Carbon accounting is complicated
It’s hard to not run into debates over carbon accounting. Almost all of the 6 ‘W’s have a certain degree of contention around them. What environmental metrics do we report? Where and how do we report them? When do we report them – every year, every quarter, in real time? Who reports them and for what primary purpose – to provide a measuring post for our collective progress towards the Paris Accord, to shame the high emitters, or to scope out sustainability-related risks to a company’s financial performance (the most capitalist of aims)?
That’s why standards and frameworks are so important. Standards and frameworks aim to settle the “W”s. But the sheer diversity of reporting guidelines is most indicative of the fact that there is no “one standard.” A few of the most popular include: the GHGRP, SASB, GRI, CDP, CDSB, PRI, DJSI, TCFD…I’ll be the first to admit that keeping track of all of them makes my head spin.
Too many standards
A few efforts have been made over the years to align multiple standards and to clarify the similarities and differences between standards and frameworks. The CDP and GRI signed an MOU in 2013 to increase consistency between them. The CDSB published an Alignment Table in 2018 that sought to clarify which requirements are shared between standards. And most recently, SASB and GRI announced in July that they would be working together to share ways in which the two standards can be used with each other.
Even so, it’s not enough. The sheer complexity of the sustainability reporting universe creates a daunting task for anyone just beginning this journey. For larger companies, this may just be a matter of hiring a consulting firm to wade through the most up-to-date dialogue and painstakingly piece together a generally acceptable sustainability report. For smaller companies though, this could prove to be a prohibitive use of resources.
Just like Turbotax
The ease by which carbon accounting can be done is a determinant of reporting participation. Just look at our individual income taxes for example. In the US, the IRS’s returns received as a percentage of the overall population has increased from 42% to 47% over the last 40 years. For something that is a federal requirement, that is a substantial jump. Moreover, the number of people who have e-filed returns has increased from nearly zero in the 1980s to over 89% in 2019. TurboTax, the most recognizable and widely adopted tax prep software, charted its growth by focusing on ease of use and design. The role of software (and in particular, easy-to-use software) in aiding compliance to our taxation system is clear.
Because of the multiple standards, multiple reporting agencies, multiple formats, multiple goals, and continuous revisions and addendums that currently plague the carbon accounting world, there is an even greater need for a TurboTax-like software to ease the corporate reporting burden, systematically track data inputs and reporting frameworks/standards, and allow the opportunity for more companies to manage their carbon footprint. A company’s challenges in this process are certainly much different and more complex than an individual’s tax returns…which is why we expect that a popular solution will likely require an extraordinary understanding of company data and data management, a grasp of organizational structures, an intuitive onboarding process, comprehension of the nuances of each reporting standard, and patience, patience, patience.