Date posted: 02/10/2023 5 min read

How to add carbon accounting to your skill set

Businesses big and small will soon have to report on and mitigate their carbon emissions. Now, accountants have the locally developed tools help. Brought to you by Trace.

In Brief

  • New international sustainability reporting standards will require businesses to report on their carbon emissions – including Scope 3 emissions that typically include emissions from SMEs in the supply chain.
  • Australian software company Trace offers the technology to help accountants report on carbon emissions, and it is training CAs, bookkeepers and consultants to offer this service.
  • Accountants who learn how to do carbon accounting will not only be able to help their clients, they will be able to measure, report on and mitigate their own firms’ carbon emissions – leading the charge in carbon reporting and best practice.

When Catherine Long and Joanna Auburn struggled to find information on their small business’s carbon emissions – including a dead end with their accountant – they decided to quit their corporate jobs and build the software themselves. For the last three-and-a-half years, their software company Trace has been providing SMEs with the tools to measure their carbon emissions and proactively reduce them.

“In the last 18 months, the perception of carbon reporting has shifted from a nice-to-have to an incredibly urgent must-have,” says Long. “We could see that climate-related disclosures were going to impact big businesses, but it’s the small businesses in their supply chains that are going to be without the tools to comply.”

Carbon reporting training

Since May 2023, Trace has trained more than 100 accountants, bookkeepers and consultants on the role of carbon in their clients’ reporting needs.

Designed as a three-part program – presented in real time with real people – Trace busts the myth that carbon accounting is too hard, too far away or too tangential. Led by their head of partnerships, Taylor Fox-Smith, the first session explores the regulatory drivers shaping carbon as a business risk. The second session covers credible calculations, emissions factors and the role of the GHG (greenhouse gas) Protocol. The final session is all about practicalities: teaching accountants how to use the Trace software to measure and manage the carbon emissions of their firms and clients. Importantly, each accountant walks away with the skills and enthusiasm to launch their own carbon-accounting service model.

“For us, it’s all about enablement,” says Long. “We know there’s a climate literacy gap that accountants will need to bridge for their clients, so the first step is giving accountants the tools to proactively guide their clients.”

 Trace co-founders Catherine Long (left) and Joanna Auburn (right).Pictured: Trace co-founders Catherine Long (left) and Joanna Auburn (right). 
“We know there’s a climate literacy gap that accountants will need to bridge for their clients, so the first step is giving accountants the tools to proactively guide their clients.”
Catherine Long, Trace

Mandatory reporting is here

The clock is ticking. “Over 25% of our training program graduates are currently being asked by their clients for support on carbon reporting. Whether it’s an SME who’s biggest client is ASX-listed, or a specialist business with multiple government contacts, the question is no longer about being captured by legislation, it’s being caught by implication,” adds Fox-Smith.

In June, the International Sustainability Standards Board (ISSB) released two reporting standards requiring companies to disclose their full GHG emissions by 2025. These disclosures include a company’s Scope 3 emissions, defined as indirect emissions in the value chain. It is these indirect emissions that are represented by SMEs and each SME needs your help in getting ready for mandatory reporting.

The sustainability standards have created a common language and a shared baseline. As an international standard, they have already been incorporated into New Zealand’s reporting regime, with Australia set to follow suit by legislating climate-related financial disclosure from 2024 onwards. As a result, Long says that “carbon accounting is no longer a climate strategy, but a financial one”.

Measure dashboard by PnL

Carbon accounting a natural next step for CAs

The team members at Trace are fierce advocates that accountants are the key to reaching net zero. A term defined by the Paris Agreement in 2015, net zero is the ambitious commitment by public and private actors to reduce 90% of their carbon emissions produced by 2050, with the remainder removed via credible carbon removal processes. Whether you’re reading this article as we head into Australia’s bushfire season, or in the wake of catastrophic flooding in New Zealand, we can all attest to the physical risks of climate change. For CA ANZ members and their clients, there are also transitionary risks – the risk of not acting soon enough.

“I am convinced that in five years’ time carbon accounting will be as commonplace as financial accounting,” says Long. “Every company will track and disclose their carbon emissions publicly, allowing their customers to make purchase decisions based on climate impact.”

In order for us to reach this state of transparency, the world needs accountants to take the charge of carbon reporting, with partners like Trace.

CA ANZ members have built their profession on rigour, data analysis and reporting. Fortunately, it is these same principles that make CAs the perfect candidates for upskilling in carbon accounting. In the words of Long: “It’s these principles and skills that underpin the climate-risk management SMEs need.”

Not to mention, accounting firms are also a component of each of their own clients’ Scope 3 emissions, so why not take the chance to lead from the front?

“I am convinced that in five years’ time carbon accounting will be as commonplace as financial accounting.”
Catherine Long, Trace

What carbon accounting services will your clients need?

Trace is a CA ANZ Member Benefits Partner that can help you expand your services to include carbon reporting. Find out more about the company and the exclusive benefits on offer to CA ANZ members – including a carbon accounting workshop.