How does Carbon Added Accounting work?
What is Carbon Added Accounting?
Carbon Added Accounting is an easy-to-implement CO2e accounting method, aimed at companies in a production chain. This VAT-inspired principle calculates CO2e emissions of a sold product per link: the so-called cost accounting, but for CO2e. This CO2e output serves as the CO2e input for the next link in the chain. By keeping track of the data quality and passing it on, it Is clear on which source data the CO2e output is based. You therefore know how reliable and accurate the CO2e emissions are. This is not only important for companies themselves, but also for accountants, governments and consumers. Ultimately, you arrive at the total CO2e footprint of a product. You can calculate the emissions of the entire chain or zoom in on a single link. Here we explain: how does Carbon Added Accounting work? And to whom is it relevant?
What makes Carbon Added Accounting so important?
As a company you cannot ignore it: the CO2e emissions of your product must be demonstrably reliable. Modelling based on a typical product or industry average is no longer enough. You have to make calculations based on your own company data. Customers are increasingly demanding such figures and governments enforce this in the form of laws and regulations. Yet there was still no CO2e accounting method that made this possible in an accurate, uniform and efficient way. Practical cases with production companies, agricultural companies and logistics companies show that Carbon Added Accounting does make this possible. This method at the same time gives you insight into your efficiency. This way you streamline processes, reduce costs and improve business results. But there’s more.
Carbon added accounting helps:
- businesses to be competitive;
- accountants to check the CO2e information;
- governments to maintain control of CO2e reduction;
- consumers to make environmentally friendly choices.
How does Carbon Added Accounting work?
Carbon Added Accounting is a CO2e accounting method. This method can be compared to the VAT that you charge for your part of the work. You charge on your share of CO2e emissions for that part. Ultimately, the CO2e emissions of all parties involved in the chain can be passed on to the consumer. Allow us to explain this.
CO2e input + CO2e added = CO2e output
As part of a production chain, you receive the necessary raw materials, semi-finished products and production resources. That represents your CO2e input. When processing and using these materials or (semi-finished) products, you too produce CO2e emissions. Just like during storage, transshipment and transport to the next link in the chain. That represents your CO2e added. By adding up all CO2e emissions from all links in the chain, we arrive at the CO2e output: the total CO2e emission of a product or subproduct.
Data quality statement: uniformity and transparency
An important addition to Carbon Added Accounting is that each link provides an indication of its own data quality and that of predecessors in the chain. For example, the data of other parties can be a rough estimate, while your own data is very accurate. The system combines that data and shows how reliable the ultimately calculated CO2e footprint is. This ensures uniformity and extra transparency, allowing you to truly compare companies with each other. The data is also easily verifiable by an accountant. You simply include the demonstrably reliable results in your annual report.
Carbon Added Accounting is universally applicable and scalable. It works everywhere: whether you are active in the agricultural and extraction world, production, transport and storage or in trade. This practical method allows starting at a small scale in existing software systems. Adding more and more details will produce more and more valuable insights into the efficiency and the energy and resource consumption of products and services in the chain.
Carbon Added Accounting treats carbon emissions as if they were finances. Just as products and services are normally taxed with VAT, they are now taxed with CO2e. This gives CO2e value and can also be included in the annual report. How does Carbon Added Accounting work? It is in keeping with the cost accounting principles of the International Financial Reporting Standards: a method used by accountants worldwide. That makes it easy to understand and use and directly applicable for audits.
Carbon Added Accounting has been detailed for each type of business in the supply chain of physical goods. Various cases have already been carried out using real company data. Topsector Logistiek’s current aim is to gain as much practical experience as possible with this method, in order to gain further knowledge. We therefore like to work together with as many different companies as possible. This way it becomes clear the method works, while streamlining the processes even further. Ultimately, we will jointly arrive at a method that will help every organisation to demonstrate and minimise its CO2e footprint. One which also helps governments, accountants and consumers in making the next step.
Topsector Logistiek is looking for partners who want to charge on the CO2e footprint of their business processes or chain. Are you interested as a company, customs office or accountant? We help you implement Carbon Added Accounting and analyse the data. This way we can fine-tune the method, whilst you optimize your business processes.
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