Smart accounting practices that strengthen your climate report

Guide to Adjusting Your Accounting Practices for More Accurate Climate Accounting

Introduction

The Climate Reporting Tool calculates emissions automatically based on accounting data (spend method). For better accuracy, you can input activity data, such as energy and fuel consumption.
This guide provides best practices for how to conduct accounting most accurately. It covers the use of general ledger accounts and SAF-T ID, how accounts are linked to the GHG Protocol (Scopes 1, 2, and 3), and special considerations such as VAT, accruals, and leasing.

How the Climate Reporting Tool Works in Practice

The tool connects to the accounting system by mapping general ledger accounts to SAF-T IDs. Each SAF-T ID determines the emission factor applied to transactions.
To get started, you only need to activate SAF-T ID in the ERP system. It will then automatically link to your general ledger accounts. Some accounts are mapped 1:1 with SAF-T ID, while others are combined.
Example: If a company purchases fuel, it must be recorded on a general ledger account that is mapped with a SAF-T ID associated with Scope 1 emissions to ensure the correct emission factor is used.

Fundamental Principles for Good Accounting Practices

Accounting for accurate climate accounting will represent a new perspective for many in their accounting practices. To ensure detailed and reliable climate accounting, we recommend the following principles when recording your financial accounts:

• Consistently record accounts monthly to ensure comparable data over time.
• Breakdown transactions into multiple accounts for more detailed emission data.
• Record physical assets with different energy sources separately for more precise calculations.
• Avoid using general accounts like “Miscellaneous,” as these provide poorer accuracy.
• Record leasing costs and financial leases as assets so they can be included in Scope 3 reporting.

Following these principles will give you a better overview of the company’s emissions and facilitate future improvements.

How Emissions Are Allocated in Climate Accounting

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used framework for defining which emissions should be reported where in the climate accounts, aligning with EU and accounting law requirements (CSRD/VSME).

To ensure emissions are categorized correctly, we have compiled some practical recommendations here:

Assets and Equipment

Activating assets provides a better data basis for emission calculations. This functionality is coming in 2025, and we recommend establishing good accounting practices now:

• Register assets separately: Equipment and fixed assets that use different sources of fuel or electricity should be recorded as separate assets. It provides more precise calculations since two vehicles worth 800,000 NOK will have higher emissions than one of the same value.
• Connect energy data to the asset: By recording each asset individually, energy meters or fuel accounts can later be linked to the specific asset, automatically recording energy usage to the correct asset and scope.
• Retain assets after depreciation: This enables energy consumption to still be linked to the correct asset without manual effort.
• Activate leasing: Leased assets that are critical for operations should be activated. This enables reporting in Scope 3, category 8: Upstream leased assets – and provides more accurate Scope 3 data.
• Register rentals: Leased out assets should also be activated. This allows emissions to be reported in Scope 3, category 13: Downstream leased assets.

Fuel and Energy Use (Scope 1 and 2 - Direct Emissions from the Company)

Fuel and energy purchases result in direct greenhouse gas emissions. If these entries are low or zero, it is often because the costs are hidden in other accounts. To ensure correct reporting, such expenses should be separated out and recorded correctly – this way they are assigned the correct emission factor and placed in the correct emission category (Scope 1 or 2). It also makes it easier to avoid double counting when you input consumption data or connect to integrations like mileage logs and electricity meters.

Production (energy, fuel, cooling, and heating)
Separate all consumption related to production in owned or leased buildings and equipment. Record refrigerants on a separate account – this will soon be supported in the tool.

Vehicles (fuel and electricity)
Record all fuel and electricity used for owned vehicles separately. Differentiate fuel for employee travel where practically possible.

Electricity and Heating
Use dedicated accounts for electricity and heating. If you are a tenant, request separate energy statements – this ensures that consumption can be booked correctly and included in Scope 2 emissions.

Goods, Services, Transport, and Employee Travel (Scope 3 - Indirect Emissions from the Company’s Supply Chain)

Scope 3 is indirect emissions from the company’s supply chain and is voluntarily reported for small and medium-sized enterprises. However, this is often where the largest emissions for many are found – and opportunities for improvement. If you wish to work on your Scope 3 emissions, we recommend detailing as much as possible in the accounts within each emission category:

Purchases of raw materials
Record only the raw materials themselves. Freight and transport should be recorded separately (see below).
The raw material account currently has an average emission factor, but we are working to provide industry-specific factors based on NACE code.

Freight of sold goods
Record transport and freight of raw materials and products separately. This provides an overview of emissions from transport (Scope 3, category 4).

Purchases of goods and services
Use relevant accounts to differentiate various types of purchases. Avoid “miscellaneous” accounts. More detail provides a better data basis and more precise emission calculations.

Employee travel
Record employee travel separately – it enables measuring the effects of initiatives over time. It also provides a clearer picture of purchased services and makes it easier to avoid double reporting when using automatic data sources for travel expenses and disbursements.

For further details regarding the categories in the GHG Protocol, you can read this article.

Conduct a Quality Check of Accounting Practices with Our Comprehensive Table

Overview of the GHG Protocol categories and relevant general ledger accounts mapped against which SAF-T ID. Download the table (Excel format) for your ERP solution and conduct a quality check of your accounting practices:

• Business NXT
• Visma.net
• Tripletex

Contact support@ducky.eco for a walkthrough if you are using file uploads.

Special Considerations in Climate Accounting

Value-Added Tax (VAT)

The Climate Reporting Tool calculates emissions based on transactions without VAT. Therefore, VAT accounts are not included in the climate accounts.

Accruals

By accruing costs associated with emissions, these will be picked up on the expense accounts, providing a more accurate picture of when emissions occur. For example, a quarterly electricity bill should be accrued over each month so that electricity consumption is distributed throughout the year and reflected in the climate accounts.

Leasing of Assets

Leasing assets, such as vehicles and machinery, should be activated as assets in the accounts. This allows them to be included in the company’s indirect emissions (Scope 3, category 8: upstream leased assets).
Example: A company leasing electric vans should activate these in the accounts to ensure the emissions are correctly categorized.

Future Opportunities – How to Prepare?

Throughout 2025, new functionality is planned to increase the level of detail in data from the financial accounts, so you automatically get better climate accounting from your ERP system. We therefore recommend that you already now:

• Use available tags, often referred to as cost bearers, responsibility units, or dimensions, in the ERP system for more detailed categorization of transactions where available. Examples include cost centers to divide into areas within the company, or project accounting where possible to link emissions to activities, services, or products you purchase.
• Differentiate energy use, fuel, and transport costs on relevant accounts to avoid double counting. This is crucial when you overwrite accounting data with activity data (consumption of kWh, liters of diesel, etc.) or connect to external data sources like disbursement data, mileage logs, or electricity meters.
• Activate leasing and physical assets now, so they can be automatically captured when the asset functionality is available.

Summary – 5 Smart Steps You Can Take Now for Better Climate Accounting

1. ✅ Activate SAF-T ID and ensure the ID has 4 digits.
2. ✅ Record transactions on relevant accounts to increase accuracy in emission categorization.
3. ✅ Differentiate energy use, fuel, and transport from other costs.
4. ✅ Prepare for new functions in 2025 by establishing good routines now.
5. ✅ Use responsibility units and dimensions in the ERP system for more detailed reporting.

By implementing these measures, you ensure that climate accounting becomes both more accurate and more valuable as a decision-making basis.

Do you have questions? Contact support@ducky.eco for guidance!