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Carbon accounting 101: What is it and why you should do it

In recent years, or even just the last few days, you’ll no doubt have heard companies making big claims to be ‘carbon neutral’, ‘climate positive’ or to become ‘net-zero’ by a certain date. Noble, no doubt, but all a bit arbitrary unless backed by solid evidence. To add foundations to your ambitions, you need carbon accounting…

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The term ‘carbon accounting’ summarises the process of getting said evidence. In other words, quantifying, tracking and reporting the amount of greenhouse gas emissions released into the atmosphere as a result of your business activity. 
In our <a href="https://ecologi.com/articles/blog/charting-the-path-to-net-zero-for-businesses" target="_blank" rel="noopener">Charting the path to net-zero for businesses blog</a> we showed that calculating emissions is a key stage in getting to net-zero. Carbon accounting forms the foundations of these calculations. It helps you understand your starting point,  find the emissions hotspots in your value chain, and pinpoint the biggest opportunities for reduction.

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Carbon footprint assessments can happen at a product or organisational level. At a product level, Product Life Cycle Assessments (or LCAs) evaluate the environmental impact of a product through its entire life cycle, including extraction and processing of raw materials, manufacturing, distribution, product usage, and finally end-of-life.
But for the purpose of this blog, we’ll be exploring organisational carbon footprinting. This means assessing the greenhouse gas emissions of a business’s operating activity through the entire value chain, including upstream suppliers and downstream processes like remote working, product use, disposal and pensions.

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What isn’t measured can’t be managed: The carbon accounting process 

A) The carbon audit 
Conducting a carbon audit lets you allocate responsibility for emissions to the relevant areas of your company and value chain. This will inform decisions on how operations can be decarbonised, and help you to set the right science-based targets. 
B) Target setting 
Target setting determines the level of ambition for your reduction strategy. It opens the door for  carbon accounting to forecast scenarios and strategies to meet these targets. It also allows you to spot the strategies that may appear more sustainable but could actually increase greenhouse gas emissions. For example, swapping to a material with a lower carbon footprint in raw materials, but with increased shipping emissions. *It’s worth noting that this assumes a narrow GHG emissions lens and there may be other environmental credentials unaccounted for in this process but which should be considered. 
C) Emissions reporting 
Carbon accounting isn’t a one-off job. An emissions inventory needs to be taken and reported annually during your journey to net-zero. This is how you’ll measure your performance and impact over time.. 
Emissions reporting is increasingly becoming an industry-standard requirement for many businesses.‍ Under regulations such as the SECR, larger and publicly-listed companies are required to disclose GHG emissions in their directors’ reports. Many investors are also mandating it as a requirement in order to assess liability and risk. High emissions within a difficult to decarbonise scope 3 value chain is considered a liability by some investors. 
By measuring and reporting your footprint, you also acquire supporting evidence for your environmental claims, and reduce the risk of greenwashing accusations. 
To learn more about Carbon Accounting, you can <a href="https://info.ecologi.com/webinar-carbon-accounting-101" target="_blank" rel="noopener">watch Ecologi&#8217;s Carbon Accounting 101 webinar here</a>.
You can measure your footprint and get started on your net-zero journey with <a href="https://ecologi.com/business/zero" target="_blank" rel="noopener">Ecologi Zero</a>, our free carbon footprinting tool for small and medium-sized enterprises.

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UK Voluntary Carbon Market Guide: Best Practices for Climate Action

The voluntary carbon market plays an important role in corporate climate strategies – but its effectiveness relies on buyers doing due diligence and rigorous quality assessment on each project, as well as placing the purchase of credits in the right place in the climate journey.
To ensure meaningful climate impact, businesses must develop a comprehensive carbon strategy and find ways to fund only high-quality credits in the voluntary carbon market – and this guide shows you how to do so with Ecologi.

<h2>Table of contents</h2>
<ul>
<li>When to buy carbon credits</li>
<li>Our new carbon projects assessment framework</li>
<li>Ecologi&#8217;s core due diligence principles</li>
<li>How Ecologi scores and ranks carbon credit projects</li>
<li>Questions to ask your carbon credit supplier</li>
<li>Take action in the voluntary carbon market</li>
</ul>

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<h2>When should businesses buy carbon credits in the voluntary market?</h2>
Businesses must not use credits in place of making direct, measurable reductions in their emissions. Instead, follow these steps to ensure you buy your carbon credits on the right step of your corporate climate action journey, and in the right way:
<ol>
<li style="font-weight: 400;" aria-level="1">Measure your emissions first – to allow you to understand where your business’s emissions are coming from. 
</li>
<li style="font-weight: 400;" aria-level="1">Set science-based targets and work towards them – set ambitious targets aligned with the SBTi and compatible with the global 1.5ºC warming target.</li>
<li style="font-weight: 400;" aria-level="1">Beyond value chain mitigation (BVCM) – design your BVCM portfolio to work alongside your decarbonisation plan and address your unabated emissions in each reporting year. Align it with SBTi guidance and the Oxford Principles. </li>
<li style="font-weight: 400;" aria-level="1">Buy high-quality carbon credits – use this guide to ensure the carbon credits you buy meet rigorous quality standards. Remember, under the SBTi framework you’ll also need permanent carbon removal credits for neutralising your residual emissions when you reach your net-zero date.</li>
<li style="font-weight: 400;" aria-level="1">Disclose and report transparently – publicly disclose information about your carbon credit purchases, and clearly communicate the limited role of carbon credits in your broader sustainability strategy.</li>
</ol>

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<h2>Ecologi&#8217;s carbon project assessment framework</h2>
In April 2025, we published a report summarising how we assess carbon credit projects against our rigorous proprietary rubric. A snapshot of what goes into our carbon credit project assessment is below, or you <a href="https://cms-assets.offset.earth/app/uploads/20250428124112/Ecologi_Whitepaper_A4.pdf" target="_blank" rel="noopener">download the full whitepaper here</a>.

<h2>Carbon project due diligence: Ecologi’s core principles</h2>
At Ecologi, we maintain general due diligence principles which we apply universally across the voluntary carbon market, to support our efforts to supply only high-quality carbon credits.
<ul>
<li style="font-weight: 400;" aria-level="1">ICROA-endorsed standards only – we supply credits exclusively from carbon standards which are ICROA-endorsed.</li>
<li style="font-weight: 400;" aria-level="1">Responsive to ICVCM decisions – we support the ICVCM’s two-tick approach to providing CCP-Approval to project methodologies, and we go further still, to assess individual projects on their merits and limitations as well.</li>
<li style="font-weight: 400;" aria-level="1">Keep the carbon credit life cycle as short as possible – 75% of our credits in 2024 came directly from project developers and their nominated dispensaries (as opposed to intermediaries on the secondary market), maximising the proportion of purchase price which goes to the developer.</li>
<li style="font-weight: 400;" aria-level="1">Locally-appropriate projects only – we take care to ensure that supported projects are being applied in appropriate geographies, where they can have the greatest impact.</li>
<li style="font-weight: 400;" aria-level="1">Deep project-level scrutiny – our extensive assessment criteria are specific to each type of project, and we assess every project against these criteria, ensuring the project’s specifics have been taken into account.</li>
<li style="font-weight: 400;" aria-level="1">Methodological consensus – we synthesise data we receive from our partners Sylvera, BeZero Carbon, Calyx Global and Renoster) with our own in-house analysis to uncover where there is consensus about project quality, and improve confidence.</li>
</ul>

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<h2>How to evaluate carbon credits: Ecologi&#8217;s scoring methodology</h2>
We designed a three-layer assessment process which takes into account the merits and limitations of the carbon standard used, the carbon credit methodology used, and of the individual project design.
The tables below summarise some of the data inputs we use at each stage.

<h3>Assessment level: Carbon Standard</h3>
Examples: Gold Standard, Verra, Puro Earth, Isometric, Plan Vivo.

<h3>Assessment level: Methodology (or ‘Protocol’)</h3>
Examples: GS TPDDTEC, VM0048, ACM0002.

<h3>Assessment level: Project</h3>
Examples: GS 10790, VCS 1571.

Criteria in the assessment are categorised as either quality criteria or risk criteria, and are segmented by our three pillars of impact: Climate, Nature and People. Based on how it meets each criterion, the project gains points for quality criteria, and loses points for excess risk – ultimately giving a risk-adjusted value out of 100 for each of these pillars.
Having gathered our risk-adjusted pillar scores, we use our own unique scoring formula which weights the risk-adjusted Climate score of the project equally with the combined risk-adjusted Nature and People scores. The formula then produces an ‘overall’ score (also out of 100) for the project. In order to be supplied by Ecologi, projects must meet a minimum overall score of 80, and must achieve no lower than 65 in any given risk-adjusted pillar score.

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<h2>Key questions to ask carbon credit suppliers</h2>
Selecting the right carbon credit provider is important to help guide you to make informed choices as part of your corporate sustainability strategy. Before purchasing carbon credits, businesses should ask:
<h3>Project quality </h3>
<ul>
<li style="font-weight: 400;" aria-level="1">Do you assess/validate/underwrite project quality? If so, how?</li>
<li style="font-weight: 400;" aria-level="1">Do your projects get good ratings from the ratings agencies? If so, what ratings are they?</li>
<li style="font-weight: 400;" aria-level="1">Do you source credits directly from project developers, or from the secondary market?</li>
<li style="font-weight: 400;" aria-level="1">Do you monitor projects over time to ensure continued success, and how do you remedy it, if a project&#8217;s quality drops?</li>
</ul>
<h3>Due diligence</h3>
<ul>
<li style="font-weight: 400;" aria-level="1">How do you ensure you are supporting the right projects in the right locations?</li>
<li style="font-weight: 400;" aria-level="1">How do you account for project permanence and mitigate risks?</li>
<li style="font-weight: 400;" aria-level="1">What makes your projects additional?</li>
<li style="font-weight: 400;" aria-level="1">How do you assess the project&#8217;s impacts on climate, nature and people?</li>
</ul>
<h3>Positioning</h3>
<ul>
<li style="font-weight: 400;" aria-level="1">How do you contribute to the development of a high integrity voluntary carbon market?</li>
<li style="font-weight: 400;" aria-level="1">Do you align your portfolios with the Oxford Principles? If so, how?</li>
<li style="font-weight: 400;" aria-level="1">How do you reflect ICVCM guidance on carbon credit methodologies and technologies?</li>
<li style="font-weight: 400;" aria-level="1">Do you build multi-year portfolios that align to mid- &amp; long-term SBTs?</li>
</ul>
As the voluntary carbon market evolves, corporate buyers have the power and the responsibility to demand high-impact credits to drive real climate progress. This means buyers have a responsibility to do due diligence before placing an order for carbon credits.

<h2>Take action in the voluntary carbon market</h2>
As a business committed to corporate climate action, understanding the voluntary carbon market is essential for making informed decisions about carbon credits. Our comprehensive whitepaper provides deeper insights into creating an effective sustainability strategy.
<a href="https://cms-assets.offset.earth/app/uploads/20250428124112/Ecologi_Whitepaper_A4.pdf" target="_blank" rel="noopener">Download our full whitepaper</a> to learn how your business can navigate the voluntary carbon market with confidence.

<h2>Connect with one of our climate experts</h2>
Please complete our form to arrange a 30-minute discovery call to discuss your goals and get a tailored solution for your business.

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Carbon accounting 101: What is it and why you should do it

What is carbon accounting?

Organisational vs product footprinting

What isn’t measured can’t be managed: The carbon accounting process

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