Towards carbon-free management! Quickly visualize GHG emissions using data integration platform

What is carbon accounting?

We will provide a basic overview and explain the importance of "carbon accounting," which calculates and manages the greenhouse gas emissions emitted by companies.

Carbon accounting overview

Carbon accounting is a system for understanding greenhouse gas emissions associated with corporate activities and verifying the effectiveness of reduction targets and measures. Specifically, it quantifies the fuel and electricity used and emissions generated in manufacturing processes, and adds up the data from each department and base to derive the company's overall emissions.

Emissions are generally calculated using "activity amount" and "emissions coefficient." Activity amount refers to quantitative information generated during business activities, such as electricity usage and waste volume. Emissions coefficient is a coefficient that indicates the amount of GHG emissions per activity amount, and is also called emissions intensity. Emissions coefficients are generally calculated using information published by the Ministry of the Environment and other organizations.

Why carbon accounting is gaining attention

As exemplified by the Paris Agreement, which established an international framework for reducing greenhouse gas emissions from 2020 onwards, and various countries declaring their intention to become carbon neutral by 2050, interest in climate change issues is growing not only in Japan but also internationally.

In this social climate, companies are being asked to accurately grasp their emissions and prepare for information disclosure in order to raise funds from overseas investors and receive requests for information disclosure from overseas buyers.

In addition, by implementing carbon accounting as part of your management philosophy, management policy, SDGs and ESG initiatives, you can also expect to increase your company's value and strengthen relationships with investors and business partners.

Steps to calculate GHG emissions

Calculating GHG emissions generally involves three steps: information collection, data entry, and visualization and analysis.

STEP 1. Gather information

The first step in carbon accounting is to identify all emission sources across the entire company. It is necessary to collect as comprehensive information as possible that can be used to estimate emissions, such as energy consumption, fuel consumption, invoices, and purchase details. In particular, for large companies or those with multiple locations, data collection methods often differ between locations, making consolidation time-consuming.

STEP 2. Data entry

The data obtained after collecting information is entered into a designated system or calculation tool to quantify emissions. In recent years, AI systems have emerged that can automatically calculate emissions from billing data, making it possible to significantly reduce input work. However, as different tools require different formats, it is important to consider in advance how to format the data.

STEP3. Visualization/Analysis

The input data can be visualized using graphs and dashboards to clarify where emissions are concentrated. For example, by accurately determining whether direct emissions from fuel use are large or whether indirect emissions from electricity use are the main cause, it becomes possible to narrow down the reduction measures that should be prioritized. Furthermore, by continuously monitoring the analysis results, it becomes possible to evaluate the reduction effects and reset targets.

Scope of GHG emissions calculation

When measuring emissions, it is recommended to organize them from three perspectives: direct emissions, indirect emissions, and supply chain emissions. These are generally referred to as Scope 1, Scope 2, and Scope 3, and each has different scopes of responsibility and calculation methods for emissions.

Scope 1. GHG emissions directly emitted by companies during manufacturing, etc.

Scope 1 refers to emissions generated by using fuel in a company's facilities and manufacturing processes. A typical example is emissions from fuel combustion at a manufacturing plant. These emissions have the advantage that they are relatively easy to compile, as the source is contained within the company.

Scope 2. GHG emissions indirectly from companies through electricity, etc.

Indirect emissions that occur with the use of purchased electricity, heat, steam, etc. are classified as Scope 2. Compared to Scope 1, emissions sources are power plants outside the company, but they can be calculated based on contract information, electricity usage, etc.

Scope 3. Indirect GHG emissions in upstream/downstream processes

Scope 3 covers emissions throughout the entire supply chain. It encompasses greenhouse gases emitted throughout a product's entire lifecycle, from raw material procurement and transportation to use and disposal. Because data provision from business partners and cooperating companies is essential, accurate calculations are difficult without establishing data integration system, and how to improve the efficiency of this system has become a major challenge.

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Common data pitfalls in carbon accounting

When implementing carbon accounting, issues regarding data handling will arise in various fields.

Pitfall 1: Data is not usable

Calculating emissions requires data such as energy usage and accounting information, but this information is often not digitized and is stored in a format that is difficult to process.

For example, if invoices are paper-based, or if they are in PDF format but are difficult to edit or tally, pre-processing before tallying takes a lot of time. Having to manually tally documents for environmental and accounting staff not only increases the likelihood of errors, but also places a heavy burden on those in charge. Additionally, it is difficult to check data in real time, making it difficult to quickly identify trends or abnormal values in emissions.

Furthermore, the larger the organization, the greater the volume of data it must handle, making it inefficient to input everything manually. Even if a checking system is in place, it is difficult to eliminate input errors, and there is a risk of accuracy decreasing with each repetition of the process. Ultimately, there is no denying the possibility that emissions calculations themselves may be insufficient.

Pitfall 2: Data is scattered and difficult to collect

When multiple departments manage data using different systems and formats, simply compiling the data can become a huge workload. Information tends to be separated, with energy usage data going to the energy management department, power contract data going to the general affairs department, and accounting data going to the accounting department. When manufacturing sites, logistics centers, etc. each use different systems, it becomes difficult to extract data in a unified format.

Furthermore, the IT environments within companies vary widely, from older on-premise systems to the latest cloud services. Therefore, unless a data integration mechanism is established, automatic calculations across systems are difficult. These challenges affect the overall speed of carbon accounting.

Pitfall 3: Data is fragmented and preparation takes time

When trying to aggregate data, if the format and quality are not standardized, consistency will ultimately have to be achieved manually. Translation work is unavoidable when handling data in different formats, such as Excel, CSV, and PDF. For example, even if the same amount of fuel consumption is recorded in one unit by month and in the other by day, tedious processing work will be required to align the units.

From an organizational perspective, if data owners across the supply chain each have their own procedures and formats, they will need to communicate, negotiate, and go through approval processes separately. This is especially true when dealing with overseas bases or other companies, where factors such as language and time differences come into play, making the coordination burden even greater.

Promoting carbon accounting through data integration platform

Carbon accounting has many challenges, but by utilizing data integration platform, we can expect to see significant labor savings and efficiency improvements. We will explain each of the three phases of promoting carbon accounting using data integration platform.

Phase 1. Data input and preprocessing

The first step in the carbon accounting process is data input and preprocessing. Data such as usage and billing data held by the site and partner companies must be organized into a format that can be accepted by the GHG emissions calculation service. The key to this is data integration platform.

Emissions calculation services often assume that data will be entered in a set format and units. However, the data recorded in actual operations may be in a different format at each location, or the units may not be standardized. For example, some factories may compile monthly usage figures, while others may enter a daily list by hand.

By introducing data integration platform, data in different formats can be automatically converted and handled by the same calculation service. This significantly reduces the amount of data re-entry and consistency checks that were previously done manually, allowing for a quick and accurate understanding of emissions.

Phase 2. data integration within the service

To understand emissions across the entire supply chain, such as Scope 3, information is required from many stakeholders, including partner companies, transport companies, and end-user usage. It is not easy to consolidate data that is managed independently by each party.

However, if the suppliers responsible for the upstream and downstream processes use the same accounting service, the Scope 3 information that your company needs will already be available on the accounting service.

By sharing the data held by each supplier through data integration platform, individual adjustments and duplicate entry can be avoided. The required emission coefficients and usage formats can be easily synchronized, reducing the hassle of re-entering data and discrepancies due to inconsistencies.

Phase 3. data integration between services

Carbon accounting requires open data integration, but in reality, it is not uncommon for different companies to use different calculation services. Companies that operate globally tend to use different platforms depending on the region and industry. Even in such situations, a common data integration platform would enable information exchange between services.

There are a wide variety of calculation services, with overseas suppliers using local calculation services, different industries standardizing different systems, etc. To manage these all together, it is smoother to utilize data integration platform that is common across services rather than forcing unification into a single calculation service.

Fundamentally, the information required, such as the amount of fuel and electricity used to be calculated, is almost the same. As long as the differences in the tool's unique format can be absorbed, similar calculation results can be obtained from any service. data integration platform acts as a bridge to make this possible. By positioning data integration platform as a virtual hub, participating companies can automatically provide the information required by other companies simply by inputting data into their own company's tool.

Finally

Carbon accounting plays an important role in companies' decarbonization efforts. However, the existence of a wide variety of information sources and management systems makes carbon accounting complicated. Therefore, it is important to introduce data integration platform to unify data in different formats and build a system that allows smooth linkage with the necessary parties.

To realize a sustainable society, all organizations, including companies, must implement effective decarbonization management. Creating an environment that allows for smooth implementation of carbon accounting initiatives and making decisions based on accurate data will be the best step toward the future.

The person who wrote the article

Affiliation: Data Integration Consulting Department, Data & AI Evangelist

Shinnosuke Yamamoto

After joining the company, he worked as a data engineer, designing and developing data infrastructure, primarily for major manufacturing clients. He then became involved in business planning for the standardization of data integration and the introduction of generative AI environments. From April 2023, he will be working as a pre-sales representative, proposing and planning services related to data infrastructure, while also giving lectures at seminars and acting as an evangelist in the "data x generative AI" field. His hobbies are traveling to remote islands and visiting open-air baths.
(Affiliations are as of the time of publication)

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