Measuring business carbon emissions is the foundation for real corporate climate action. Only with good data and insights will companies be able to implement strategies that benefit the people, profit, and planet.
But measurement is not straightforward, and not all approaches are equal. The right measurement should be comprehensive in nature and robust. It should allow companies and stakeholders to trust the numbers to see what the next steps are in their business sustainability journey—whether that is deep-diving into hotspots to better understand where emissions come from, setting a net-zero goal, preparing for an external audit and certification, complying with reporting obligations or purchasing carbon offsets.
NetNada helps Australian businesses and global organisations—like Zip Payments, Merivale, and URM—measure, report, and act on emissions throughout their supply chains. In this guide, we uncover and explain what companies using NetNada need to know about carbon measurement—from understanding what data is needed to the different frameworks that are followed.
Before we dive in, it is essential that you understand some base concepts and terminology. If you are already proficient in carbon accounting feel free to skip this section but you can always refer to all the terminology used by visiting our Carbon Glossary.
Carbon dioxide equivalent (CO2e) - business activities emit more than just CO2 such as water vapour and methane which is a potent greenhouse gas that contributes to global warming. To include non-CO2 greenhouse gases while still keeping things simple, the term CO2e is used by carbon accountants to combine all emissions into a single metric.
The GHG Protocol Corporate Accounting and Reporting Standard (GHG Protocol) - this protocol provides the requirements and guidance for companies and other organisations preparing a corporate-level GHG emissions inventory. NetNada embeds the standard into its software so you can trust the decisions we make in regard to measuring your emissions.
Emission Scopes - The Greenhouse Gas Protocol categorises emissions by Scope to facilitate how businesses understand how their emissions are generated, reported, and reduced.
It is important to note that Scope 3 is where all new reporting frameworks are focusing on and where you should spend your resources—it often represents more than 80% of a company’s total emissions. The best way to tackle Scope 3 measurement is to quickly understand which suppliers are contributing to your emissions and work on improving how they are tackling their own sustainability and carbon emissions. A transparent supply chain is half the journey to a sustainable one.
Reporting standards - one of the most challenging parts of carbon accounting or sustainability is knowing how to disclose or report your numbers. Large companies accounting for two-thirds of global public market capitalisation already participate and submit carbon emissions inventories through voluntary disclosure frameworks such as TCFD and CDP. However, far more detailed mandatory reporting standards are emerging on a national/regional basis (AUS, US, EU, UK) under the ISSB. While it might feel like an alphabet soup of acronyms, NetNada carbon experts can guide you in understanding which reporting framework is relevant for you.
An advantage of software for employees leading the measuring process is that it can bring and organise data from you multiple places into a single place: ERP and accounting systems, travel apps, utility bills, staff surveys, and so on.
NetNada’s software and our carbon experts detect anomalies and flag expected emissions sources not included in your import data. We regularly works with auditing firms to help our clients carbon account audited and ready for stringent 3rd party certifications such as Climate Active or CDP submissions. Looking ahead to where verification and reporting are going, NetNada allows you to invite auditors and external verifiers to the platform.
Finally, It’s important carbon accounting solutions solve the problem of emissions interpretability and why emissions totals change over time. This can happen not only because of reductions but methodology or macro changes such as grid improvements. We ensure that you’re able to keep incorporating the latest science into your measurements by keeping our databases up to date.
Carbon accounting as per The Greenhouse Gas Protocol (and incorporated into NetNada) calculates an organisation’s greenhouse gas (GHG) emissions using a combination of two methodologies: spend-based and activity-based. The hybrid methodology used in NetNada when measuring emissions combines spend-based and activity-based methods.
The carbon footprint of the business is modeled using the proprietary NetNada algorithm which identifies emissions by various categories based on accounting data and a calculator available inside the software.
This approach is based on an environmentally extended input–output method, which combines environmental data with traditional financial flow data from national and regional economic accounts.
Spend-based method of calculating GHG emissions takes the financial value (of a purchased good or service and multiplies it by an emission factor – the amount of emissions produced per financial unit – resulting in an estimate of the emissions produced.
Spend-based emission factors are typically derived from so-called environmentally extended input-output (EEIO) models that depict the flow of resources between different sectors of the economy. Based on this, one can calculate the average amount of emissions associated with each unit of money paid to a company in some specific industry and region.
There are around 344 categories - all with different emissions factors that spending can be allocated to. Categories have different emission intensities and therefore impact your total footprint based on the allocation of spending. For example, a dollar spent on company car repairs does not equal a dollar spent on legal services.
NetNada system holds ISAPC categories as well as Climate Active categories when it comes to the allocation of spending for carbon accounting purposes.
Since spend-based methods’ emission factors are built on the industry average greenhouse gas emissions levels, spend-based calculations can lack specificity.
For example: if you buy a chair, a spend-based approach would only factor in that you bought a piece of furniture, and wouldn’t account for whether the chair was made of iron or wood.
The activity-based method uses data to specify how many units of a particular product or material a company has purchased. For example, this could be litres of fuel, kilograms of textile, etc.
If we identify activities in your business such as flying or employee commute, NetNada offers in-built calculators and smart forms to gather and process relevant data. This will ensure that your team can focus more on implementing solutions rather than requesting data from several departments and staff.
NetNada platform facilitates activity-based measurement for flights, waste, employee commutes, and events.
Like the spend-based method, the activity-based method also uses emissions factors to determine an activity’s emissions output. In carbon accounting, activity data it’s not as readily available as spend-based data, and can be time-consuming to gather.
Thus, the hybrid model methodology is recommended by the Greenhouse Gas Protocol, the most widely-used carbon calculation standard that has been incorporated into NetNada
NetNada pragmatic approach involves using a spend-based method to identify relevant hotspots in your business and then improve where it is needed using activity-based data
As you consider how to calculate your carbon emissions for your whole business and the right balance of approaches to use, ensuring you have all the data is crucial. Traditionally, there were trade offs between capturing every tonne, kilo, and gram of carbon and creating meaningful business climate action.
Today, with carbon accounting software like NetNada, it is possible to measure everything to achieve a complete carbon measurement and then spend time improving certain aspects through activity-based methods.
While we advocate for using the best method that meets your goals and internal resources, you will want to ensure that your carbon inventory is:
Traditional ways to achieve these results involved a mix of in-house climate teams and consultants - even then the process can take months and lack data interoperability.
Good software is also reinforced with human support—who can help you understand complex legislation, source clean power, and navigate the carbon credits market. NetNada’s teams of climate strategy, carbon data, and policy experts are here to help.
If you have any questions please get in touch.
This document describes the requirements that apply to all entities seeking certification during calendar year 2024 for their 2023 emissions. Last updated: 20 May 2024.
Quick start:
To better understand this document, the following terms are important to understand.
How to apply for and receive a Carbon Neutral Certified label?
Companies must follow the NetNada Carbon Neutral Certified Standard (NCNS), apply for certification, and receive formal approval from NetNada Approved Certifiers (NAC) in order to be licensed to use the Carbon Neutral Certified label.
Eligible Certifying Entities
The NetNada Carbon Neutral Certified Standard represents a leading and comprehensive approach to climate action by businesses. Businesses can pursue certification for a corporate entity, subsidiary, or brand, but individual products or services are not eligible. To maintain the integrity and reputation of the NetNada Carbon Neutral Certification and its marks, companies operating in sectors listed on the Restrictions on Eligibility for Certification are ineligible for NetNada Carbon Neutral Certification.
While Carbon Neutral Certification primarily targets corporate brands, non-brand entities such as events or film projects may still qualify for certification through our Carbon Neutral Event Standard and Carbon Neutral Film Standard.
Requirements for Greenhouse Gas Measurement
For certification eligibility in 2024, entities must track their cradle-to-customer emissions either from the entire 2023 calendar year or an overlapping full fiscal year. This tracking must include emissions from all products, services, and business activities. Fiscal year data is valid if it overlaps with at least six months of the 2023 calendar year. Measurement boundaries follow the Greenhouse Gas Protocol, encompassing all Scope 1 emissions, all Scope 2 emissions, and 8 out of the 15 categories of Scope 3 emissions, as outlined below.
Table 1: Carbon Neutral Certified measurement boundary requirements
* Investments Required for Finance and Investment Firms - Entities with substantial financial holdings ( at least 5% of revenue is derived from these activities) are also required to measure Greenhouse Gas Protocol Scope 3.15 emissions. Please note, institutions determined to have significant financial holdings encompass asset managers/owners, retail and commercial banks, insurance companies acting as asset managers, real estate investment trusts (REITs).
Use of verifiable activity data vs. estimated data for Scope 1 and 2: Certifying entities are encouraged to provide actual metered or billed data, rather than modeled estimates, for Scopes 1 & 2.
Use of activity data: Certifying entities are strongly advised to utilise activity data or physical data for emissions Scopes and Categories where emissions account for 5% or more of the total footprint. Companies that fall outside the Small Company Pathway must use activity data or physical data (e.g., kWh instead of dollars spent on electricity) for Scopes 1 and 2, beginning in their second annual certification year.
While all GHG inventory submissions must follow the boundaries and categories defined in Table 1, the inputs and how you measure your business emissions depends on your company size.
If an organisation that seeks certification has multiple subsidiaries, the combined revenue of all certified entities will be used to determine the Verification Requirements Pathways
Once GHG inventory has been completed, our staff will review your submission and evaluate it for compliance with the Standard.
Small business pathway: below $5 million in revenue for 2023
Estimate your emissions using the NetNada Carbon Management Platform (NCMP)
If you measure your emissions using the NetNada Carbon Management Platform, here’s what you need to submit:If you don’t measure through the NetNada Carbon Management Platform, here’s what you need to submit:A complete inventory with signed attestation. (No third party verification required.)A complete inventory with signed attestation. (No third party verification required.)
Attestation document
https://docs.google.com/document/d/1rL7m-90kmT2E6EZ3fJq8P6kR-CKWfv7NRRm4Vh-DlaE/edit?usp=sharing
Medium brands: 2023 revenues $5-100 millionCreate a report summarising total emissions by scope and category. This report should be generated using either the NetNada Carbon Management Platform, an external calculator, a consultant, or an in-house tool, provided it complies with the GHG Protocol and adheres to the measurement boundary criteria. Independent verification is not necessary.
If you measure your emissions using the NetNada Carbon Management Platform, here’s what you need to submit:If you don’t measure through the NetNada Carbon Management Platform, here’s what you need to submit:1. A complete measurement report from the NetNada Carbon Management Platform.
Large brands:2023 revenues above $100 millionCreate a report summarising total emissions by scope and category. This report should be generated using either the NetNada Carbon Management Platform, an external calculator, a consultant, or an in-houstoole , provided it complies with the GHG Protocol and adheres to the measurement boundary criteria. A third-party verifier must review the inventory (see below).
If you measure your emissions using the NetNada Carbon Management Platform, here’s what you need to submit:If you don’t measure through the NetNada Carbon Management Platform, here’s what you need to submit:1) A complete measurement report from the Carbon Management Platform.
All verification reports should follow these five common principles of carbon footprint verification: relevance, completeness, consistency, transparency, and accuracy.Verifications must conform to one of these standards: ISO 14064-3, ISAE3000, ISAE 3410, or Corporate GHG verification guidelines from ERT. Verification reports must specify the level of assurance provided by the report as either limited or reasonable.g:
Third-party verifiers (e.g. environmental auditors or consultants) must be able to demonstrate the following:
Renewable Energy Certificates (RECs) that are bundled or unbundled with energy purchases may be used to make “market-based” adjustments to the total emissions from your electricity consumption.
The Standard requires that vintages of any Energy Attribute Certificates used for compliance be purchased within the certification year or one year prior. For example, when considering 2023 Scope 2 emissions, you must purchase RECs with a vintage of 2022 or later. All RECs used for compliance must also take place on the same grid subregion as your Scope 2 electricity consumption.
For example, if your business operates only in one state of Australia, your RECs need to be attributed to that subregion.
If errors or omissions are identified in a previous submission that exceed a 5% materiality threshold, the certified entity is obligated to restate the emissions for the affected year(s).
All organisations seeking certification must develop a Reduction Action Plan using Change Climate’s prescribed template.
The plan should demonstrate progress in reducing emissions from their products and services and include:
Science-Based Target Setting Requirements:
In cases where multiple subsidiary within a larger company seek to achieve certification, certifiers will use the combined revenue of all certified brands to determine certification requirements.
Success toward reduction actions and science-aligned targets will be closely evaluated in Checkpoint Years set in 2025 and 2028. Certified entities will be required to evaluate and report on progress towards the following goals:
Checkpoint Year 2025 Goals: • All RAPs set through 2023 should be complete.• Clearly report on progress toward targeted year-over-year emissions reductions. • You should be roughly 50% toward completing 2030 target requirements, if applicable.*
Checkpoint Year 2028 Goals: • All RAPs established through 2026 should be complete.• You should be roughly 80% toward completing 2030 target requirements, if applicable.*
a. Requirements for GHG Mitigation Beyond the Value ChainCertifying entities are required to contribute to greenhouse gas mitigation projects at a level proportional to their measured emissions (all product, services, and operations) by making investments beyond the value chain. Carbon inventories may be adjusted with clean energy purchases made via eligible Energy Attribute Certificates such as RECs or GOs. All carbon credits and/or EACs must meet the following criteria:
All carbon credit purchases must be from the approved project categories and types in Table 4. Certifying entities are encouraged, but not required, to follow the Suggested Portfolio Allocation Targets.
Table 3: Eligible Carbon Credit Types and Categories
The Standard requires that companies with active certifications publicly disclose the following information on the Brand Profile Directory on the NetNada website:
Certified entities are strongly encouraged to engage in lobbying, education and stakeholder (e.g. customer, supplier, employee, consumer) mobilization efforts in support of climate solutions. Applications for certification will include a requirement to report on such activities completed in the prior calendar year. This reporting will not be made public, but should generally include one or more of the following activities:
In addition, use of the NetNada Carbon Neutral label is an important form of advocacy. Re-certifying companies must provide evidence of at least one (1) example of using the label in either a digital or real-world setting.
