The Corporate Sustainability Reporting Directive (CSRD) is reshaping how businesses report on their sustainability performance. As organisations strive to meet these robust requirements, measuring your carbon emissions (=carbon accounting) has become an essential piece of the puzzle. In this article, we’ll explore the connection between carbon accounting and CSRD compliance, when carbon accounting comes into play in your compliance process, why starting your carbon accounting journey is so valuable, and how tools like the Hedgehog Carbon Platform can simplify and enhance this critical step.
Do you want to read more about carbon accounting first? Check out our article Quantifying sustainability: a complete guide to carbon accounting
What has carbon accounting to do with CSRD compliance?
The CSRD mandates that organisations disclose detailed sustainability data, including their climate-related impacts, risks, and transition plans. The European Sustainability Reporting Standards (ESRS) are a set of mandatory reporting guidelines developed by the European Financial Reporting Advisory Group (EFRAG) to ensure organisations disclose standardised, comprehensive, and comparable information on their environmental, social, and governance (ESG) impacts in alignment with the Corporate Sustainability Reporting Directive (CSRD).
One of these standards is ESRS E1 – Climate Change, which specifies, amongst others, the need for businesses to:
- Outline transition plans to reduce their environmental footprint (E1-1)
- Disclose Scope 1, Scope 2, and Scope 3 GHG emissions. (E1-5 and E1-6)
- Set and report on science-based emission reduction targets, aligned with the Paris Agreement (E1-4)
- Assess the impact, risks and opportunities of climate change on their business models (as per ESRS 2 IRO-1)
Carbon accounting—measuring and managing greenhouse gas (GHG) emissions—is therefore essential for meeting CSRD requirements. Without accurate carbon accounting, organisations cannot generate the reliable, verifiable data needed for compliance.
By providing a quantitative foundation for climate-related disclosures, carbon accounting transforms sustainability ambitions into measurable, actionable insights, enabling organisations to track progress and demonstrate accountability.
Where does Carbon Footprinting fit into my CSRD compliance process?
The process of achieving CSRD compliance is multifaceted, involving materiality assessments, data collection, gap analysis, and disclosure preparation.
During the mandatory double materiality assessment (DMA), you’ll identify which environmental, social, and governance (ESG) issues are most material to your organisation and stakeholders. ESRS E1 is a key topic and is one of the most frequently material topics for companies.
To comply with it, you’ll need to collect data on your GHG emissions across:
- Scope 1 (direct emissions from operations).
- Scope 2 (indirect emissions from purchased energy).
- Scope 3 (value chain emissions, including upstream and downstream activities).
This will provide the basis for all E1 disclosures and allow you for example to set a baseline with related (science-based) targets for your climate transition plan.
Do you want to know more about scope 1, 2 and 3 emissions? Read our article Scope 1,2, and 3 explained
Once your GHG data is collected, you should perform a thorough gap analysis to reveal the areas where data is missing or insufficient (e.g., incomplete Scope 3 reporting or lack of reduction targets).
What are other reasons to start carbon accounting?
The benefits of carbon accounting extend far beyond regulatory compliance:
Identify cost-saving opportunities: Carbon accounting doesn’t just measure emissions; it reveals inefficiencies. By analysing your emission-data, you can identify hotspot areas to optimise operations, reduce energy consumption, and cut costs.
Enhance stakeholder confidence: Investors, customers, and regulators are increasingly scrutinising organisations’ climate performance. Transparent carbon accounting builds trust and demonstrates your commitment to sustainability.
Drive strategic decision-making: With detailed carbon data, you can make informed decisions about investments, partnerships, and operations.
Mitigate risks and unlock opportunities: Carbon accounting helps you assess climate-related risks (e.g., regulatory changes, physical risks) and opportunities (e.g., renewable energy adoption, green product innovation). This proactive approach strengthens your resilience and competitiveness.
Use the Hedgehog Carbon Platform to simplify carbon accounting
One of the most effective ways to streamline your carbon accounting is by leveraging digital tools like the Hedgehog Carbon Platform. Our platform is designed to help organisations track, manage, and report their GHG emissions efficiently and accurately.
The Hedgehog Carbon Platform provides the tools you need to manage the complexities of carbon accounting, while ensuring alignment with CSRD requirements. It empowers you to transform carbon data into actionable insights and meet your sustainability goals.
Key Features of the Hedgehog Carbon Platform:
- Custom GHG-inventory. Access spend-based, and activity-based references and add your EPD's, LCA's and other footprint data.
- Smooth data collection. Our dynamic platform ensures you're always collecting available and meaningful data.
- Automated reporting. Save money and start reporting your own yearly footprints compliant to all global standards.
- Collaborate with ease. Manage users and allow access to colleagues, accountants, auditors, consultants, etc.
Why start carbon accounting today
Carbon accounting is more than a compliance exercise; it’s a strategic opportunity to build a more sustainable, resilient business.
By integrating carbon accounting into your CSRD compliance journey, you’ll not only meet regulatory requirements but also enhance your competitive edge, foster stakeholder trust, and contribute meaningfully to global climate goals.
Contact us to learn how we can guide you to align your carbon accounting and CSRD compliance efforts.
