy in place, even though 90% of corporate leaders understand the vitality of sustainability.
Adopting a sustainability strategy has become very important not only due to environmental concerns but also due to the demand of stakeholders across the supply chain to collaborate with sustainable businesses. Consequently, the construction industry which is a major contributor to climate change, accountable for a global 37% of carbon emissions, is also required to undertake measures.
One of the strategies to achieve net zero and ESG is carbon accounting. Carbon accounting describes the procedures used to calculate the amount of carbon dioxide emissions generated by a business. It is frequently used to produce carbon credits, which are exchanged on carbon markets by businesses, organizations, and people. At present, WRI and WBCSD GHG Protocol guide carbon accounting and efforts to reduce emissions.
Carbon Accounting As Net Zero and ESG Strategy
A carbon emissions assessment for any industry determines its carbon footprint by calculating the total amount of greenhouse gases generated by it, either explicitly or implicitly. The generated information can be used as a commercial tool and set the stage for comprehending and dealing with the effects of climate change. In lifecycle construction, following a bottom-up strategy, carbon accounting methodology takes account of emissions from construction activities, material manufacturing, on-site construction, waste disposal, operation, and environmental intervention. By trading carbon credits through the carbon chain- the reporting load, early risk addressal, and complexity control of ESG regulation can be achieved.
Technology and Carbon Accounting
Automation has further improved the area of carbon accounting. In the next five years from 2021, the market for carbon accounting software is anticipated to rise by 9.61 billion USD, with a CAGR of 28.66%. Construction and building lifecycle stakeholders can also use software to automate several of their carbon accounting tasks, such as monitoring the progress of their carbon reduction goals, using AI and machine learning technologies.
By automating the collection of the data needed to report on the building lifecycle and combining it into a unified system of record, carbon accounting software enables significant insights and results on the asset level. With asset-level emissions information, data-driven purchasing decisions, risk identifications, emissions reductions, and environmentally friendly alternatives can be explored.
It systematically gathers a variety of data throughout the year, pre-defines data allotment and reporting rules, and offers a rich collection of tools to authenticate data completeness and reliability before the accounting season begins to assist in automating the end-to-end accounting process.
By assuring data integrity and audibility at each stage of the accounting process, automation aids in producing financial-grade reports. This will help the stakeholders in the construction industry to establish a competitive advantage via the invention and low-carbon processes and products. At the same time, it will also provide them with reliable, auditable reports that benchmark efficiency and help them demonstrate ESG leadership.
By controlling and disclosing carbon risk, it will assist them to gain access to green financing and take advantage of possibilities to meet the rising demand for low-carbon built environments. The use of carbon accounting software will make it possible to save time by having access to a library of compliance and management reporting templates. This saved time enables businesses to focus their efforts on accomplishing their strategic objectives.
Carbon accounting will be very essential in the allocation of accountability for the roles that various levels of the building lifecycle industry and value chain play in generating carbon emissions. To reach its Net Zero goal, the construction industry must frequently embark on an emissions reduction journey, attempting to boost productivity, implement renewable energy sources, and buy offsets. Additionally, carbon accounting feeds the environmental element in ESG reporting, which can gauge and monitor sustainability progress with pre-established KPIs or benchmarks.
Reducing greenhouse gas emissions on a worldwide scale has become critical to delaying climate change and achieving sustainability. And for any decarbonization strategy to be successful, a data-driven approach is required so that strong and reliable reporting as well as informed strategy and tactics to reduce carbon emissions can be achieved.
The building lifecycle industry also needs to reduce supply chain emissions for the sake of a future without catastrophic climate change and to increase resilience. Technology-backed carbon accounting can empower the industry to achieve sustainable results in its processes and make the industry future-proof by calculating and reducing its carbon footprint.