For small and medium-sized enterprises (SMEs), sustainability is no longer just a corporate social responsibility initiative. It is becoming a regulatory and commercial imperative. Customers, investors and regulators increasingly expect businesses to measure and report their carbon footprint. Yet for many SMEs, carbon accounting feels complex and resource-intensive, especially when financial and operational data is scattered across spreadsheets and disconnected systems.
Microsoft Dynamics 365 Business Central, combined with Power BI, offers a practical way forward. By capturing activity data within your ERP and linking it to emission factors, SMEs can produce accurate carbon reports without reinventing their processes. This blog explores how to track emissions tied to items, vendors and projects, and how to turn that data into board-ready dashboards that support compliance and strategic decision-making.
Why carbon accounting matters for SMEs
Carbon reporting is no longer optional for many businesses. The UK government’s Streamlined Energy and Carbon Reporting (SECR) framework already applies to large companies, and similar requirements are expected to cascade to smaller organisations in the coming years. Beyond compliance, sustainability credentials influence customer choices and supply chain partnerships. According to Gartner, over 70% of global supply chain leaders plan to require carbon reporting from their suppliers by 2026.
For SMEs, the challenge is twofold: collecting accurate data and presenting it in a way that satisfies stakeholders. Manual methods are time-consuming and prone to error. Integrating carbon accounting into existing systems like Business Central reduces complexity and cost, while improving accuracy and auditability.
Capturing activity data in Business Central
Carbon emissions are typically calculated by multiplying activity data (such as energy use, fuel consumption or material purchases) by emission factors. Business Central already holds much of the activity data you need for Scope 3 emissions, including purchase orders, item consumption and project costs. Here’s how to leverage it:
1. Link emission factors to items
Start by creating a custom field or dimension in Business Central to store emission factors for products or materials. For example, if you purchase steel components, you can record the associated CO₂e per kilogram. When items are bought or consumed in projects, Business Central can calculate emissions automatically based on quantity and factor.
2. Capture vendor-level data
Suppliers often provide carbon data for their goods or services. Use dimensions or attributes to tag vendors with sustainability scores or emission profiles. This enables reporting by supplier and supports greener procurement decisions.
3. Track project-related emissions
For service-based businesses or construction SMEs, projects are a major source of emissions. Business Central’s Jobs module can capture fuel usage, travel costs and material consumption. By associating emission factors with these activities, you can calculate project-level carbon impact alongside financial performance.
4. Automate data entry where possible
Integrate Business Central with Power Automate to pull data from external sources, such as utility bills or transport logs. This reduces manual input and ensures your carbon accounting remains accurate and up to date.
Reporting with Power BI: turning data into insight
Collecting data is only half the battle. Stakeholders need clear, actionable insights. Power BI transforms Business Central data into interactive dashboards that make carbon reporting simple and compelling. Here’s what to include:
Board-ready dashboards
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Total emissions by scope: Break down Scope 1 (direct), Scope 2 (energy) and Scope 3 (supply chain) emissions for transparency.
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Emissions by supplier or item: Highlight high-impact vendors or materials to inform procurement strategies.
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Project-level carbon footprint: Show emissions alongside project margins to balance sustainability with profitability.
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Trend analysis: Track emissions over time to demonstrate progress against reduction targets.
Power BI’s drill-down capabilities allow executives to move from high-level summaries to granular details, supporting both compliance reporting and strategic planning.
Governance and auditability
Carbon accounting must be auditable. Business Central provides a strong foundation with its built-in audit trails and approval workflows. Every transaction linked to emissions can be traced back to its source, whether it’s a purchase order or a project expense. Combine this with Power BI’s data lineage features to ensure transparency for internal and external audits.
Best practices include:
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Standardise emission factors: Use recognised sources such as DEFRA or GHG Protocol to maintain credibility.
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Apply dimensions consistently: Ensure all relevant transactions are tagged with the correct emission attributes.
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Schedule regular reviews: Validate data accuracy and update emission factors annually or when suppliers change.
Practical steps to get started
Implementing carbon accounting in Business Central doesn’t require a significant overhaul. Here’s a roadmap for SMEs:
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Identify key emission sources: Focus on materials, energy and transport as starting points.
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Configure custom fields or dimensions: Add emission factors to items and vendors in Business Central.
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Build calculation logic: Use Business Central’s reporting or Power Automate to multiply activity data by emission factors.
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Create Power BI dashboards: Visualise emissions by scope, supplier and project for board reporting.
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Train your team: Ensure finance and operations staff understand how to capture and maintain sustainability data.
The payoff: compliance, credibility and competitive advantage
By embedding carbon accounting into Business Central and visualising results in Power BI, SMEs can achieve:
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Regulatory readiness: Stay ahead of evolving carbon reporting requirements.
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Operational insight: Identify high-impact areas and reduce emissions strategically.
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Enhanced reputation: Demonstrate sustainability credentials to customers and partners.
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Data-driven decisions: Balance environmental goals with financial performance using integrated dashboards.
As Microsoft notes, “Sustainability is a data challenge as much as an environmental one.” For SMEs, leveraging existing ERP data is the fastest, most cost-effective way to meet that challenge.
Ready to start your carbon accounting journey?
If you want to move beyond spreadsheets and manual calculations, Business Central and Power BI provide the tools you need. Begin by tagging items and vendors with emission factors, then build dashboards that turn data into actionable insights for your board and stakeholders.