The Four Maturation Levels of Climate Accounting

A climate statement is more than two numbers that are multiplied together.

It is a key management tool that -- when used correctly -- can drive decisions, document progress and create real business value.

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Climate data as a foundation for change

Many companies are already well into preparing climate accounting.

For many, climate accounting becomes a task that is solved once a year. Data is collected, figures are calculated and the report is published.

Other companies use the climate figures for more than reporting. They invest in improving data quality, engage suppliers and implement internal systems and processes so that climate accounting can be actively used as a strategic management tool on the company's path to net-zero.

At SustainX, we work with a maturity model that demonstrates how companies can gradually mature their climate accounting practices.

The model describes four levels of climate accounting practice -- from initial attempts to create overview to a robust and entrenched system that supports both decisions and reductions.

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Ad Hoc Accounting

The first level often occurs when the company needs to use a climate accounting to meet a requirement or create an initial overview.

The data base is patchy, methods vary, and results can rarely be compared from year to year.

An ad hoc accounting gives an indication of where emissions lie, but cannot be used as a basis for decision making.

Still, it is an important starting point. It creates awareness and makes it possible to identify where the company should focus its efforts.

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System-based, but superficial

When the company establishes a digital system or an automated setup, a more structured level emerges.

This makes calculations repeatable and reporting easier. But precision is often low because data relies on standard factors and general assumptions.

Climate accounting is becoming stable, but does not necessarily say anything precise about the company's real emissions.

This level provides efficiency and puts climate accounting into system, but only with limited management value.

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Technical islands

In some companies, development goes the opposite way. Here the methods are advanced, the data base is solid, and the precision is high, but the work takes place in a closed technical environment.

Climate accounting becomes an expert project without organizational anchoring.

Management finds it difficult to apply the results, and employees rarely understand how the numbers affect the company's strategic choices.

The result is knowledge without ownership. To create value, accounting must be integrated into the decision-making processes, not isolated in a specialist function.

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State of Play — robust and future-proof practices

The highest level of maturity occurs when climate data, methods and processes are embedded in the company's management system.

Here governance, roles and quality control are clearly defined. Data flows automatically through the systems, and the results are actively used in both strategy, investment and reporting.

Climate accounting becomes a strategic tool in line with economic indicators.

This approach is seen at companies such as Novo Nordisk and Mars.

Both have worked systematically to quality-assure their baseline and methodology. Novo Nordisk has adjusted its Scope 3 methodology to ensure a more reliable data base, while Mars stresses that consistency in measurement methods is essential to be able to track progress over time.

It is an example of how methodological maturity increases both credibility and decision relevance and makes climate data applicable in practice.

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The quality of your climate accounting practice determines your mitigation options

Decarbonization requires more than a climate accounting. It requires a practice in which data is actively used to prioritize and manage efforts.

When the methodology is solid, governance rooted and the results integrated into management, climate accounting becomes a compass for the entire company. Data quality is now high enough to identify effective mitigation measures and value-adding business opportunities.

Companies that manage to lift themselves to a robust level of maturity thus stand stronger. Both in its reporting, but equally important in a market where valid climate data is increasingly opening new doors for investment and customers.

Therefore, climate accounting should not be seen as a stand-alone project, but as a continuous process and an integral part of ongoing business operations.

A process in which you optimize your calculation methods year by year in pursuit of higher data quality. At the same time, you implement necessary practices and systems that ensure that the climate figures come out and live throughout the organization.