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Business of measuring company emissions booms despite data flaws

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on The Financial Times or enjoy below

🗞️ Driving the news: Venture capital investment in carbon accounting has skyrocketed
• Regulations like the US Inflation Reduction Act are fueling this growth, as start-ups like CarbonChain and Greenly gain traction
Partnerships with bodies such as the EPA and IPCC are providing essential emissions data

🔭 The context: Carbon accounting, crucial for global sustainability, faces controversy due to imprecise methods like emissions factors
• Industry leaders, including McKinsey's Peter Spiller and Oxford University's Karthik Ramanna, have expressed concerns over the existing approach

🌎 Why does it matter for the planet: Carbon accounting enables companies to track their emissions, contributing to global decarbonization efforts
• The development of clear and accurate accounting methods will be essential for fulfilling international climate goals

⏭️ What's next: Ongoing challenges include standardizing measurements, obtaining transparent information from suppliers, and accounting for remote suppliers in the supply chain
• New regulations, such as those being considered by the SEC, may clarify standards, but many issues remain unresolved

💬 One quote: "But it is still very much a wild west where there is very little architecture and very little consensus on what constitutes good accounting." (Karthik Ramanna, professor of business and public policy at University of Oxford)

📈 One stat: Venture capital investment in carbon accounting companies surged from $60 million in 2020 to $767 million in 2022, reflecting the growing interest and need in the sector

Click for more news covering the latest on environmental sustainability

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