Fossil-fuel companies and other heavy emitters are among the backers of a new carbon accounting initiative that looks to be on a collision course with current standards.

Carbon Measures — which launched last week with ExxonMobil, BASF, Nucor, Mitsubishi Heavy Industries and Blackrock’s Global Infrastructure Partners as members — will advocate for global emissions strategies focused on lowering emissions at a product level. The approach runs counter to current de facto standards from the Greenhouse Gas Protocol and Science Based Targets initiative (SBTi), which require companies to measure and reduce emissions across value chains.

The approach is based on the success of financial accounting, said Carbon Measures CEO Amy Brachio. 

“Financial accounting is what helped us to get past the Great Depression, when we had real issues with understanding the finances of organizations and we needed to get to a place where there were commonly and generally accepted rules,” she told Trellis. “And so we need to get to that same place where you’re associating the carbon with a product and you’re able to follow it through the system.”

Ledger-based 

The project takes inspiration from E-liabilities, a carbon accounting system developed by Karthik Ramanna, a University of Oxford professor announced this week as co-chair of a technical advisory panel established by Carbon Measures and the International Chamber of Commerce, and Harvard’s Robert Kaplan. 

E-liabilities eschews Scope 3 measurements and requires companies to measure direct emissions and allocate a portion of those emissions to customers. It’s won support from academics and been piloted in multiple industries. It’s also been criticized by the creators of the current carbon reporting system as impractical and likely to disincentivize collaboration between value-chain partners. 

For the Carbon Measures backers, such “ledger” systems — named for the record of carbon emissions each company would maintain — are attractive because they may boost competition for low-carbon products. Companies already calculate the emissions associated with a ton of steel, semiconductor chip and countless other products. But these numbers often rely on estimates of supply-chain emissions that are based on industry averages, which lessens the motivation for companies to source lower-carbon alternatives. 

“Four years ago, Bob Kaplan and I articulated a method for how companies can win by competitively differentiating their products based on their emissions efficiencies,” said Ramanna. “As more businesses show interest in this model, now is the time to drive into practice the systems change that will align market capitalism with decarbonization innovations.”

Once a ledger-based carbon accounting system is established, said Brachio, governments could use it as the basis for climate policies focused on reducing the emissions associated with specific products, known as carbon intensities. 

“This move from voluntary to mandatory is what drives demand in the system and levels the playing field so that companies have to compete,” she argued. “As l