Carbon accounting: Steps for successful implementation

How will greater adoption of carbon accounting change the way we build? A recent webinar, in partnership with Deepki, explored the role of carbon accounting in reducing emissions. Here are some of the thoughts from the webinar.

Counting carbon

‘We need some clarity around carbon accounting’, says Emmanuel Blanchet, Chief Operating Officer & Co-founder of Deepki. He explains that for corporates wanting to use carbon accounting, the questions and methodologies employed would differ to that of a real estate fund. Even in the Greenhouse Gas (GHG) Protocol, different carbon is counted in the same way, he adds. He emphasises the merit of professionalising the way we count carbon as we move from assessment to action and achieving carbon savings.

Debbie Hobbs is Sustainability and Net Zero Director at CBRE and Global Workplace Solutions for S&P Global. The two main drivers of measuring and reporting carbon are increasing legal requirements around the world and the growth of voluntary compliance with schemes such as SBTi, UNPRI, CDP, RE100, she explains. Corporates can set their own targets on carbon and energy, then annually report against them using the GHG protocol.

An outcome of growing regulation and compliance is that a building’s environmental performance will have a direct impact on its value, says Emmanuel. This development is crucial because asset managers now need to evaluate sustainability into the overall performance of their properties, he says. ‘Carbon assessment has evolved into an evaluation of financial risk in the real estate sector’, he states.

Strategies and roadmaps

Having a strategy and a roadmap are important in turning assessments into action, says Mark Rogers MRICS, Head of Net Zero Carbon, Cost Management at Turner & Townsend. For example, ‘how have you developed your operating model and what's your delivery plan to get to net zero?’ he asks. Carbon accounting can play a key role in understanding where to start from, what is possible and where to focus efforts for the greatest impact, he explains.

A measurable action plan that tracks carbon year-on-year allows you to see improvements or make adjustments and feed the information into the operational plan, he says. ‘In the construction industry, carbon accounting can provide visibility of how products or services perform, shining a spotlight on where things need to improve and incentivise the supply chain to develop more climate friendly products’. Carbon accounting can help in setting policy direction and give a better understanding of the benefits of changing policy, as well as highlight the positive impact of the decisions to employees, explains Mark. It can also encourage positive peer-to-peer competitiveness, with corporates keen to publicise progress made, and suppliers to provide transparency around the sustainability of products to consumers, he adds.

Energy efficiency and carbon

Under the Greenhouse Gas Protocol, a large corporate, for example, can transition away from fossil fuels, switch to electric and purchase carbon credits to achieve net-zero emissions. However, while this seems a simple solution, the increasing annual cost to buy carbon credits makes it financially more prudent to improve the energy efficiency of the buildings instead, argues Debbie. Furthermore, in all the net zero carbon building standards being proposed, including in the UK, a building will have to achieve a certain energy efficiency level, as well as purchasing a renewable energy tariff, to be net zero carbon, she says.

‘Once a building has to perform in its own right, with its own targets to get to net zero, we move to another level’, she says. Currently, companies are looking at their global footprint and how to reduce it. But as we go forward, landlords and property funds will be looking at their individual buildings and how they get each building to be certified as net zero, she says. One example is the UK Net Zero Carbon Buildings Standard, which is an industry initiative that RICS is part of. The main barriers to implementation of such standards are the cost of each building achieving net zero and no legal definition of net zero carbon.

Collecting carbon data

‘The fundamental thing is you can't manage something you're not measuring. So, the first step is to calculate your carbon footprint and then work out how you're setting the targets’. says Debbie.

Emmanuel advises not waiting for settled regulation to start collecting data. The EU taxonomy or the sustainability‐related disclosures in the financial services sector (SFDR) are the main drivers for investors and asset managers in Europe. Although you will find Scope 1, 2, and 3 emissions mentioned in both, neither document provides definitions of them, he says. He believes this is why standards from organisations such as RICS are important. The taxonomy, for example, covers so many activities that it is difficult for the EU to be experts in all of them.

For a full assessment you need some estimation, and as much real and raw data as possible, Emmanuel says. ‘It’s typically something involving all your stakeholders, your property managers and your tenants. Yes, there will be some challenges but there will become less and less challenges because all real estate players need to move forward on this topic’. He cites the example of working with an asset manager. In the first year, 50–60% of data was available but after improvements and stakeholder involvement, this rose to 70–80%. This creates enough information to create a powerful computer model to fill in the gaps, he says.

Tackling embodied carbon

As increasing regulations and efficiency are reducing carbon emissions from buildings, the proportion of embodied carbon in the whole life carbon cycle of an asset is increasing. The forecasting of emissions should be an integral part of the design process, says Mark. He believes it is important to drive out carbon in the first place to ensure designs are as efficient as possible. This includes material choice and how much of a particular material is used.

The operational phase is becoming ever more important. In France, the latest construction regulations now include targets on embodied carbon, making it the first country to do so, says Emmanuel. The calculation of embodied carbon and exploration of low carbon options is witnessing substantial innovation he says. Deepki, for instance, recently acquired Nooco, a software company dedicated to the carbon assessment of construction stages.

Launch of the BECD

In October 2023, a consortium led by RICS and the Building Cost Information Service (BCIS) launched the Built Environment Carbon Database (BECD). This is a UK-based platform for reporting the results of project level carbon assessment. Fabrizio Varriale is Place and Space Analyst, RICS, moderator for this webinar and Chair of BECD Working Groups 1,2 and 3. BECD is not a calculation tool, he explains, but a place to report and share results with the rest of the industry. Free to access, BECD hopes to become the main source of carbon estimating and benchmarking for the construction industry.

Carbon accounting plays a key role in lowering carbon emissions, but how well is it implemented? With increasing regulatory and reporting obligations, a panel of industry experts discuss how companies are measuring their carbon footprint across both direct and indirect emissions. What are the challenges in collecting accurate data for effective carbon accounting and what are the tools and processes that allow this to be achieved?