Recording Emissions in Microsoft Dynamics 365 Business Central

Sustainability is more important today than ever before. As a result, many companies need to document their sustainability initiatives and be able to prepare sustainability reports. 
In the latest version of Microsoft Dynamics 365 Business Central, Microsoft is introducing new functionality that enables companies to collect, record, and report on their sustainability activities.

Recording Emissions 

In version 24 of Business Central, which is expected to be released in April, you can record emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). These emissions can be recorded in three ways: direct emissions, indirect emissions, and indirect emissions from other companies. In Business Central, you record these emissions under Scope 1, Scope 2, and Scope 3.

Direct emissions – Scope 1
Direct emissions are emission sources from your own company. These include emissions from your leased vehicles and emissions from your production facilities.

Scope 2 Indirect Emissions
Indirect emissions are emissions resulting from the generation of electricity, heat, or steam that an organization purchases and consumes. For example, if a company purchases electricity from a coal-fired power plant, it is responsible for the emissions associated with the production of that electricity, even though it does not emit them directly. Scope 2 emissions are reported separately from Scope 1 emissions, which are direct emissions from sources owned or controlled by the organization.Indirect emissions from other companies – Scope 3
Scope 3 emissions are greenhouse gas emissions that occur outside an organization's direct control.
This therefore refers to emissions from suppliers, customers, and end users.

Examples:

• Emissions resulting from the production of raw materials or components that a company uses to manufacture its products or provide its services. This is an upstream Scope 3 emission, as it occurs before the company receives the materials or components.
• Emissions resulting from the use or disposal of a product or service that a company sells to its customers. This is a downstream Scope 3 emission, because it occurs after the company has delivered the product or service. 
• Emissions from transportation, both upstream and downstream (trucks, trains, airplanes, etc.). 

How does it work?

Before we delve deeper into the subject, let's start with a diagram. 

Sustainability Accounting Framework 

The sustainability chart of accounts serves as the basis for sustainability reports. It must be defined with its own sustainability categories and subcategories. The values displayed are based on sustainability journal entries.

Sustainability Categories

The first step in the setup process is to define sustainability codes. You associate specific characteristics—such as the emissions scope and the basis for calculating emissions—with each code. Each category is associated with one or more subcategories in which the emission factor is specified.

Sustainability Journal  

Emissions are recorded in the sustainability journal. This can be done either manually or calculated based on GL entries. The journal works just like any other journal; you must enter details such as the posting date, document number, account, account category, and account subcategory.  

In the example below, CO2 and CH4 values are calculated based on the entered distance for  
Line 1 and fuel/electricity for Line 2. The calculation is based on: 

• Account codes for which the calculation basis has been defined.
• Account subcategory where CO2, CH4, and N2O standards are listed.