Carbon accounting
[7] Initial efforts to create greenhouse gas (GHG) accounting methods were largely at the national level.
In 1995, the United Nations climate program required developed countries to report annually on their emissions from six types of industry.
These are carbon dioxide (CO2), methane (CH4), nitrous oxide, sulfur hexafluoride, nitrogen trifluoride, hydrofluorocarbons and perfluorocarbons.
[10] It establishes a "comprehensive, global, standardized framework for measuring and managing emissions from private and public sector operations, value chains, products, cities, and policies".
The Carbon Disclosure Project (CDP) began in the UK in 2002, and is now a multinational group, with thousands of companies disclosing their GHG emissions.
[12] The Science Based Targets Initiative (SBTi) formed in 2015 as a collaboration between CDP, WRI, the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC).
[14] More recently, governments such as the EU and US have developed regulations that cover corporate financial disclosure requirements and the use of accounting protocols to meet them.
These include rankings alongside other companies,[17] managing climate change related risks, investment due diligence, shareholder and stakeholder outreach, staff engagement, and energy cost savings.
[28][29] Emission trading schemes in various countries also play a role in promoting GHG accounting, as do international carbon offset programs.
The CDM has a detailed set of monitoring, reporting, and verification procedures,[35] as does the Reducing Emissions from Deforestation and Forest Degradation (REDD+) program.
[39] The Science Based Targets initiative cites Greenhouse Gas Protocol guidance as part of its criteria and recommendations.
[41] Many of today's carbon accounting standards have incorporated principles from the 2006 guidelines for greenhouse gas inventories that were created by the Intergovernmental Panel on Climate Change (IPCC).
The IPCC principle of comparability, for example amongst organizations, is less widely applied,[43] though techniques to support this goal are mentioned throughout Greenhouse Gas Protocol's corporate standard.
[54] These were estimated to represent 75% of all emissions reported to the Carbon Disclosure Project, though that percentage varies widely amongst business sectors.
[56] However, the International Sustainability Standards Board is developing a recommendation that Scope 3 emissions be included as part of all GHG reporting.
[67] EPA uses the facility-level and supplier data to help prepare the annual Inventory of U.S. Greenhouse Gas Emissions and Sinks, which is submitted to the United Nations.
[74] An independent evaluation of inventories that have been developed using this protocol has questioned whether they capture the full range of Scope 1 sources within their jurisdictions.
[80] Steps include setting business goals, defining analysis boundaries, calculating results, analyzing uncertainties, and reporting.
[85] Accounting rules cover areas such as monitoring, reporting, and verification, and are designed to ensure that the emission reduction estimates for a project are accurate.
[93] Like the ISO standard, the protocol's focus is on core accounting principles and impact quantification, rather than the programmatic and transactional aspects of carbon credits.
[94] WRI and WBCSD have also developed additional guidance documents for projects in the land use, forestry, and electric grid sectors.
This allows them to report lower emissions even while their real electricity consumption stays the same, as the use of a REC does not necessarily mean additional renewable power has been brought to the grid.
[114][115] The CDP (formerly the Carbon Disclosure Project) is an international NGO that helps companies and cities disclose their environmental impact.
[116] It aims to make corporate accounting and reporting a business norm, and drive GHG disclosure, insight, and action.
Problems also arise with characterizing uncertainty in emission estimates, and identifying what information materially affects a company's operations, and therefore needs reporting.
Problems created by skewed data collection methods can affect companies, GHG reduction projects, investors, those involved in carbon credits/offsets, and regulatory agencies.
[150] As mentioned in the "Frameworks and standards" section, organizations can use a variety of accounting methods and approaches to estimate and report on GHG emissions.
For example, when the SEC proposal uses the term "material", it is only describing the extent to which reporting on emissions could directly impact a company financially.
[158] However, only about a third of suppliers reporting to CDP as part of their Global Supply Chain program describe specific climate targets.
[171] Climate Trace is an independent organization that improves monitoring, reporting and verification (MRV) by publishing point sources of carbon dioxide and methane in near-real-time.
