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Are you a small business wanting to measure your carbon footprint? We look at the pros and cons of using software versus hiring a consultant. We show how the software is more practical and getting increasingly sophisticated.
*This blog post is a collaboration with Spherics, a partner of Small99. Learn more about Spherics.*
For the UK to cut most of its emissions by 2035 – an ambitious target it set last year – and meet net zero by 2050, every business, from multinational to small business, has to cut its emissions.
While it’s not law (yet) for UK small businesses to report their emissions, the government is likely to bring in requirements in the coming years to meet its legally-binding 2050 target.
But just because it’s not law doesn’t mean it’s not an exciting opportunity for small businesses. In reducing your carbon footprint you become part of the solution to the climate crisis.
Doing so could help you attract new talent, keep your best staff, boost your sales – because people value your net zero commitment – and cut your running costs.
In short, achieving net zero will make you more profit.
To know how to effectively reduce your emissions, any small business first needs to get a good grasp of what environmental impact their business has.
All carbon footprints are tallied up in essentially the same way: record all the things you do, measure the impact of each, and add it all up.
There are two main ways to go about it (outlined in this Small99 video): spend-based measurement and activity-based measurement.
Spend-based uses carbon accounting to calculate your emissions based on your spending. This works because any money that moves between you, your customers and your suppliers have a measurable impact. Basically, you convert pounds spent into CO2e emitted.
The second way is a detailed look at your activity: how long your heating is on or how your staff get to work, for example. This usually requires someone external to do the analysis.
Spend-based is a quicker way to give you a decent overall picture of your footprint, but some say it’s less accurate (we don’t agree, as you’ll see below).
Activity-based is arguably more accurate and detailed, but because of this it takes much longer and your wallet takes a hit.
For some businesses, this cost can be a barrier to taking climate action; but you don’t always need to have total accuracy to see trends in your carbon emissions and act accordingly.
When it comes to accounting for Scope 3 in activity-based measurement, it’s only possible through a detailed and time-consuming process of material and process assessments.
But supply chains are so complex and changeable that this is rarely practical, so most companies use the much simpler approach of spend analysis.
This saves time, is cheaper, and often gives more flexibility in showing seasonal trends within your business.
There are quick carbon ‘calculators’ out there, but they’ve been known to ignore supply chain emissions (Scope 3), a major part – sometimes more than 90% – of any business footprint (Source).
“When analyzing over 4,000 companies’ emissions inventories, upstream emissions are on average over twice that of a company’s own operational emissions.”
Carbon accounting software, such as what Spherics offers, is an automated system that connects to accounting software programmes like Xero, Sage or Quickbooks.
It extracts data from your transactions and estimates the CO2e emitted per pound spent. (Get a breakdown of their methodology here, including handy jargon busters.)
Spherics’s mission is to tackle the complexity of measuring Scope 3 emissions head-on. Its commitment to demystifying Scope 3 means it’s the first thing it does for you when you connect your accounting software.
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A 2021 British Chambers of Commerce poll found that only 11% of SMEs are measuring emissions at least annually, falling to 9% for small business and 5% for micro business.
Why these low numbers? The survey found the most common challenges are cost and little in-house understanding of net zero. A lack of capacity (time) could also be to blame.
Carbon accounting software is changing that. It provides an accessible option to overwhelmed small businesses that connects with existing activities they’re already doing.
And as the technology gets more advanced and databases deepen, the software will continue to disrupt the market; it’s only in the foothills of its emerging capabilities.
In 2022, if you find a good consultant who knows their stuff about measuring footprints and they work closely with you, then they’re likely to be more accurate than the software. This is similar to hiring an accountant to manually go through all of your accounts, versus using software.
With the manual approach and (currently) more detailed activity-based analysis, they deliver excellent impact measurement with a thorough and detailed methodology.
In the long run, however, manual spreadsheets and consultants’ conversion factors will become less and less valuable as carbon accounting software gets more sophisticated.
Over time, as more data lands into cloud-based systems, the data becomes more accurate than the offline spreadsheets consultants use.
The data is also real time so if one company in your supply chain changes their approach, your carbon footprint will automatically be updated.
Consultants – as long as they’re reputable and have the right knowledge – do come out on top when it comes to creating bespoke action plans based on your carbon footprint.
At this early stage in carbon software development, a good consultant should still be able to get to grips with your business better than a computer can and offer bespoke solutions.
Over time we expect this will change and solutions like Small99, which provides sustainability guidance to lighten your journey to net zero, start to integrate with Spherics.
The thing is, tracking down every last drop of carbon in your operations and supply chain is a specialist skill – not every sustainability consultant is going to have that knowledge. And besides, with the current amount of data out there, catching it all is unlikely anyway.
As carbon measurement is still a new field, the consultants who do have all the skills you need, and won’t miss those hard-to-measure areas, are few and far between:
“The number of well-trained consultants with the skill set to perform a comprehensive carbon footprinting analysis is in the thousands. The number of small and micro businesses in the UK is millions.
On that calculation alone, only around 10% of business can be served by traditional methods at any one time – and that's ignoring the fact that most consultants are already overrun by large businesses.
Once you do get a consultant through your door, you’ll likely get a very accurate picture, but it’s going to take time and cost you a fortune – starting in the thousands.
While it’s not as meticulously detailed yet, the software is quicker and usually much more affordable, meaning it’s far more practical for small business.
With Spherics, for example, you can get an overview of your footprint in about 45 minutes.
When it comes to climate action, as well-intentioned as many small businesses are, they don’t have it easy: limited budgets, lack of in-house knowledge, and little time to spare.
Even if you can afford a good consultant, there are not nearly enough out there to meet the demand from the millions of small businesses in the UK.
While good carbon consultants certainly have a role to play with their high accuracy, a consultancy-led approach isn’t fit to meet the needs of the climate crisis at scale.
Carbon accounting software is affordable, getting more sophisticated and accurate all the time. Spherics makes sure those crucial Scope 3 emissions are captured from the get-go.
Spherics focuses on encouraging carbon reduction by supporting behaviour change with trustworthy data. It’s a good idea to first understand the size of your carbon footprint so you can plan for the most appropriate forms of reduction.
Connect your accounting tool to Spherics’s accurate and affordable carbon accountability software and you’ll be able to measure your emissions in just a few clicks. If you’re interested in learning more, check out its website.
Answer a few questions and get an estimated carbon footprint of your business in 2 minutes.
Join our Hero platform to get a free and simple Carbon Reduction Plan for your small business so you can start acting in less than 10 minutes.
