Carbon accounting software is the software that collects a company's fuel, power and supplier data, converts it into emissions and produces the report that regulators, investors and customers ask for. The report is split into three groups, called Scope 1, 2 and 3 emissions. Scope 1 is what the company releases itself, for example by burning fuel in its boilers and vehicles. Scope 2 comes from making the electricity it buys. Scope 3 is everything else linked to its business, such as its suppliers' emissions and the use of its products. Scope 3 is usually the largest group and the hardest to measure.
Most of these numbers are estimates. The software takes what the company used, such as units of electricity or litres of diesel, and multiplies it by a standard figure for the emissions of each unit. That standard figure is called an emission factor. Where a company has no quantity, only a rupee amount spent, the software multiplies the amount by an average factor for that kind of spending. This is quicker but less exact, so companies replace it with real quantities as their data improves.
Consider a packaging factory near Pune. In one year it used 12,00,000 units of electricity and 40,000 litres of diesel. The software multiplies the electricity by about 0.7 kg of carbon dioxide per unit, which gives 840 tonnes. It multiplies the diesel by about 2.7 kg per litre, which gives 108 tonnes. The factory's own report then shows 948 tonnes, before any Scope 3 figure is added.
Spreadsheets can do this sum once. They fail when the report has to be repeated every year, covers dozens of plants and suppliers, and must satisfy an auditor. The software keeps the source of every number, so an auditor can trace a figure back to the electricity bill it came from.
The software gets its data from several places. It reads fuel and power purchases from the company's ERP system. It receives energy meter data from industrial energy management and safety and waste records from EHS software. It can replace estimates with readings from greenhouse gas monitoring. For suppliers' emissions it depends on supply chain traceability. The finished figures go to the board portal, and to carbon credit buyers who want to make up for what remains.
The buyers are a company's sustainability team, and increasingly its finance team. The market is young and crowded, and Indian start-ups are active in it.