A Simple Guide to Carbon Accounting for Businesses

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May 19, 2026

On April 30, 2026

What is Carbon Accounting?

Carbon accounting is the process of measuring the greenhouse gas emissions produced by an organisation. By understanding where emissions are generated, organisations can make informed decisions to reduce their environmental impact, improve efficiency, and meet legal and stakeholder expectations.

What is a Carbon Footprint?

Carbon accounting is the process, while a carbon footprint is the final output of that process. A carbon footprint represents the total greenhouse gas emissions caused directly and indirectly by an organisation.

Carbon footprints can be calculated at different scales, ranging from individual products and services to an entire organisation. In this article, we are focusing on whole-organisation carbon footprints.

Organisational carbon footprints are typically divided into three categories:

Scope 1 – Direct emissions from sources owned or controlled by the organisation (e.g. fuel combustion, company vehicles).
Scope 2 – Indirect emissions from purchased energy (e.g. electricity consumption).
Scope 3 – Other indirect emissions across the value chain (e.g. suppliers, business travel, waste, commuting).

For more detailed carbon footprints, a clear distinction is made between direct and indirect emissions using an organisational boundary. There are several recognised methods for defining this boundary, but as a general principle it should align with the organisation’s financial reporting boundary. Activities within the boundary are typically considered Scope 1 while emissions outside the boundary generally fall into Scope 3. Scope 2 is for a specific category of indirect emissions from purchased energy.

Key UK Carbon Reporting Frameworks

There are a variety of carbon reporting standards, frameworks, and regulations relevant to UK organisations. Some of the key frameworks that Loreus can support organisations with include:

Streamlined Energy & Carbon Reporting (SECR)
PPN 06/21
Science Based Targets initiative (SBTi)
ISO 14064 (-1, -2 & -3)
GHG Protocol Corporate Accounting and Reporting Standard
PAS 2060
Global Reporting Initiative (GRI)

Why Carbon Accounting Matters

Carbon accounting can help organisations to:

Comply with legal and contractual requirements such as SECR and PPN 06/21.
Better understand their environmental impact.
Meet client and stakeholder expectations.
Demonstrate environmental performance improvements.
Develop a competitive advantage.
Identify opportunities for efficiency improvements and cost savings.
Support third-party certifications and initiatives such as SBTi.

Where to Start

Producing your first carbon footprint does not need to be overwhelming. We regularly support organisations completing their first footprint and generally encourage a staged and practical approach.

A typical starting process may include:

Establishing the reporting period, usually aligned with the financial reporting year.
Collecting readily available data such as energy consumption and travel information.
Calculating emissions using recognised conversion factors.
Reviewing the results to identify data gaps and opportunities to improve accuracy.
Identifying the largest emission sources and exploring practical reduction opportunities.

Focus on Practicality

Once a carbon footprint has been established, the next step is to use the information to guide a carbon reduction strategy. The most effective strategies are data-driven, realistic, and achievable.

With the largest emission sources identified, organisations can begin researching reduction opportunities and engaging relevant staff to benefit from their operational knowledge and experience.

Rather than aiming for perfection from the outset, organisations should focus on:

Establishing accurate baseline data.
Developing clear and repeatable processes.
Implementing reliable monitoring systems.
Continually improving data quality and reduction initiatives over time.

Final Thoughts

Carbon accounting is the process used to calculate a carbon footprint, which is typically divided into Scope 1, 2, and 3 emissions. Organisational boundaries are used to distinguish between direct and indirect emissions, and a range of voluntary and mandatory reporting frameworks apply to UK organisations.

Your first carbon footprint does not need to be perfect. In most cases, organisations improve the quality and detail of their reporting over time. The key objective is to establish a practical and reliable baseline that can be used to support informed decision-making and meaningful carbon reduction initiatives.

If you would like to learn more about how Loreus can help, please reach out using our Contact page.

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