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The journey towards a sustainable future demands more than static numbers

Unlocking the power of dynamic carbon accounting

May 3, 2024
7
min read
Written by
With the rise of the EUs Corporate Sustainability Reporting Directive (CSRD), many companies are gearing up for a seismic shift in how they track their sustainability performance, in particular their carbon emissions. With a stated aim of bringing sustainability disclosures up to the level of financial disclosures, the EU has leaned on a vast landscape of sustainability reporting frameworks in an attempt to standardize the information provided by companies. However, there is an important difference between carbon accounting and financial accounting: carbon accounting is not a static exercise, it must by necessity be a dynamic exercise. For finance-centric minds accustomed to the notion of fixed accounting numbers for a given year, the fluidity of carbon accounting may initially seem unsettling. Yet, it is this very fluidity that empowers organizations to stay agile, responsive, and, most importantly, accurate in their decarbonization efforts. The ability to refine, improve, and recalculate emissions is the fundamental principle that sets dynamic carbon accounting apart from traditional financial accounting.
What is dynamic carbon accounting?

Dynamic carbon accounting refers to an approach in carbon accounting that recognizes and adapts to changes in data, methodologies, technologies, and scientific understanding over time and adjusting calculations accordingly. This approach allows for continuous refinement and improvement in assessing carbon emissions, ensuring that reporting remains accurate and up-to-date.

Why dynamic carbon accounting matters

In the realm of carbon accounting, the ability to recalibrate strategies in response to evolving standards, improvements in technology, science and data availability is fundamental. Dynamic carbon accounting enables organizations to make informed decisions based on the most current and relevant information available, ultimately supporting more effective climate action and sustainability initiatives.

To illustrate this, emission factors that are based on the scientific consensus set by the Intergovernmental Panel on Climate Change (IPCC) would experience significant changes when transitioning from previous scientific consensus to the newest scientific consensus, e.g. updating their methodology to adhere to the Fifth Assessment Report (AR5) from the Fourth Assessment Report (AR4). Take, for instance, the case of refrigerant emission factors. When the UK governmental database for emission factors (DEFRA) updated their methodology, the global warming potential value for nitrous oxide decreased from 298 kgCO2e/kg to 265 kgCO2e/kg. Consequently, organizations adhering to outdated methodologies risk misallocating resources, investing in emission reduction efforts that may not align with the latest scientific understanding.


How MoreScope embraces dynamic carbon accounting

At MoreScope, our commitment to improving the methodology on our platform stems from our dedication to enhancing strategic, data-driven decision-making for our clients. By integrating the latest methodology into our platform, we ensure that the data presented is as accurate as possible and aligned with the most up-to-date data, scientific consensus, technology, and best practices. This approach empowers organizations to make informed decisions based on current and relevant information, fostering positive environmental outcomes and long-term business success. 

Maintaining consistency in our methodology is essential for meaningful comparisons over time. At the same time, we also recognize that accuracy is paramount in providing reliable insights into our clients' environmental footprint. Therefore, when we make changes to our methodology to enhance accuracy—such as adjusting our spend-based model with inflation rates, improving estimates, improving our algorithms for matching sectors of operation with S1-3 categories or incorporating the newest AI technologies and macro models—we proactively ensure consistency in reporting. This involves recalculating emissions for previous years using the updated methodology, ensuring that historical data remains comparable and aligned with the latest standards. At the same time, we recognize the need to archive and store historical data as they have been reported and communicated to stakeholders, and are committed to ensuring that our clients have easy access to past reports.

Balancing consistency and accuracy in our methodology is crucial for providing our clients with the most reliable insights possible, forming a robust basis for data-driven decision-making. Consistency allows for meaningful comparisons over time, revealing trends in environmental performance, while accuracy ensures that these insights accurately reflect current conditions.




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