What Is Carbon Accounting? A 2025 Guide for Finance and ESG Leaders

Corporate carbon accounting is the process of tracking a company's greenhouse gas (GHG) emissions.

It's valuable in 2025 due to evolving government regulations, mounting pressure from investors, and specific net-zero emissions commitments that businesses make.

After all, your organization can't claim to be net-zero—or even care about global warming—if it doesn't collect carbon emissions data and use it to improve operations.

Keep reading for a detailed carbon accounting definition, how the carbon accounting process works (including common methodologies and important standards), how to start tracking your company's carbon footprint, how Sylvera supports carbon accounting initiatives, and more.

What is carbon accounting?

Carbon accounting, sometimes referred to as greenhouse gas accounting, is the process of tracking, monitoring, and reporting on the GHG emissions a business produces.

Think of it like financial accounting, but instead of reporting on your company's financial status, you report on activities that impact climate change—and possibly your brand's reputation.

It's important to understand the difference between carbon accounting and carbon assessment.

Whereas carbon accounting is the technical process of tracking emissions data for a company, carbon assessment is the process of using said emissions data to inform decision making. You could say that carbon accounting gives you data, while carbon assessment determines what to do with it.

Note: At Sylvera, we use the term "carbon accounting" in a different context for our Ratings product. Put simply, we give projects a "Carbon Score" or "Carbon Accounting Score" to verify reporting accuracy.

Projects that accurately represent the avoidance or removal of CO2 and other greenhouse gases, as measured in carbon dioxide equivalent (CO2e), receive high scores. Those that don't receive low scores. This helps our users identify quality projects and carbon credits.

Learn more about our Carbon Accounting Score here.

The benefits of carbon accounting

Carbon accounting enables businesses to prove compliance, develop effective net-zero emissions strategies, and connect with potential customers.

• Compliance: World governments, industry bodies and global standards authorities enforce environmental regulations. Failure to meet said regulations can lead to expensive fines and public backlash. Carbon accounting helps businesses calculate GHG emissions so they can avoid or offset them via credits.
• Strategy: How does a company become net zero? It calculates its GHG emissions, then implements a plan to reduce them. Carbon reporting allows businesses to understand the impact they have on the environment so they can limit climate-related risks.
• Customers: Many people care about corporate carbon footprints. Carbon accounting enables organizations to not only identify and reduce carbon dioxide emissions, but also market this fact to potential customers, gaining support in the process. Put simply, a commitment to transparent sustainability reporting can have huge financial benefits.

So, is carbon accounting mandatory? No, but it can be incredibly valuable to organizations. As such, business leaders should consider implementing the best practices in this guide.

How does carbon emission accounting work?

Total greenhouse gas emissions are segmented into one of three categories, as defined by the Greenhouse Gas Protocol. Then, carbon footprints are calculated. Let's take a closer look:

Scope 1 emissions

Scope 1 emissions are direct emissions produced by your company via daily operations.

Examples include burning fossil fuels to run vehicles and using company equipment to produce chemicals. Basically, if your company controls the source of GHG emission, it's Scope 1.

Scope 2 emissions

Scope 2 emissions are emissions caused by energy consumption.

Examples include purchasing electricity to illuminate, heat, and/or cool office space, as well as buying steam to run machines. If your business uses energy, it produces Scope 2 emissions.

Scope 3 emissions

Scope 3 emissions are indirect emissions that occur throughout a company's value chain. Because of this, Scope 3 emissions are often referred to as "supply chain emissions". 

Examples include purchasing raw materials, employee commutes, leased office space, business travel, waste disposal, and even the use of your company’s products.

Calculating carbon footprint

Gather accurate data about all of your company's direct and indirect emissions. Then use one of the carbon accounting methodologies below to calculate your organization's carbon footprint.

If that sounds like a lot of work, you can use carbon accounting software to streamline the process of reporting emissions. Just be aware, you'll still need to roll up your sleeves and collect data regarding your company's direct and indirect greenhouse gas emissions.

To get your started, know that ~5% of your organization's greenhouse gas emissions will fall into Scope 1, ~5% will fall into Scope 2, and ~90% will fall into Scope 3.

Two common carbon accounting methodologies

There are two methodologies you can use to calculate your company's greenhouse gas emissions: the spend-based method and the activity-based method. Each has pros and cons.

The spend-based method

With the spend-based method, emissions calculations are made by multiplying the cost of purchased products and/or services by related emission factors. When said costs are combined with Environmentally Extended Input-Output (EEIO) models, users can predict emissions.

The spend-based model is easy to implement and requires a limited data set, which makes it a strong methodology for first-time carbon accountants. But it's less accurate than the activity-based method and doesn't represent residual emissions throughout the supply chain.

The activity-based method

With the activity-based method, emissions calculations are made by measuring physical activity, like purchasing X gallons of fuel. Customized emissions factors are then applied to this data.

The activity-based model is known for accuracy. As such, it reflects actual emissions sources and consumption better than the spend-based model. But it requires more time to implement and detailed information regarding operations, which some companies don't have access to.

Using a hybrid approach

Good news: you don't have to choose between the spend-based method and the activity-based method. You can use them both to improve the speed and accuracy of your carbon accounting.

For example, you might use the spend-based method when you only have access to financial data, then use the activity-based method when you know more about your company's activities.

This hybrid approach will help your company remain transparent and support claims that align with the World Resources Institute, the World Business Council, and other industry standards.

Important carbon accounting standards and frameworks

Once you choose a carbon accounting methodology, you should pick an established calculations framework to guide your efforts. Here are five common options:

• GHG Protocol: Often referred to as the "gold standard" for carbon accounting, this framework helps users calculate emissions across all three scopes. 
• ISO 14064: This framework helps users report GHG emissions and removals by providing specific verification requirements. It's used by organizations around the world.
• CDP: Formerly known as the Carbon Disclosure Project, CDP is a carbon accounting framework that rates companies based on their climate disclosures. This encourages said companies to improve both climate-related performance and reporting accuracy.
• TCFD: An abbreviation for the Task Force on Climate-Related Financial Disclosures, the TCFD makes recommendations that help companies improve GHG accounting.
• SBTi: Short for Science Based Targets Initiative, the SBTi is NOT a true enterprise carbon accounting system. But it does help users set realistic emissions reduction targets that align with both modern science and the Paris Agreement. 

Calculating and reducing carbon emissions is hard work. The right framework, in addition to the right accounting methodology, will streamline your efforts and make them more effective.

Sylvera can help too. Our platform's Monitoring suite will give you data you can use to improve your emissions estimations, by tracking the real impact of the carbon projects you invest it, making sure they're as accurate as possible.

Why calculating GHG emissions matters in 2025

We've covered a lot so far, but you might be wondering, "Why is annual carbon accounting important? Maybe I should focus on other initiatives..." That would be a mistake.

First, carbon accounting helps companies comply with government regulations. For example, the United States Environmental Protection Agency (EPA) developed the Clean Air Act and Air Pollution initiative to solve multiple air pollution issues via modern science and technologies. Failure to comply could lead to hefty fines and ongoing legal trouble for your business.

Second, carbon accounting practices give you data across your entire value chain. How do company actions impact climate change? You won't really know until you calculate emissions.

And third, carbon accounting principles build trust. Stakeholders and customers can look at the data and believe that your company is working towards its emissions reduction targets. This could potentially lead to more investment, sales, and success for your organization. 

Top 3 Challenges in carbon footprint accounting

As mentioned, carbon accounting is hard work. In fact, there are numerous challenges you'll need to overcome to track emissions and promote sustainable development for your company.

Poor data quality

It can be difficult to acquire necessary data for carbon accounting. Important information is often stored in disconnected spreadsheets—if it's stored at all. These data silos increase reporting risk and reduce transparency. Luckily, they can be solved via standardized reporting processes and automation.

Scope 3 complexity

Generally speaking, 90% of company emissions fall into the scope 3 category. Sadly, these emissions are the hardest to track because they’re outside of the reporting organization's control. To track scope 3 emissions, you'll need to coordinate with suppliers, buyers, etc. across the supply chain, set up standardized data exchanges, and invest in tools to build simplified, effective data workflows. 

Lack of consistency

Many companies suffer from inconsistency when it comes to carbon accounting. Different employees use different methodologies to calculate emissions, which makes it near impossible to audit performance. Fortunately, by implementing standardized carbon reporting workflows, you can overcome this challenge for your business.

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While we can't solve every GHG accounting problem, the Sylvera platform was specifically designed to improve data quality. Use our tools to properly assess carbon projects (our NBS biomass measurement tools are especially effective) and track project progress with confidence.

Carbon accounting: managing emissions and offsets

Carbon accountants must do more than track emissions. They must account for carbon credits their companies purchase to offset emissions and prove compliance and sustainability claims.

A carbon credit represents one metric tonne of greenhouse gas. Carbon credits are generated via carbon projects, which attempt to minimize GHGs to the atmosphere. Common carbon projects include planting new forests, building renewable energy sources, and extracting carbon from the air (a process known as “direct air capture” or “DAC”.)

Companies can acquire carbon credits in two ways: investing in carbon projects that produce credits, or purchasing credits that have already been produced by other carbon projects. Once credits are procured, they can be used for emissions reduction purposes.

Your carbon accounting efforts identify your company's total greenhouse gas emissions. This information is then used to determine the number of carbon credits your company needs to procure. For example, a company that produces 1,000 tonnes of carbon via operations needs to secure at least 1,000 carbon credits to remain compliant and negate its carbon footprint.

Sylvera plays an important role when it comes to carbon credits. Our Ratings analyze carbon projects with industry-leading depth and detail. The goal? To understand which projects meet their stated goals and produce quality credits, i.e. credits that actually impact climate change.

This is important because low-quality credits don't help the environment, erode trust in the entire carbon credit system, and could be reversed, leading to fines.

How to build your carbon accounting process

So, how do you build an effective carbon accounting process? First, decide if you're going to track GHG emissions internally or outsource this task to a third-party.

Internal tracking could be more affordable and will give you direct access to important data. But it's a difficult task and might lead to errors. Outsourcing will remove the burden from your employees' shoulders and result in higher accuracy, but will likely cost a lot of money.

If you choose to track emissions yourself, follow the advice in this guide. That means choosing the right carbon accounting methodology and framework. Then go deeper and invest in quality software tools to aid your approach. Popular options include Persefoni and Greenly.

As noted, Sylvera can also improve the carbon accounting process. Our Pre-Issuance and Ratings products, along with our in-depth database, will give you valuable insights you can use to purchase quality credits. Speaking of which...

How Sylvera supports accurate carbon accounting

Sylvera helps users discover new carbon projects, evaluate each for quality, invest in credits that align with organizational goals, and monitor carbon portfolios for ongoing performance.

We specifically want to call out our Pre-Issuance and Project Rating tools:

• Pre-Issuance: Use our platform to evaluate carbon projects before they launch, giving you the chance to invest in the highest quality credits at the lowest possible prices.
• Project Ratings: Purchase high-quality credits from pre-existing projects. Our Ratings system will tell you where each project excels, how durable its credits are, and more.

In addition, Sylvera has the largest carbon database in the industry.

Our team of scientists used terrestrial and satellite-based lidar technology to scan 25,000+ individual trees across 220,000 hectares. The result? 450B total data points and up to 180x more ground-truth data than any other biomass estimate. 

Even better, the data we collect is ground-truthed across 80% of NBS regions. Broken down, 30% of our data represents African landscapes, 32% represents South American landscapes, and 38% represents Southeast Asia and Australian landscapes. Since most NBS projects take place in these locations, our data is more representative, and therefore accurate, than competing models.

What does all this mean? Sylvera gives you the comprehensive tools and data to make quality carbon investment decisions and improve your carbon credit accounting efforts.

Sign up for a free demo of Sylvera today to see our industry-leading platform in action.

Reduce emissions with accurate carbon accounting data

Carbon accounting is an essential business practice in 2025.

Without it, you can't calculate GHG emissions, procure the right number of carbon credits, or avoid compliance-related fines. You can't support net-zero claims either.

Of course, doing carbon accounting and doing it well are two different things. You need to prioritize accuracy and transparency—two things Sylvera is known for.

If you want access to finance-grade carbon accounting data, you need access to the Sylvera platform. Request a free Sylvera demo now to learn more about our top-level tools.