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What is Carbon Disclosure?

By T. Webster
Updated: May 17, 2024

Carbon disclosure refers to the practice of encouraging or requiring organizations or individuals to report greenhouse gas emissions that can impact the environment. This is often calculated by the amount of carbon dioxide being emitted by a certain practice being carried out by an individual or a business, for example. Two target areas of carbon disclosure are fossil fuels and utility usage.

Emissions of carbon can cause heat to become trapped in the atmosphere. Various scientists and environmental groups around the world have expressed concern about the amount of greenhouse gases being emitted. They say it leads to climate change or global warming, which can have a variety of environmental consequences.

Companies participating in carbon disclosure often invest in ways to increase energy efficiency to help protect the environment and save money. Companies also often develop new products or services that limit damage to the environment. In turn, these developments assist customers of these companies in cutting their carbon emissions.

Much of the participation in carbon emissions reporting is voluntary, so some people question why businesses should do it. A number of factors can influence this for businesses, including political pressure, the desires of customers or clients or a desire to help improve the environment and reduce pollution. Another benefit cited for participation in carbon disclosure is an improved public image for helping to protect the environment.

Some large and well-known international corporations participate in carbon disclosure and reporting. This typically involves reporting the company's emission level and plans to reduce it. These companies sometimes require their suppliers to report this information, as well.

Carbon disclosure is often seen as the first step in reducing emissions. This step includes defining an organization’s goals for reduction, calculating the levels, reporting and auditing. The information gathering and reporting is usually done over a one-year period.

Calculating a “carbon footprint” can also be done for a business, organization or an individual. This can include analyzing the impact of production, manufacturing and transportation on the environment. Product usage and recycling are also part of calculating a carbon footprint.

The term "carbon disclosure" can also refer to the Carbon Disclosure Project, an international organization that gathers data on hundreds of companies around the world. This nonprofit organization claims to hold the world's biggest corporate climate change database. The group also asks the businesses to report how climate changes would affect their businesses.

About Mechanics is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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