Is your business accounting for its carbon footprint? If you sell products on platforms such as Amazon, Shopify and Etsy, it's likely that you'll increasingly need to do so. That's where carbon accounting comes in.

What is carbon accounting?

Carbon accounting is the process of measuring and tracking greenhouse gas emissions (GHGs) generated by a business. So, how does carbon accounting work? The process involves tracking emissions to understand their sources, quantify their impact and identify opportunities for reduction. Emissions are broken down into three main categories (or scopes) as pictured below: 

Scope 1: Direct emissions from sources that are owned or directly controlled by the organisation, for example company-owned vehicles.

Scope 2: Indirect emissions from energy consumption, typically emissions from purchased electricity, steam, heating, and cooling.

Scope 3: All other indirect emissions, which includes indirect emissions that occur in the company’s value chain. These can be the most challenging to quantify and manage, as they encompass a broad range of activities, such as, emissions from the production of purchased goods and services, transportation and distribution, use of sold products, waste disposal, business travel, employee commuting, and leased assets.
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Why is carbon accounting important?

Environmental responsibility is an ever growing issue within society and the importance of companies. Simply put, you can’t reduce what you don’t measure. Carbon accounting provides the data needed to:

• Make smarter, more sustainable decisions
• Cut unnecessary costs (e.g. energy waste or inefficient logistics)
• Future-proof your business against upcoming regulations
• Show your customers you take climate responsibility seriously

In a world where,“70% of employees report that sustainability programs make employers more appealing” and products/ services offered as “sustainable,” are proven to increase sales, this matters.
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Why is carbon accounting relevant for Ecommerce Businesses?

Even if you don’t have a warehouse or manufacturing plant, your business still impacts the environment. Here’s how:

• Packaging (often single-use) contributes to waste and emissions.
• Shipping and logistics generate carbon, especially for next-day or international deliveries.
• Returns (a big part of eCommerce) can double emissions per order.
• Digital infrastructure (data centers, website hosting, email marketing) also uses energy.

If you sell via major platforms, it's likely that you'll increasingly need to report on your carbon footprint. Customers are becoming more conscious—and they notice brands that show real climate action. We foresee platforms rewarding businesses that implement carbon accounting with selling perks or customer-facing badges. Over time, marketplaces may well make this mandatory for sellers.
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What is the UK’s position on carbon accounting and does it apply to me?

The UK has a legally binding commitment to reach net zero by 2050, and this shapes business policy.

• Large UK companies (a turnover of £36 million, a balance sheet of £18 million or 250 employees) are required to report emissions through SECR (Streamlined Energy and Carbon Reporting).
• Many public procurement and funding applications now ask for carbon reduction plans.
• Even if you’re a smaller business, you’ll increasingly be expected to report emissions - especially by partners or platforms such as Amazon and Shopify.

Even if it is not yet a legal requirement for your size or sector, starting now puts you ahead.
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What is the world position on carbon accounting?

Globally, the picture is moving in a similar direction.

• EU Regulations, SEC proposals and international ESG standards are all introducing mandatory carbon reporting 
• Businesses of all sizes are being encouraged to/ required to begin accounting for carbon footprints.

For UK sellers exporting abroad this global change will have an important impact on their business.
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Who can help me with carbon accounting?

We can! If you'd like our help with this, please get in touch today.
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What are the benefits of carbon accounting?

There are real business gains to be had, outside of compliance:

• More efficient operations results in cost savings
• Better supplier relationships (many large organisations are and will have to screen vendors/ partners for sustainability)
• Improved relationships with eco-conscious customers/ suppliers
• A better position in funding applications, tenders, and green supply chains

Employing carbon accounting methods will help you further understand your operations and identify business inefficiencies, giving you a clearer picture of where improvements can be made.
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What is the future of carbon accounting?

Expect corporate carbon accounting to become as standard as financial accounting in the next decade. The trends to watch:

• Widening regulatory requirements; It will no longer just be large organisations that have to report but smaller companies as well
• Carbon data will be integrated into financial metrics to give a more comprehensive view of a business
• Automated data tracking across platforms such as Amazon and Shopify

What are the challenges associated with carbon accounting?

There are multiple challenges that organisations are likely to face when implementing carbon accounting standards:

• Estimating Scope 3 missions, like product use or delivery emissions
• Limited internal metrics on energy usage and product packaging impact
• Confusing terminology and the constantly evolving frameworks
• Time and resource constraints can make it difficult to accurately track emissions.
• Costs associated with carbon accounting training

Tools are getting better and as the carbon accounting evolves as will the resources provided to businesses to accurately track their carbon emissions.
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Last Word

We hope this has shed light on the concept of carbon accounting and how you can get ahead of the curve before these standards become commonplace. We recommend working with accountants who are able to analyse and report on your business's carbon footprint, not only for potential future compliance but for the added efficiency and cost savings these insights could provide. If you'd like to work with us, please get in touch on this page.

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