Corporate Responsibility

Carbon accounting and enterprise resource planning

Carbon accounting can be a significant component of Enterprise Resource Planning (ERP) systems. Carbon accounting refers to the tracking and management of an organisation's greenhouse gas (GHG) emissions and overall carbon footprint. Many businesses are increasingly recognizing the importance of sustainability and environmental responsibility, and carbon accounting is a key aspect of those efforts. Learn more about how ERP and carbon accounting go hand-in-hand.

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) software streamlines the management of an organisation's day-to-day activities.  To put it simply, ERP systems integrate a range of processes and functions across departments into a single unified platform to provide real-time information, while facilitating company wide communication and collaboration - for example, with carbon accounting.

Carbon accounting involves the quantification and reporting of greenhouse gas emissions and as such can play a crucial role in helping to track, measure, and manage emissions and the corresponding environmental impact. 

Amongst other benefits, integrating an ERP woith carbon accoungting offers the following opportunities for environmentally conscious businesses:

  • Real time monitoring and data collection of resource usage and emissions
  • Enhanced supply chain visibility, creating the opportunity to make informed decisions about the output of the organization and its suppliers.
  • Generation of reliable reports to ensure local and international regulatory compliance - which is especially important when it comes to carbon regulations.

How does carbon accounting factor into ERP?

The integration of carbon accounting into an ERP system can lead to enhanced transparency, informed decision making, and the ability to comply in real time with increasingly stringent environmental regulations. Here are some of the ways this can be achieved.

Data collection

An ERP system allows real time monitoring of energy usage, transportation and production processes, and should include any other activities directly related to a business's carbon emissions. 

Many ERP systems also enable organisations to extend their carbon accounting beyond internal operations to include their entire supply chain. This enhanced visibility helps in assessing and managing the environmental impact associated with suppliers, transportation, and other external factors.

Emission calculations

By centralising data for a range of activities, including energy usage, transportation and production processes, an ERP system can provide an overview of an organisation's emissions when integrated with a carbon acocuntoing platform. This information is accrued in the following ways: 

Automated data collection

By automating the collection of relevant data an organisation reduces the reliance on manual data entry and minimises the risk of errors. Automated data collection also ensures that emission calculations are based on accurate and up-to-date information.

Standardised emission factors

The standardisation of emission factors through databases helps organisations calculate more efficiently by providing universal values for different activities, such as energy consumption or transportation.

Emission calculation algorithms

ERP incorporates sophisticated algorithms to take into account factors, such as energy consumption, fuel usage and raw material inputs to generate accurate estimates of emissions associated with specific activities.

Scenario analysis

Analysing the impact of different emissions strategies helps in evaluating the effectiveness of emission reduction initiatives and making informed decisions to achieve an organisation's sustainability goals - this is known as a scenario analysisemission factors through databases.

Supply chain emission tracking

Supply chain modules enable organisations to track emissions not only within their operations but also throughout their supply chain. This holistic approach provides a more complete understanding of the environmental impact associated with the entire value chain.

Reporting and analytics

ERP systems generate detailed reports and analytics on carbon emissions which can be used for internal analysis, external communication, and regulatory reporting.

Reporting and compliance

By integrating ERP systems with carbon accounting, organizations can become more compliant with environmental regulations and reporting standards. This is crucial, as regulatory requirements related to carbon emissions continue to evolve, emphasising the need for accurate and timely submissions.

 By properly incorporating an ERP system it becomes easy to generate comprehensive and timely reports and analytics on an organisation's carbon footprint. These reports can be used for internal decision-making, regulatory reporting, and communication with stakeholders as well as adherence to local and international regulations.

Integration with ERP systems

By comprehensively mapping data sources, an organisation can employ an ERP system’s customised emission calculation algorithms to ensure compliance with environmental standards like the Greenhouse Gas Protocol - but it’s best to ensure that this information is fed by a dedicated emissions data platform for greater acciurancy, such as Minimum’s.

User training, robust documentation, and continuous improvement processes are essential for successful integration. Through these steps and integration with ERP systems, comprehensive carbon accounting tools promote more informed decision-making and sustainable business practices.

Leveraging carbon data

One of the primary purposes of Enterprise Resource Planning systems is to assist organisations in setting and tracking their sustainability goals - but to do this effectively, it must be integrated with an appropriate emissions data platform. There are many benefits to this, which can include:

  • Benchmarking against international industry standards such as the Greenhouse Gas Protocol  
  • Monitoring progress towards important emission reduction targets

Adjusting strategies in real time based on wide ranging performance metrics that cover the entire supply chain is one of the primary ways to leverage data to create holistic carbon reduction strategies. 

It can also help with cost analysis and efficiency improvements - by analysing carbon data alongside financial information within the ERP system enables businesses to understand the cost implications of their environmental impact, leading to improved efficiency and cost savings.

It’s also possible to conduct a Life Cycle Assessment (LCA) by incorporating carbon data into product design and manufacturing decisions, leading to the development of significantly more sustainable products.

Finally, ERP systems with carbon accounting integrations lead to improved  communication and stakeholder relations. Leveraging carbon data within ERP systems supports transparent communication with stakeholders, including customers, investors, and regulatory bodies. Demonstrating a commitment to sustainability and further enhancing an organisation's reputation.

Learn more about transparency and accountability with carbon software.

Moving toward supplier engagement

A key part of getting a place where an organization can truly transform its carbon accounting practice is supplier engagement. Without it, an organization can only change its own impact, meaning that the supply chain could still be having a huge impact on scope 3 emissions

By integrating carbon accounting into ERP platforms, organisations gain the ability to track and manage emissions across the entire supply chain. ERP systems enable a comprehensive understanding of the carbon footprint associated with each stage of the supply chain. This transparency extends beyond a businesses internal operations, providing insights into the environmental impact of a cross section of suppliers and transportation partners.

ERP systems assisted with carbon emissions data can further contribute to supply chain transparency by automating data collection and incorporating standardised emission factors, ensuring accuracy in emission calculations as well as streamlining the reporting process. All of these assets aim to help organisations promptly identify areas for improvement within the entire supply chain.

By placing an emphasis on transparency throughout the entire supply chain, organisations are able to make more eco-conscious decisions which are guaranteed to meet regulatory requirements and foster even more trust among consumers and stakeholders. This can also lead to a great ROI for carbon accounting software.

How Minimum can help

Minimum can help organizations to understand their existing carbon output, and create plans to mitigate climate related risks in the future.  Our Emissions Data Platform seamlessly collects and processes emissions data from every corner of your organization and supply chain - no matter the format. Making it the ideal platform for emissions audits and all-round business intelligence. 

Learn more about how Minimum's Emission Data Platform can help to power you all the way to Net Zero today.