Environmental Accounting Trends for Climate Action

The world is changing, is the GHG Protocol following? What is happening from now until 2028? I often hear from potential customers: “These climate and sustainability rules change so much. I’d rather wait and invest when things become stable.” But the reality is waiting is riskier than acting. The Greenhouse Gas Protocol (GHG Protocol) the global baseline for corporate climate disclosure is about to undergo its biggest reset in decades. And it will redefine what credible and compliant emissions reporting looks like. What’s changing (2025–2028): 2025: Land Sector & Removals Guidance (after years of delay) 2026: Drafts of Corporate Standard, Scope 2 & Scope 3 2027: Final versions published 2028: New guidance on Actions & Market Instruments Why it matters: - Tighter rules = less flexibility, more comparability - Scope 3 & carbon market claims under tougher scrutiny - Closer alignment with IFRS Foundation S2 & EU CSRD - Closing loopholes & raising the bar for credibility - Think of this as the IFRS moment for climate disclosure, a reset of the global accounting standards for carbon. What are the top 4 things leaders should do NOW: 1- Audit your reporting: spot weak assumptions in Scope 2 & 3 2- Engage the Board: this is as much governance as sustainability 3- Invest in data & suppliers: stronger data quality = stronger trust 4- Stay close to the process: follow drafts, anticipate impacts early Companies that prepare today will not only survive stricter rules, they’ll win investor trust, attract capital, and lead in credible climate action. This is not disruption, it’s transition. And it’s your chance to turn compliance into competitiveness. A decisive decade for climate action can also be your decisive decade for credible disclosure.

The world isn’t ready for what’s coming next in sustainability data. We’re quietly living through the creation of a financial infrastructure for sustainability—and it’s happening faster than most realize. Over 2,000 sustainability regulations have emerged globally in the past decade, with a 155% surge in ESG-related rules since 2018. This isn’t just about compliance—it’s a fundamental shift in how we define value, risk, and performance. What’s driving it? • EU: CSRD & ESRS will impact over 50,000 companies, embedding double materiality. • India: BRSR Core is mandatory for top 1,000 listed firms. • China: CSDS expands carbon reporting in high-impact sectors. • California: SB 253/261 reshape U.S. climate disclosures. • Australia: AASB S2 aligns with IFRS S2, effective in 2025. • Brazil: CVM 193 adopts IFRS-aligned sustainability standards. • And more: Japan, Canada, Singapore, Nigeria, Turkey—all aligning with global standads. We’ve entered a phase where climate, nature, and transition risks are becoming embedded in financial decision-making—from underwriting and M&A to risk pricing and insurance modeling. In the real estate sector, GRESB has made third-party verified performance data (GHG, energy, water, waste) a best practice. ESG metrics are now more embedded in due diligence for loans, equity, and new acquisitions. Yes, today’s data is often backward-looking. And yes, we still need science-based thresholds and stronger assurance. But this foundational work is what allows us to get there. Without reliable, standardized, machine-readable data, we can’t scale action, track progress, or hold anyone accountable. Just as GAAP and IFRS created trust in financial markets, IFRS S1/S2, CSRD, and the GHG Protocol are setting the stage for credible, comparable sustainability data. It will not be a “parallel system.” in the future. We are building the groundwork for full integration into the global financial system. This shift will transform: • How we price risk • How capital is allocated • How resilient companies are rewarded • How we define long-term value creation It’s messy. It’s political. It’s imperfect. But it’s also historic. If you’re in this space, you’re not just reporting data—you’re helping build a new operating system for business and capital markets. One that rewards transparency, resilience, and climate alignment. Let’s keep building—with more rigor, more ambition, and more impact.

Climate Action and Resilience 🌍 As climate risks intensify and regulatory expectations evolve, companies across sectors are under pressure to adopt more strategic and integrated climate responses. This requires a shift from isolated actions to system-wide business transformation. A comprehensive climate strategy involves more than emissions reductions. It starts with aligning climate priorities with corporate strategy, embedding them into investment and risk management decisions, and ensuring board-level accountability. Robust GHG accounting and disclosure frameworks are essential. Measuring Scope 1, 2, and material Scope 3 emissions using recognized protocols enables businesses to understand their impact and develop informed strategies. Transparent reporting aligned with leading frameworks such as ISSB and TCFD builds credibility and investor confidence. Operational adjustments play a critical role. From transitioning to renewable energy and increasing efficiency to electrifying fleets and evaluating climate-related risks, every step contributes to reducing exposure and enhancing resilience. Supply chains must also evolve. Integrating climate criteria into supplier selection, improving traceability, and collaborating to lower upstream emissions are key steps in building more resilient and sustainable value chains. Product and service decarbonization offers a pathway to long-term differentiation. Businesses are rethinking product design through circular economy principles and regenerative models, while supporting customers in lowering their environmental footprint. Internal alignment is equally important. Building climate competencies across leadership and staff, supporting local adaptation efforts, and engaging in cross-sector coalitions accelerates meaningful transformation. The path forward requires more than commitment. It calls for a structured, multi-level approach across strategy, operations, procurement, product, and people systems to drive real progress in climate action and resilience. #sustainability #sustainable #esg #business #resilience

🌍 Carbon Accounting Goes Granular ..... Finance Leaders Rethink Carbon as Currency At Climate Week NYC, SAP unveiled its Green Ledger system which is about embedding carbon data into every transaction. This marks a paradigm shift for CFOs and finance leaders: treating carbon like currency. 🔑 Why This Matters Compliance pressure: Aligns with EU Taxonomy, CSRD, and upcoming disclosure mandates. Risk navigation: Prepares businesses for mechanisms like the EU Carbon Border Adjustment Mechanism (CBAM). Financial integration: Puts carbon on par with dollars and euros, giving sustainability real weight in boardroom decisions. 📊 What Changes for CFOs Move from annual ESG reports → to real-time carbon insights. Enable transaction-level carbon visibility across supply chains. Equip leadership with data for strategic risk management and investor confidence. ✅ Key Takeaways Carbon as a new unit of measure is no longer a future concept but it’s happening now. Finance functions are becoming climate strategy enablers, not just financial stewards. Early adoption will separate leaders from laggards in compliance and competitiveness. #Corporategovernance #Independentdirectors #ESG #Carbonaccounting

We are increasingly recognizing the structural problems with Scope 3 GHG accounting? Our latest installment in the "What is GHG Accounting?" series tackles the Scope 3 boundary problem head-on, addressing how we could fix the legacy GHG Protocol value chain approach that lacks clear boundaries and comparability. We propose: 1. A Physical GHG Inventory statement using allocational methods and precisely delimited, industry-specific boundaries 2. A Mitigation Intervention statement using consequential methods to account for avoided emissions and enhanced removals from actions outside the clearly defined physical inventory boundaries A multi-statement approach aims to end the confusion between allocational and consequential accounting claims inherent in the current fuzzy value chain paradigm. Key to the proposed Physical Inventory statement is establishing "clear" boundaries that explicitly identify physical emission sources and removal sinks, and thereby offer an objective basis for evaluating inventory completeness. This is achieved through applying proposed boundary-setting principles like pursuing intra-industry comparability, limiting to proximate physical connections, requiring process-level visibility and quantifiability, screening for significant sources/sinks, and potentially enabling sectoral additivity. The goal is to produce corporate GHG inventory totals and trends that are more accurate, comparable, and sensitive to real changes in company operations. We recognize that this transformation will entail new work, but this can be expediently driven through a bottom-up process with standard setters providing guidance and oversight. I also call out current "comparability illusion" of using GHG Protocol value chain inventories for comparative decisions, highlighting the need for standards purpose-built for specific use cases where comparability is necessary. This ongoing work has significant implications for ongoing debates over corporate net zero standards in SBTi and ISO, as well as mandatory corporate reporting such as under the EU CSRD and California SB 253 - Climate Corporate Data Accountability Act. What are your thoughts on this proposed shift to more clearly delimited Physical Inventory boundaries and a multi-statement framework for corporate GHG reporting? Our next installment will dive more deeply into elaborating options for various statements that serve different intended uses of corporate GHG accounting. #GHGAccounting #Scope3 #ClimateAction #SustainabilityReporting #Comparability #GHGProtocol Derik Broekhoff Matthew Brander Mark Trexler Alexia Kelly Chris Davis Gilles Dufrasne Timothy Juliani Jonathan Crook Dr Injy Johnstone Grant Ivison-Lane Nathan Truitt Roger Ballentine Autumn Fox Emma W. Alberto Carrillo Pineda Hans Näsman Jimmy Jia Alissa Benchimol Erika Barnett Darius Nassiry Kaya Axelsson Scarlett Benson

♟️Sustainability Regulations: Saying the quiet part out loud    Sustainability reporting frameworks are continuing to evolve, as we’ve seen most recently in the EU Commission's omnibus proposal. That takes away the 'easy button' from validating sustainability reporting. (Your auditor suddenly go quiet in board meetings about assurance?)   The uncertainty of these regulatory updates brings a silver lining that forces the value of data surfaced back into the conversation.   In my recent The Wall Street Journal interview, I made a point that's getting lost in the sustainability conversation: Carbon accounting is about generating activity-based carbon information that can be broken down along the lines of P&L, surfacing revenue or removing risk by business line or geography. Read it at https://lnkd.in/efNTRMZE   Of the companies I see turning this moment into a value vs. compliance chess game, they are designing their reporting to reveal the direct relationship between sustainability metrics and business performance. They are integrating financial and sustainability data to: 🔹Surface actionable insights to accelerate cost and carbon reduction along the value chain (like ways to reduce material consumption) 🔹Reveal new revenue streams, opportunities for investment, or margin increases (like green steel) 🔹 Already use AI to generate data and draft reports, knowing that investors will also be using agentic AI   The bottom line: While CSRD came out of the box overly complex (in my personal opinion), the foundations of accurate carbon data based on business activities ('actuals') remains the bedrock of the ability to distribute margin and risk from carbon and climate change. It's not about environmental altruism—it's about reminding the Titans of industry that climate change is a business conversation, because mitigation can diffuse risk and adaptation can be profitable.   Deloitte Jodie Stahly Payette Pete Dabbs #SAPsustainability

Net-zero has become the headline every company wants. But the authenticity of those commitments' rests on a credibility gap that’s widening fast. Carbon accounting, the backbone of climate disclosure, isn’t keeping pace. Standards are fragmented, supplier data is unreliable, and the gaps are widening. Deloitte found that 46% of FTSE-100 companies had to restate their sustainability disclosures, with nearly 9 in 10 tied to emissions data. It’s a signal for a strategic blind spot. If the numbers don’t hold, neither do the promises. If carbon data lacks integrity, leaders are steering multi-billion-dollar strategies with unreliable instruments. It can and will lead to regulatory penalties, investor skepticism, and reputational damage that can erase years of progress and customer trust. This is where leaders need to reset their priorities. Net-zero strategies are meaningless if the data can’t withstand scrutiny. Carbon data must be treated with the same discipline and auditability as financial data. That means investing in end-to-end traceability, standardizing methodologies across supply chains, and building rigorous verification systems. The future of net-zero won’t be written by the companies with the boldest targets. It will be decided by those whose numbers can stand up to the test. Those who embed accuracy, transparency, and trust into their carbon accounting will define which companies and which leaders are still standing when scrutiny sharpens. #CarbonAccounting #SustainableBusiness #RiskManagement #CorporateSustainability #SupplyChainCompliance