CO2 balancing companies: The ultimate guide

Why CO? accounting is your competitive advantage today

Imagine if you could manage your company’s environmental impact just as clearly and precisely as your finances. What sounded like a dream of the future just a few years ago is already part of everyday life for many progressive companies. Corporate carbon accounting is much more than just a response to social pressure – it’s a sharp strategic tool that delivers real business benefits. The question is no longer whether to deal with emissions, but how to manage them wisely to strengthen your market position.

Systematically recording your carbon footprint works like a thorough inventory of your processes. It reveals where energy is wasted, transport routes are inefficient or supply chains need to be optimized – these are often hidden cost guzzlers. A reduction in emissions therefore almost always goes hand in hand with lower operating costs.

From cost driver to customer magnet

Customers and business partners are making increasingly conscious decisions. Sustainability has long since become a hard factor. A transparently communicated, low carbon footprint sends a strong signal to the market and builds trust. This trust is the basis for long-term customer loyalty and a positive perception of your brand. This allows you to stand out clearly from the competition and appeal to new, environmentally conscious target groups.

Pressure from investors is also growing. ESG criteria (environmental, social and governance) are now an integral part of investment decisions. Companies that actively manage their climate risks and set up their carbon footprint professionally are seen as more resilient and future-proof. This not only secures access to capital, but also makes you an attractive employer for talented people looking for a meaningful job.

Proactive action beats reactive measures

The legal requirements, such as the Corporate Sustainability Reporting Directive (CSRD), are becoming ever stricter. If you deal with CO? accounting for companies voluntarily and at an early stage, you will be well prepared for future obligations. This protects you from compliance risks and possible penalties. Instead of being overwhelmed by new laws, you actively shape the change. This proactive approach shows foresight and responsibility – qualities that are well received by all stakeholders.

The economic significance becomes particularly tangible when you consider the influence of companies on the national carbon footprint. Of the average 10.4 tons of greenhouse gases produced by each person in Germany each year, around 2.2 tons are attributable to the production and services of companies. This shows the enormous leverage that a strategic reduction in emissions has in the economy. You can find detailed information on your personal greenhouse gas balance at Statista.com. Those who know and reduce their emissions not only make a contribution to climate neutrality, but also secure decisive competitive advantages. Find out more here about how you can successfully shape the path to climate neutrality in your company.

The three scopes decoded: Your compass through emission worlds

In order to master carbon accounting for companies, you first need to understand where your emissions come from in the first place. A global standard method has been established for this, which divides all greenhouse gases into three clearly defined categories: the so-called scopes.

Imagine these scopes as three concentric circles around your company. The innermost circle (Scope 1) covers the most direct sources, while the outer circles (Scopes 2 and 3) cover the indirect effects. Only when you consider all three circles will you get a complete and honest picture of your climate impact.

Dividing your emissions into these three areas is the crucial first step towards effective climate management. It enables you to clearly assign responsibilities, develop targeted reduction measures and communicate your progress transparently.

Scope 1: Focus on your direct emissions

Scope 1 includes all emissions that come directly from sources that your company owns or controls. You can think of it as the direct “tailpipe” of your company – the emissions that are generated on site.

These include:

• Stationary combustion: Emissions from boilers, furnaces or in-house power plants that run on fossil fuels such as gas or oil.
• Mobile combustion: Exhaust gases from your vehicle fleet – i.e. from company cars, trucks or other company-owned vehicles.
• Process emissions: Direct release of greenhouse gases during industrial or chemical production processes, for example in cement production.
• Fugitive emissions: Unintentional leaks, for example from air conditioning or refrigeration systems that contain refrigerants that are harmful to the climate.

The recording of Scope 1 emissions is usually relatively straightforward, as the consumption data (e.g. fuel filled, gas consumption) is available directly in the company.

Scope 2: The energy you buy

Scope 2 only covers indirect emissions that occur during the generation of the energy you purchase. This means that if you purchase electricity, heat, cooling or steam from an external supplier, the emissions released during its production are included in your Scope 2.

A manufacturing company that obtains its electricity from a coal-fired power plant has a correspondingly high Scope 2 footprint. Switching to a certified green electricity tariff is therefore one of the quickest and most effective ways to reduce Scope 2 emissions to zero.

Scope 3: A view of the entire value chain

Scope 3 is the most comprehensive and often the largest area. It includes all other indirect emissions that occur in your upstream and downstream value chain but are not under your direct control.

These include, for example:

• emissions from the production of purchased raw materials and preliminary products.
• Transportation and logistics by external service providers.
• Business trips of your employees by plane or train.
• The use and disposal of your sold products by the end customer.

The calculation of Scope 3 is complex but crucial, as this is often where over 70% of a company’s total emissions are hidden. A precise analysis reveals the biggest emissions hotspots and shows where collaboration with suppliers or product redesign has the greatest leverage.

The following table gives you a quick overview of the three scopes and helps you to allocate the sources in your own company.

Overview of the three emission scopes with practical examples
Comparison of the different scope categories with specific emission sources and calculation approaches for different types of companies

Scope category	Scope definition	Typical sources	Measurement method	Priority
Scope 1	Direct emissions from sources controlled by the company.	Own vehicle fleet (gasoline, diesel), heating systems (gas, oil), refrigerant leaks, process emissions (e.g. cement production).	Direct measurement of consumption data (e.g. liters of fuel, kWh of gas) and application of emission factors.	High, as direct control and simple data collection. Basis for every balance sheet.
Scope 2	Indirect emissions from purchased energy.	Purchased electricity, district heating, district cooling, steam.	Energy supplier invoices (kWh) and multiplication with location- or provider-specific emission factors.	High, as easy to calculate and often easy to reduce by switching to green electricity.
Scope 3	All other indirect emissions in the value chain.	Purchased goods & services, transportation & logistics, business travel, waste, use of products sold, employee commuting.	Very complex; often based on spend-based data, average values or direct data from suppliers.	Medium to high, often the largest share, but more complex to collect. Starting with the most important categories.

As the table shows, the complexity of data collection increases significantly from Scope 1 to Scope 3. At the same time, Scope 3 often offers the greatest potential for sustainable change.

The following infographic illustrates the hierarchical structure of the regulations that are interlinked in carbon accounting.

This structure shows how global frameworks such as the GHG Protocol form the basis for more specific regulations at EU and national level and thus ensure the comparability of carbon accounting for companies.

Mastering legal requirements: Your protective shield against compliance risks

Carbon accounting for companies has long since ceased to be a voluntary exercise and is fast becoming a tangible legal obligation. Those who ignore these developments risk not only high penalties, but also a loss of competitiveness and investor confidence. The regulations are not a bureaucratic evil, but a clear signal from the market: transparency and climate protection are the new currency for business success.

Think of the legal framework as a safety net that is becoming ever tighter. It is designed to prevent greenwashing and promote genuine corporate responsibility. Companies that understand this net and act with foresight not only protect themselves from compliance risks. They also position themselves as reliable partners in an economy that places great importance on climate awareness.

The CSRD: Europe’s new rules for sustainability reporting

The Corporate Sustainability Reporting Directive (CSRD) is at the heart of European legislation. This directive significantly expands reporting obligations and places sustainability reporting on the same level as financial reporting. It replaces the previous Non-Financial Reporting Directive (NFRD) and is gradually affecting more and more companies.

For many large companies, things will soon get serious: from the 2025 financial year, they will have to report and disclose their greenhouse gas emissions in accordance with the CSRD. This means recording all relevant gases in detail and converting them into CO? equivalents (in tons). These results must be audited and published in the management report, which makes the importance of precise carbon accounting for companies clear. You can find out more about the specific implications of these accounting obligations for companies at der-wirtschaftspruefungs-blog.de.

But the CSRD does not come alone. It is closely linked to other important EU regulations, which together form a strong set of rules:

• EU taxonomy: This regulation defines which economic activities are considered environmentally sustainable. In order to be considered “taxonomy-compliant”, a company must prove that its activities make a significant contribution to at least one of six environmental objectives without compromising other objectives. The carbon footprint is a key piece of evidence here.
• TCFD recommendations: The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) require transparent reporting on climate-related financial risks. Although they were originally voluntary, their principles are now firmly integrated into the CSRD and are therefore binding for many European companies.

This combination of regulations shows one thing very clearly: it is no longer enough to look at CO? emissions in isolation. A holistic sustainability strategy for companies is the key to not only fulfilling the legal requirements, but also seeing them as a strategic opportunity. Those who act early will secure an important competitive edge and make their company fit for the future.

Data collection demystified: From chaos to crystal clear insights

Creating a solid carbon footprint for your company doesn’t start with complicated formulas, but with simple detective work: systematic data collection. Think of it as if you were securing evidence at a crime scene. Every electricity bill, every fuel receipt and every supplier contract is a crucial clue that reveals your company’s emissions footprint.

Without reliable data, every balance sheet remains a mere estimate. The key to success lies in approaching this process in a structured manner from the outset. This is how you transform an apparent chaos of information into a clear and reliable data basis. Manual entry in endless tables is not only error-prone, but also frustrating. Smart companies therefore rely on a mixture of tried-and-tested methods and digital helpers to maintain an overview and ensure data quality.

Where can you find the right data?

The search for the required information is like a treasure hunt within your own company. The most important data sources are often already available, but scattered across different departments. The first step is therefore a clear plan: what data do you need for scopes 1, 2 and 3 and where can you find it?

The following data is typically essential for a company’s carbon footprint:

• Scope 1: This relates to consumption data that is generated directly in your company. Think of liters of diesel used for the vehicle fleet, cubic meters of natural gas used for heating or the amount of refrigerant refilled in air conditioning systems. You can find this information in logbooks, fuel card statements and the bills from your energy suppliers.
• Scope 2: The primary source here is the electricity and district heating bills from your external suppliers. The decisive factor is the specification of consumption in kilowatt hours(kWh).
• Scope 3: This area is the most challenging, but doable. Start with easy-to-collect data such as flights booked for business trips or the amount of waste generated according to your waste disposal company’s invoices. The kilometers driven by employees when commuting, which can often be determined through internal surveys, are also a good starting point. For purchased goods and services, aspend-based estimate is often the most pragmatic first step. Purchasing volumes are multiplied by industry-specific emission factors.

Ensure data quality and avoid typical errors

The biggest challenge is often not finding the data, but evaluating it correctly. Incomplete calculations, missing units (e.g. liters instead of kWh) or different recording periods can quickly distort your balance sheet. Transparency is the be-all and end-all here: document all assumptions and estimate missing values conservatively.

To simplify the process, we provide you with an overview of typical data sources and collection methods. This table will help you to proceed systematically and not overlook anything.

Division	Relevant data sources	Data collection method	Frequency	Challenges
Energy & Buildings	Electricity, gas and district heating bills	Direct meter reading, utility bills	Monthly, quarterly	Different billing cycles, missing consumption peaks
Vehicle fleet	Fuel card statements, logbooks, leasing contracts	Data extract, manual entry	Monthly	Private vs. business use, incomplete logbooks
Business trips	Travel expense reports, booking confirmations, travel agency reports	System report, manual collection	Per trip, monthly	Incomplete recording (e.g. cab), various booking channels
Purchasing & procurement	Supplier invoices, purchasing data from ERP systems	Spend-based analysis, supplier survey	Annual, quarterly	Large amounts of data, lack of product-specific emission factors
Employees	Surveys on commuting behavior, HR data on the number of employees	Anonymized online surveys	Annual	Low response rate, inaccurate estimates of distances
Waste management	Invoices from the waste disposal company	Evaluation of invoices according to waste type and quantity	Monthly, quarterly	Lack of differentiation according to waste fractions, flat-rate invoices

This overview shows that a structured approach is crucial in order to obtain reliable data. The combination of direct data collection and targeted estimates forms a solid basis for your balance sheet.

Modern software solutions for carbon accounting can be an enormous help here. They validate data automatically, carry out plausibility checks and can intelligently close gaps with the help of algorithms. Such a structured approach transforms the initial data chaos into an auditable basis for your climate management. This turns carbon accounting into a reliable management tool for your company instead of a chore.

Calculation secrets revealed: How data becomes meaningful CO? values

As soon as you have collected your consumption data like a detective, the real core of carbon accounting for companies begins: the conversion. Think of it as if you had to convert completely different currencies – electricity in kWh, diesel in liters and natural gas in cubic meters – into a single, comparable currency. When calculating CO?, this common currency is the “CO? equivalent”.

The formula for this is surprisingly straightforward:

Consumption data x emission factor = CO? equivalents (CO?e)

The key role in this process is played by the emission factor. It works like an exact conversion rate that indicates how much greenhouse gas is produced when a certain unit of energy or activity is used. These factors come from official bodies such as the Federal Environment Agency (UBA) or from international databases. This ensures that your calculations are based on a standardized and comparable basis.

From activity to emission: the calculation in practice

To make the theory tangible, let’s look at a concrete example. A medium-sized logistics company consumed 50,000 liters of diesel for its vehicle fleet last year.

• Consumption data: 50,000 liters of diesel
• emission factor (example value): 2.64 kg CO?e per liter of diesel
• Calculation: 50,000 l × 2.64 kg CO?e/l = 132,000 kg CO?e (or 132 tons of CO?e)

These 132 tons of CO?e fall under Scope 1, as the emissions come directly from the company’s own vehicle fleet. The same principle is applied to all other sources of emissions. The appropriate emission factor is used for each activity, from electricity consumption and business travel to waste disposal.

Location-based vs. market-based: A crucial difference in Scope 2

The accounting of purchased electricity, i.e. Scope 2, is a little more nuanced. The Greenhouse Gas Protocol allows two different calculation approaches here, which can lead to different results:

• Location-based method: Here you use the average emission factor of the electricity grid to which your company is connected. This value reflects the general electricity mix in your region, for example the German average.
• Market-based method: This approach takes into account the specific electricity products that you have actually purchased. For example, if you use a certified green electricity tariff, you can apply an emission factor of zero. If, on the other hand, you purchase normal gray electricity, you must use the specific factor of your supplier.

The market-based method is particularly important for active carbon accounting in the company. It directly reflects your conscious decisions in favor of renewable energies and makes your success in reducing emissions visible. Most modern reporting standards now require the disclosure of both values in order to ensure full transparency. Choosing the right method is therefore not a small detail, but a central building block for the credibility of your climate strategy.

Reporting excellence: telling your CO? story convincingly

Careful carbon accounting for your company is only half the battle. The pure figures are mute – they need a story that brings them to life and makes them understandable. Think of your CO? reporting not as a dry collection of data, but as an exciting narrative for your stakeholders. Who are the main characters (your biggest sources of emissions)? What is the arc of suspense (the development over time)? And what does the future look like (your climate targets and how to get there)? A well-told story transforms complex data into credible messages that investors, customers and employees understand and support.

The key point is to go beyond mere compliance. A good report is more than a list of issues; it is a strategic tool that builds trust and positively charges your brand.

Visual communication: A picture says more than a thousand tons of CO?

People process images and graphics much faster than plain text. You should take advantage of this fact to present your emissions data effectively. Instead of endless tables, meaningful graphics make your climate performance understandable at first glance.

Here are some proven methods for visualization:

• Column or bar charts: Perfect for displaying the distribution of your emissions across the three scopes or directly comparing the largest emission sources within a scope.
• Line charts: Ideal for showing the development of your total emissions over several years and thus demonstrating the progress of your reduction efforts.
• Waterfall diagrams: Excellent for illustrating how individual measures (e.g. switching to green electricity, optimizing the vehicle fleet) contribute to reducing the overall footprint.

Such presentations are now an integral part of modern sustainability reports. The following illustration shows an example of the typical structure of such a report, as it can also be found on Wikipedia.

This structure makes it clear that carbon accounting is not an isolated issue. It is deeply embedded in the entire corporate strategy – from the general vision to the specific measures. If you would like to delve deeper into this topic, our article will show you how to create a professional sustainability report.

Transparency and authenticity: your shield against greenwashing

In a world where customer trust counts, honesty is your most important currency. Accusations of greenwashing can damage a company’s reputation in the long term. The best protection against this is open, fact-based communication. This means not only celebrating successes, but also addressing challenges clearly and unambiguously.

Show where you are today, where you want to go and what hurdles you still have to overcome along the way. Explain the methodology of your carbon accounting for companies, disclose your emission factors and be transparent, especially when it comes to uncertainties in your Scope 3 data. This authenticity creates credibility and proves that you take the issue seriously. An honest report that does not conceal setbacks is far more convincing than a flawless glossy brochure that leaves important questions unanswered.

How digital tools simplify your climate management

Imagine if your CO? accounting for companies was as simple and clear as your online banking: automatic, accurate and traceable at all times. What was still a dream of the future a few years ago has long been possible today thanks to digital tools. The days of laboriously maintaining emissions data in confusing Excel spreadsheets are numbered. Modern software solutions take a large part of the work off your hands and turn complex climate management into a controllable and transparent process.

These digital helpers are far more than simple pocket calculators. They act as a central data hub that collates, checks and automatically processes information from a wide range of sources – from energy bills and ERP systems to travel booking platforms. Manual data entry is reduced to a minimum, which not only saves valuable time, but also significantly reduces the susceptibility to errors.

Smart software: from data collector to strategic partner

The real added value of these tools lies in their built-in intelligence. They work on the basis of globally recognized standards such as the GHG Protocol and access constantly updated databases with thousands of emission factors. This ensures that your calculations are not only correct, but also reliable for external audits.

Modern platforms go one step further:

• Automated data capture: Direct interfaces to your existing systems (e.g. accounting, fleet management) enable a smooth data flow without manual detours.
• AI-supported error detection: machine learning algorithms detect irregularities and data gaps, point out implausible values and suggest corrections.
• Scenario modeling: You can simulate how certain decisions – such as switching to a green electricity tariff or electrifying your vehicle fleet – will affect your overall carbon footprint. This allows you to make well-founded, data-based decisions for your climate strategy.

This technological support is an important building block for achieving climate targets at national level. In 2024, greenhouse gas emissions in Germany were estimated at around 649 million tons of CO? equivalents, which corresponds to a decrease of 3.4% compared to the previous year. Digital tools help companies to systematically make and document their contribution to this trend. You can find out more about the latest emissions data from the Expert Council for Climate Issues.

Find the right solution for your company

The market offers a wide range of solutions, from specialized SaaS platforms to modules that can be integrated into existing ERP systems. When making your selection, you should not only pay attention to the range of functions. Just as important is how well the software fits into your existing IT environment and whether the provider offers industry-specific knowledge and personal support. Good software automates the calculation, but human expertise remains essential for strategic evaluation and the implementation of measures.

Well thought-out carbon accounting for companies is the first step. But how do you turn those numbers into a visible, positive impact? Click A Tree helps you connect your sustainability goals to tangible projects – from planting trees to collecting plastic from the ocean. Discover how you can automate sustainability in a simple and measurable way.