Carbon Accounting Standards and Global Frameworks
Here’s an up-to-date guide to the major carbon accounting standards, their applications, and how they intersect with other critical sustainability frameworks like the GHG Protocol, Corporate Sustainability Reporting Directive (CSRD), and carbon neutrality strategies.
Foto: Adobe Stock
Carbon accounting standards form the very backbone of effective climate action, enabling organizations to measure, report, and verify their greenhouse gas (GHG) emissions systematically. These frameworks ensure transparency, comparability, and accountability, helping businesses and institutions contribute meaningfully to global climate goals.
Why Carbon Accounting Standards Matter
Carbon accounting standards are more than just compliance tools—they are strategic enablers for organizations looking to be leaders within sustainability. By adopting these frameworks, businesses can:
- Enhance transparency through clear and verifiable reporting of emissions data.
- Benchmark performance by comparing their carbon footprint with industry peers.
- Drive informed action by identifying reduction opportunities and aligning with science-based targets.
The Key Carbon Accounting Standards
1. Greenhouse Gas Protocol (GHGP)
The GHG Protocol is the most widely adopted framework for measuring and managing emissions globally. Jointly developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it forms the foundation of most other frameworks as well.
Its structure categorizes emissions into three scopes, to give us a comprehensive understanding of different types of carbon footprint.
- Scope 1 (Direct Emissions): These emissions stem from sources directly owned or controlled by an organization (e.g., fuel combustion in company-owned facilities).
- Scope 2 (Indirect Energy Emissions): These result from the electricity, heating, or cooling purchased and used by the company. Tracking Scope 2 is crucial for organizations pursuing renewable energy adoption.
- Scope 3 (Value Chain Emissions): Often the largest source of emissions, Scope 3 includes indirect emissions across the value chain, such as supplier activities, waste, and employee travel. While challenging to measure, they are critical for developing a holistic carbon strategy.
The GHG Protocol is foundational for frameworks like ISO 14064, PCAF, and regulatory mandates such as the CSRD. For a detailed exploration, refer to our Guide to the GHG Protocol. Foto: CEMAsys
2. ISO Standards for Carbon Management and Neutrality
ISO 14064
ISO 14064, developed by the International Organization for Standardization (ISO), complements the GHG Protocol by offering detailed methodologies for GHG quantification, reporting, and verification.
It is divided into three parts: Part 1 focuses on organization-level GHG inventories, addressing Scopes 1 and 2; Part 2 is tailored for project-level emissions, such as renewable energy installations or carbon capture initiatives; and Part 3 ensures independent validation and verification of emissions inventories or reductions.
ISO 14064 is ideal for organizations already working within ISO management system frameworks, providing a seamless path to integrating environmental goals.
ISO 14068-1:2023
Effective January 2025, ISO 14068-1:2023 will replace PAS 2060 as the global standard for carbon neutrality verification. Introduced at COP28, ISO 14068-1 builds on the foundation of standards like ISO 14064, offering a rigorous framework for organizations to measure, reduce, and offset their emissions systematically.
Key features include a strong focus on emission reduction, prioritizing meaningful reductions over offsets to align with long-term climate goals, and independent verification to ensure the credibility of neutrality claims. By adopting ISO 14068-1, organizations can credibly pursue carbon neutrality while adhering to the highest standards of accountability.
3. Partnership for Carbon Accounting Financials (PCAF)
PCAF addresses the growing demand for carbon accounting in the financial sector by focusing on financed emissions, or emissions generated by an institution’s investments and lending activities.
They have tailored approaches for different types of assets, such as corporate loans, mortgages, and private equity. This means that each financial sector can measure its carbon impact in a way that fits its specific activities, making the process more accurate and relevant.
In addition, PCAF aligns with the Greenhouse Gas (GHG) Protocol’s Scope 3, particularly Category 15, which focuses on emissions from investments. This helps financial institutions assess the carbon footprint of their investments, making it easier to align their strategies with science-based climate targets and assess climate-related risks.
4. IFRS Sustainability Disclosure Standards (S1 and S2)
The IFRS Sustainability Disclosure Standards are becoming the global baseline for climate-related financial disclosures. IFRS S2, in particular, focuses on climate risks and opportunities, requiring organizations to disclose material information about emissions, climate resilience, and governance processes.
Key elements include
- Governance: Emphasizes board-level oversight of climate-related risks and opportunities.
- Scenario Analysis: Guides modeling of climate scenarios and their potential impact on business performance.
- Metrics and Targets: Promotes comprehensive reporting of emissions across all scopes.
IFRS S2 is increasingly viewed as essential for global reporting and compliance, particularly in jurisdictions like the EU.
Integrating Standards with Other Frameworks
CSRD Reporting
The Corporate Sustainability Reporting Directive (CSRD) mandates detailed disclosures on sustainability, including emissions data. Organizations can simplify compliance by adopting standards like the GHG Protocol or ISO 14064, which provide the rigorous methodologies required for these disclosures. Learn more in our CSRD Reporting Guide.
Aligning Multiple Standards
Integrating and aligning frameworks can make carbon management more efficient, accurate and streamlined.
- GHG Protocol: Serves as a baseline and foundational framework for emissions measurement.
- ISO 14064: Adds depth by offering certification and project-level reporting.
- PCAF: Specifically tailored financed emissions for financial institutions.
Common Challenges and Solutions
Scope 3 Complexity
Many companies encounter common challenges when adopting carbon accounting standards, particularly with Scope 3 emissions. As these emissions come from a company’s value chain, they are often the most difficult to measure due to unreliable data from suppliers and other indirect sources.
The CEMAsys carbon accounting software provides an efficient solution by offering comprehensive tools for tracking and managing Scope 3 emissions, enabling accurate data collection and reporting across your entire supply chain.
Reporting Fatigue
Managing multiple frameworks can be overwhelming, as organizations may struggle to manage multiple frameworks simultaneously. CEMAsys alleviates this burden by offering an integrated platform that consolidates data from various carbon accounting standards, streamlining the process and reducing administrative workload. This simplifies compliance with frameworks like the GHG Protocol, ISO 14064, and PAS 2060, saving both time and resources.
Conclusion
Adopting carbon accounting standards is no longer optional—it’s a strategic imperative. By using CEMAsys carbon accounting software, businesses can enhance transparency, accountability, and efficiency in their carbon management efforts. With one unified solution, companies can meet their sustainability goals, foster innovation, and build stronger relationships with stakeholders.
