Ledger-based carbon accounting set to revolutionise industrial emissions tracking

On October 20, 2025, a coalition of nineteen leading global companies from the energy, finance, and logistics sectors announced the launch of the Carbon Measures Coalition, signalling a significant shift in industrial carbon accounting practices. This initiative proposes moving away from the traditional emissions inventory approaches exemplified by the Greenhouse Gas (GHG) Protocol, which has been the standard for corporate emissions reporting for over two decades, towards a novel, ledger-based emissions tracking system inspired by financial accounting principles.

The Carbon Measures Coalition’s approach builds on the E-ledgers methodology, developed by Professors Robert Kaplan and Karthik Ramanna in 2021, that treats carbon emissions as transferable liabilities. This method mandates that each actor in a supply chain maintains an emissions ledger, recording both direct emissions and the embedded emissions inherited from upstream suppliers. When goods or services are transacted, these emissions liabilities, or “E-liabilities”, are transferred along the value chain, much like financial liabilities or value-added tax (VAT), creating a continuous, traceable chain of emissions responsibility from raw materials through to end-use products.

This transaction-based system offers several advantages over the existing GHG Protocol framework, particularly by eliminating the segmentation of emissions into the three scopes (1, 2, and 3). Critics of the current protocol have long pointed to issues such as double counting across value chains, inconsistent data comparability, and an annual reporting cycle that limits real-time decision-making. By linking emissions directly to economic transactions, the E-ledgers system ensures that each tonne of carbon dioxide equivalent (tCO₂e) is counted once and only once, enabling greater transparency and near real-time emissions tracking.

Major corporate players backing the Coalition include ExxonMobil, BASF, and Banco Santander, highlighting the growing industrial appetite for increased accuracy and accountability in carbon management. Amy Brachio, former global vice chair and head of sustainability at Ernst & Young, has been appointed CEO of the initiative, underscoring the significant expertise driving the project.

Supported by the International Chamber of Commerce (ICC), the Coalition has established a Technical Expert Panel comprising independent experts from academia, industry, accounting, and civil society. Announced on October 27, 2025, this panel will develop global guidelines for the new carbon accounting system, focusing on product-level emissions data to support both corporate and policy applications. The panel’s remit includes addressing challenges related to data consistency, emissions allocation, and confidentiality, as well as ensuring interoperability with existing frameworks.

The Coalition’s initial focus will be on carbon intensity standards for foundational industrial materials such as electricity, fuel, steel, concrete, and chemicals, products that represent significant portions of global emissions. By embedding carbon measurement within commercial transactions, the initiative aims to transform carbon accounting from an annual reporting exercise into a continuous, data-driven process that facilitates decarbonisation through informed procurement decisions and market signals. For example, a construction firm could select steel suppliers based on comparable carbon intensity data, incentivising lower-emission practices.

Several external factors are propelling the momentum behind ledger-based accounting. Regulatory regimes such as California’s Climate Corporate Data Accountability Act and the European Union’s Corporate Sustainability Reporting Directive (CSRD) increasingly mandate comprehensive Scope 3 emissions reporting, intensifying corporate scrutiny on value chain emissions. Moreover, carbon border adjustment mechanisms (CBAM), especially within the EU, require importers to provide reliable embedded emissions data for key products, a demand that ledger-based systems are better equipped to meet than traditional estimation methods.

Despite the promising conceptual and practical benefits of E-ledgers, the new approach faces notable challenges. The requirement for granular, real-time emissions data collection and coordination across complex supply chains necessitates significant investment in data infrastructure and digital systems. Allocation of emissions within multi-product industrial processes remains a technical hurdle, given shared equipment and intertwined production outputs in sectors such as chemical refining and steelmaking. Confidentiality concerns also arise since sharing emissions data could expose sensitive commercial information, requiring robust governance frameworks to protect participants.

Another unresolved issue is the handling of end-user accountability. While emissions can be tracked through corporate supply chains, attributing and managing emissions liabilities for individual consumers, such as vehicle drivers or homeowners, remains unclear, highlighting the tension between precise accounting and practical responsibility fragmentation.

Furthermore, as the E-ledgers method diverges substantially from the established GHG Protocol framework, widespread adoption will depend on standardisation of methods, interoperability with existing accounting systems, and broad acceptance across industries and jurisdictions. The timeline envisaged by the Coalition anticipates framework development completion by 2027, with phased rollouts through 2032.

For industrial and energy sector professionals engaged in carbon management and decarbonisation strategies, the unfolding developments around the Carbon Measures Coalition present both opportunities and considerations. The potential of ledger-based carbon accounting to enhance transparency, foster innovation, and align carbon data with financial risk frameworks could influence procurement, reporting, and financing decisions. However, companies must weigh technical feasibility and data privacy implications carefully while engaging with this evolving landscape.

In sum, the Carbon Measures Coalition’s ledger-based framework represents a forward-looking, industry-led effort to refine carbon accounting in line with real-world transactional flows. Its success will rest on collaborative standard-setting, technological investment, and the broader climate policy context. As regulators tighten requirements and markets evolve, integrating ledger-based carbon data into corporate and financial decision-making may become a pivotal factor in accelerating industrial decarbonisation.