BlackRock's Carbon Measures To Improve Emissions Data

A new coalition, including financial services organisation BlackRock and banking group Banco Santander, has formed to establish a new framework for measuring carbon emissions.

The Carbon Measures initiative aims to provide a more transparent method for tracking carbon through supply chains and financial portfolios.

The group, which also includes industrial companies like ExxonMobil, BASF SE and Mitsui, is focused on developing a system that prevents the double-counting of carbon emissions in corporate reporting. Leading the initiative is Amy Brachio, the former Global Vice Chair for Sustainability at EY, who has taken on the role of CEO for Carbon Measures.

The project intends to offer an alternative to the GHG Protocol, which is the current global standard for emissions reporting used by a majority of S&P 500 companies.

A new ledger for carbon accounting

Critics of the existing GHG Protocol, which was developed in the late 1990s, suggest its structure allows for the same carbon dioxide molecules to be counted by multiple entities within a value chain. Proponents of the protocol argue this is a feature, not a flaw, stating that it promotes 'comprehensive' greenhouse gas management.

Carbon Measures proposes a different approach, supporting the development of a ledger-based framework that operates similarly to traditional financial accounting.

This system would track emissions as they are passed along with products through the supply chain.

"If you are buying a tonne of steel, you need to understand how much carbon went into producing that tonne of steel, so that when it's sold, you're not only selling the asset of the steel, but you're selling the liability, so to speak, of the carbon emissions that go along with it," Amy explains.

The group anticipates the framework will take two years to develop, with a further five to seven years needed to achieve scale. Brachio said the group expects to grow from its current 20 backers to around 100, with a focus on attracting companies from high-carbon industries.

Improving investment through data accuracy

The push for a new system comes as regulations, such as Europe's carbon border adjustment mechanism, apply more pressure on companies and their investors to manage their carbon footprints.

Carbon Measures plans to help design carbon intensity standards for key industrial products that contribute a significant portion of global emissions, including electricity, fuel and steel.

The alignment of heavy industry and the financial sector on this issue stems from a shared need for reliable data. Ana Botin, Executive Chair of Santander, says that accurate and transparent calculation of carbon emissions "is the foundation for meaningful climate action."

Similarly, the CEO of another backer, Air Liquide’s Francois Jackow, said harmonised product-level carbon intensity standards will enable investors "to reward low-carbon solutions".

Exxon's CEO, Darren Woods, believes that "the first step to reducing global emissions is to know where they're coming from".

He adds, "Today, we don't have an accurate system to do this."

The search for a ‘holy grail’ in emissions tracking

BlackRock’s Global Infrastructure Partners division views the clean-energy transition as a major investment opportunity and aims to use its influence with businesses and governments to support decarbonisation efforts.

This new framework could be a key enabler for directing capital. For Amy, "precise and comparable data has proven something of a holy grail" in the field of emissions tracking.

She argues that the current approach "simply won't be sufficient going forward".

The debate over double-counting in carbon accounting continues. While some see it as a way to incentivise emissions reductions across multiple points in a supply chain, others believe it confuses the overall picture of pollution levels.

The success of Carbon Measures will depend on its ability to reconcile these different views and achieve the widespread industry participation necessary to establish a new global standard.