Exxon and the International Chamber of Commerce are kicking off a campaign to change carbon accounting

Some say Carbon Measures will create an alternative to the GHG Protocol that ignores downstream emissions; others claim it will end double counting. Whatever the truth, it plans to make itself heard at COP30.  

The hunt is on for experts to help develop new carbon accounting rules backed by the likes of Exxon, BASF and Bayer. 

The Carbon Measures initiative, launched last week, has teamed up with the International Chamber of Commerce (ICC) to put together an advisory panel for its new endeavour: a ledger-based framework for calculating emissions. 

While its launch was relatively low-key, Carbon Measures’ presence at the upcoming COP30 climate summit in Brazil won’t be.

For starters, the ICC is the UN’s official business representative for COP30, so it will have significant opportunities to promote the project throughout the event.     

On top of that, it has formal support from Brazil’s dedicated corporate platform, Sustainable Business COP.  

In fact, Carbon Measures is listed as a sponsor of Sustainable Business COP, and the platform’s CEO, Ricardo Mussa, told Reuters recently that it planned to put carbon accounting reform at the top of its agenda for the summit.    

“I don’t see how someone could be against improving carbon accounting as we are proposing here,” he said at an event, referring to “what the Carbon Measures coalition is trying to do”. 

E-ledger accounting

So what exactly is the Carbon Measures coalition trying to do?  

While detail remains relatively scant, its main aim is to reimagine carbon accounting as a “ledger-based” process, focused on capturing product-level emissions.

It’s a concept developed by two academics: Robert Kaplan from Harvard University, and Karthik Ramanna, who currently works at Oxford.  

They want an accounting system in which, when an asset is transferred from one company to another, its carbon footprint goes with it. 

So, just as the asset moves from one financial ledger to another, the ‘E-liability’ moves from one ‘E-ledger’ to another.  

This, the pair argue, will eliminate problems around double counting: when more than one company takes responsibility for the same tonne of carbon because it qualifies as someone’s Scope 1 emissions and someone else’s Scope 3, for example.

It will also ensure that buyers are held liable for emissions, but not sellers. 

It’s perhaps not surprising that this has piqued the interest of the Oil & Gas industry, as – unlike traditional ‘Scope 3’ accounting – it doesn’t require companies to take responsibility for emissions produced by their sold products.     

Ramanna will co-chair Carbon Measures’ new technical expert group alongside its CEO, the former global vice chair of sustainability at EY, Amy Brachio.   

What does it mean for the GHG Protocol?  

Brachio’s announcement of the initiative last week garnered a mixed reaction.   

“We don’t need another accounting tool,” said one person in response to the news on LinkedIn.    

“There’s is a GHGProtocol [sic],” pointed out another. 

“It has been tested and perfected for 25 years, it is used by 97% of the Fortune 500. Why on earth does Exxon need another protocol?”  

Exxon has made its feelings about the GHG Protocol very clear already, describing it as a “flawed reporting standard” in a lawsuit filed last week against California’s climate disclosure requirements.  

The oil major doesn’t want to be forced by regulators to adopt parts of the framework it doesn’t approve of, it explained, “such as the requirement to publish base-year emissions recalculations and the requirement to report the full range of Scope 3 emissions”.    

But, while many experts told Real Economy Progress they view the Carbon Measures initiative as a brazen attempt to usurp the GHG Protocol with a business-led alternative, the ICC insists it’s willing to collaborate.   

A spokesperson said the trade body would “welcome engagement” from the GHG Protocol’s technical experts on its advisory panel.  

“Likewise from other bodies with expertise in this space,” they added.  

In return, the global director of the GHG Protocol, Pankaj Bhatia, told REP he would be “happy” to offer the group’s expertise “where there is overlap with our work”.

The GHG Protocol is currently working with the International Organization for Standardisation, better known as ISO, to merge their standards and develop a “common global language for emissions accounting”. 

Bhatia invited “interested parties” to engage with a working group the pair launched this week, which he said “provides a collaborative platform for shaping product-level greenhouse gas accounting in line with globally harmonised practices”.

Next steps  

Carbon Measures and ICC will task its new expert group with developing guidelines and steps “to establish a global carbon emissions accounting system based on financial accounting principles”.

The window for applications will open next week.   

And the week after that, it will show up at COP30 with the backing of some of the world’s most influential companies and business groups.