Corporate climate accounting could be heading for a breakup

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🗞️ Driving the news: A potential split is emerging between Greenhouse Gas Protocol and Science Based Targets initiative over how companies should measure electricity-related emissions, raising the prospect of a major shake-up in corporate climate accounting

🔭 The context: The debate centers on Scope 2 emissions, where companies currently use market-based tools like renewable energy certificates (RECs) to offset grid electricity use
• The GHG Protocol is considering stricter, more granular “time- and location-based” accounting, while SBTi is weighing whether to adopt, reject, or hybridize these changes
• With over 10,000 companies aligned to SBTi and 97% of S&P 500 firms using the GHG Protocol, any divergence could create fragmentation across the global reporting system

🌍 Why it matters for the planet: The calculation of emissions directly shapes corporate climate strategies and credibility
• Stricter accounting could push companies toward real-time decarbonization of energy use, while looser rules may continue to allow reliance on offsets
• The outcome will influence whether reported “net zero” progress reflects actual emissions cuts or accounting mechanisms

⏭️ What’s next: The GHG Protocol is expected to release updated guidance later this year, while SBTi will finalize its own standard after internal review
• A divergence between the two could force companies to navigate dual reporting systems, potentially complicating climate disclosures and investor comparisons

💬 One quote: “Our priority is to ensure any future guidance is practical and supports credible, decision-useful emissions accounting.” — Pankaj Bhatia

📈 One stat: The GHG Protocol framework is used by 97% of S&P 500 companies, highlighting the scale of potential impact

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