Deep Dive: Carbon Accounting & MRV — Metrics That Matter and How to Measure Them

Carbon accounting has evolved from voluntary sustainability reporting to mandatory regulatory compliance. The global carbon accounting software market is projected to grow from $12.1 billion in 2025 to $23.9 billion by 2030, driven by regulatory mandates from the EU's Corporate Sustainability Reporting Directive (CSRD), California's Climate Accountability Act (SB 253), and evolving SEC climate disclosure rules.

Yet the technical challenges of accurate emissions measurement, particularly for Scope 3 value chain emissions that represent 70-90% of most corporate footprints, remain substantial. This deep dive examines the metrics that matter, the technologies enabling better measurement, and the platforms helping organizations navigate increasing complexity.

Why It Matters

Carbon accounting provides the foundation for climate action. Without accurate measurement, emissions reduction targets are arbitrary, progress claims are unverifiable, and capital allocation to decarbonization lacks evidence-based guidance. The phrase "you can't manage what you can't measure" applies directly: organizations that cannot accurately quantify their emissions cannot credibly reduce them.

Regulatory requirements are raising the stakes for accuracy. CSRD mandates detailed emissions disclosure for approximately 50,000 EU companies beginning in 2024, with value chain (Scope 3) emissions included in requirements. California's SB 253 requires verified Scope 1-2 reporting for large companies starting 2026, with Scope 3 following in 2027. The SEC's climate rules, while legally contested, signal the direction of U.S. disclosure requirements.

Financial implications are becoming direct. Unmanaged Scope 3 emissions could cost companies $500 billion annually by 2030 according to CDP analysis. Companies engaging suppliers on emissions are nine times more likely to achieve their climate targets. Carbon pricing mechanisms including the EU Emissions Trading System and emerging border adjustment mechanisms translate emissions directly into costs.

For procurement teams specifically, Scope 3 Category 1 (purchased goods and services) often represents the largest emissions category. Understanding supplier emissions enables both compliance and strategic sourcing decisions that reduce overall value chain impact.

Key Concepts

GHG Protocol Scopes

The Greenhouse Gas Protocol, developed by World Resources Institute and WBCSD, provides the global standard for emissions categorization:

Scope 1 covers direct emissions from owned or controlled sources, including on-site fuel combustion, company vehicles, and industrial processes. These emissions are generally the easiest to measure with high accuracy using fuel purchase records and process data.

Scope 2 covers indirect emissions from purchased electricity, steam, heating, and cooling. Measurement uses grid emissions factors applied to energy consumption data. The protocol distinguishes location-based (average grid intensity) from market-based (contractual instruments) accounting, with significant implications for renewable energy claims.

Scope 3 encompasses all other indirect emissions across the value chain, from purchased goods and services through product use and end-of-life treatment. The protocol defines 15 categories spanning upstream suppliers through downstream customers. Scope 3 typically represents 70-90% of total organizational emissions but presents the greatest measurement challenges.

Measurement Approaches

Carbon accounting employs several measurement methodologies with varying accuracy and data requirements:

Spend-based methods apply industry-average emissions factors to procurement spending data. This approach requires minimal data collection but provides only directional estimates. A dollar spent on steel carries the same emissions regardless of the specific supplier's efficiency.

Activity-based methods use physical quantities (tonnes of material, kilometers of transport) with more specific emissions factors. This approach improves accuracy by reflecting actual activities rather than financial proxies, but requires detailed operational data.

Supplier-specific data represents the gold standard, with direct emissions measurements from individual suppliers. Only about 12% of suppliers currently provide this data, with only 50% of provided data meeting quality standards according to CDP research. The challenge is scaling primary data collection across extended supply chains.

Hybrid approaches combine methods based on data availability, using supplier-specific data where available while filling gaps with activity-based or spend-based estimates. Modern platforms automate this prioritization.

MRV Technology

Measurement, Reporting, and Verification (MRV) technologies are advancing beyond manual data collection:

Satellite remote sensing enables independent verification of emissions from industrial facilities, methane leaks, and land use change. Companies like GHGSat and Carbon Mapper provide facility-level emissions monitoring that can verify reported data.

IoT sensors provide real-time emissions measurement from industrial processes, replacing periodic estimates with continuous monitoring. Applications include stack emissions monitors, fugitive emissions detection, and energy consumption metering.

AI and machine learning enable automated data categorization, anomaly detection, and gap-filling for incomplete supplier data. Platforms use AI to map procurement data to emissions categories and identify inconsistencies requiring investigation.

Blockchain and distributed ledger technologies support audit trails and data integrity verification, though adoption remains early-stage.

What's Working

Enterprise Carbon Accounting Platforms

The market has consolidated around several leading platforms that provide integrated measurement, reporting, and reduction planning capabilities.

Watershed serves medium-to-large enterprises with particular strength in speed-to-reporting and actionable decarbonization strategies. The platform includes 60+ pre-built integrations with ERPs, cloud providers, and travel management systems. Its acquisition of VitalMetrics enhanced proprietary emissions factor databases. Notable clients include Walmart, Airbnb, Stripe, BlackRock, and Shopify. Pricing starts at approximately $50,000 annually.

Persefoni emphasizes audit-grade data architecture particularly suited to financial institutions. Its "Footprint Ledger" provides complete data lineage for every calculation, with XBRL tagging workflows designed for SEC registrants. PCAF framework alignment makes it particularly strong for financed emissions from investment portfolios. A free tier is available, with enterprise plans ranging from $55,000 to $250,000 annually.

IBM Envizi provides AI-powered capabilities through watsonx.ai for spend categorization and covers all 15 Scope 3 categories with GHG Protocol compliance. The platform integrates with IBM's broader sustainability software suite.

Salesforce Net Zero Cloud leverages existing Salesforce deployments for organizations already using the CRM platform. The integrated approach simplifies data sharing between sustainability and other business functions.

Supplier Engagement Platforms

Recognizing that Scope 3 accuracy depends on supplier data quality, specialized platforms focus on supply chain engagement:

EcoVadis Carbon Action Manager accesses a network of over 48,000 GHG reporters, providing supplier scorecards and enablement tools to improve data collection rates and quality.

CDP Supply Chain operates the world's largest corporate environmental disclosure platform, with standardized questionnaires that facilitate year-over-year comparison and benchmarking.

Regulatory Compliance Tools

As disclosure requirements proliferate, platforms are adding specific compliance modules:

CBAM calculators help importers quantify embedded carbon for EU Carbon Border Adjustment Mechanism compliance.

CSRD reporting modules map emissions data to European Sustainability Reporting Standards (ESRS) disclosure requirements.

Audit workflows provide documentation and controls necessary for third-party verification mandated by regulations.

What Isn't Working

Spend-Based Estimates at Scale

While spend-based methods enable broad coverage, their accuracy limitations are becoming problematic as regulations require verification. Two suppliers with identical spending profiles but dramatically different efficiency generate the same calculated emissions, obscuring actionable differences.

Manual Data Collection

Organizations relying on spreadsheet-based data collection from suppliers face scalability limits. Response rates decline, data quality varies, and the burden on both requesters and respondents creates friction that impedes adoption.

Point-in-Time Reporting

Annual emissions inventories provide insufficient granularity for operational decision-making or continuous improvement. By the time reports are finalized, the data is often 12-18 months old. Real-time or near-real-time measurement remains the exception rather than the norm.

Real-World Examples

Walmart: Gigaton Goal Supply Chain Engagement

Walmart's Project Gigaton aims to avoid one billion metric tonnes (one gigaton) of greenhouse gases from its global value chain by 2030. The initiative engages thousands of suppliers in setting emissions reduction targets and reporting progress. As of 2024, Walmart reports over 750 million metric tonnes in cumulative reported reductions. The program demonstrates that retail procurement power can drive supply chain decarbonization at scale, though verification of reported reductions remains challenging.

BlackRock: Financed Emissions Integration

BlackRock, the world's largest asset manager, uses carbon accounting platforms to quantify and report financed emissions across investment portfolios. The firm has integrated emissions data into investment analysis workflows, enabling portfolio carbon footprint reporting and climate risk assessment. The approach demonstrates how financial institutions are translating Scope 3 Category 15 (investments) from theoretical concern to operational metric.

Microsoft: Internal Carbon Fee

Microsoft has operated an internal carbon fee since 2012, charging business units for their emissions to drive decarbonization incentives. The fee, which has increased over time and now covers Scope 3 emissions, funded over $100 million annually for carbon removal and reduction projects. The model requires accurate emissions measurement across the organization to function effectively. Microsoft's carbon accounting infrastructure enables this internal pricing mechanism.

Action Checklist

• Complete Scope 1 and 2 inventory with activity-based data before tackling Scope 3 complexity
• Map Scope 3 categories to identify highest-impact areas; focus initial efforts on top 3-5 categories by magnitude
• Evaluate carbon accounting platforms against regulatory requirements (CSRD, SB 253, SEC), integration needs, and internal capabilities
• Establish supplier data collection processes prioritizing strategic suppliers with highest emissions impact
• Implement audit controls including documentation, approval workflows, and data quality checks required for third-party verification
• Set measurement quality improvement targets tracking progression from spend-based to activity-based to supplier-specific data over time
• Integrate emissions data with procurement decisions establishing carbon intensity as a supplier evaluation criterion alongside cost and quality

FAQ

Q: What is the typical accuracy range for Scope 3 emissions estimates?

A: Accuracy varies dramatically by methodology and data availability. Spend-based estimates may carry uncertainty ranges of +/- 50% or more. Activity-based methods improve to +/- 20-30%. Supplier-specific primary data can achieve +/- 10-15% accuracy for well-measured categories. Organizations should disclose methodology and uncertainty alongside point estimates rather than presenting false precision.

Q: How should organizations prioritize Scope 3 categories for measurement improvement?

A: Focus on materiality: categories representing the largest emissions percentages warrant greatest investment in data quality. For most manufacturers, Category 1 (purchased goods and services) dominates. For retailers, Category 11 (use of sold products) may be larger. For financial institutions, Category 15 (investments) is typically predominant. Initial screening with spend-based methods identifies priority categories for deeper activity-based or supplier-specific measurement.

Q: What verification and audit requirements apply to carbon accounting?

A: Requirements vary by jurisdiction and disclosure mandate. California SB 253 requires third-party verification of Scope 1-2 emissions using registered assurance providers. CSRD requires limited assurance initially, moving to reasonable assurance over time. Voluntary standards like ISO 14064 provide verification frameworks. Organizations should select platforms with audit trail capabilities and engage assurance providers early in implementation.

Q: How do emerging technologies like satellite monitoring change carbon accounting?

A: Satellite monitoring provides independent verification of emissions from large point sources like industrial facilities and can detect methane leaks invisible to ground-based measurement. However, current technology cannot measure many emissions sources and works best as a complement to, rather than replacement for, bottom-up accounting. The primary near-term value is verification of reported data rather than primary measurement.

Sources

• Mordor Intelligence. (2025). Carbon Accounting Market Size and Share Outlook to 2030. https://www.mordorintelligence.com/industry-reports/carbon-accounting-market
• Persefoni. (2024). The 10 Best Carbon Accounting Software in 2025. https://www.persefoni.com/blog/best-carbon-accounting-software
• Sweep. (2025). 7 Best Carbon Accounting Software Platforms in 2025. https://www.sweep.net/blog/top-carbon-accounting-software-for-us-businesses-in-2025
• IBM. (2024). Scope 3 GHG Accounting and Reporting with Envizi. https://www.ibm.com/products/envizi/scope-3-ghg-accounting-reporting
• EcoVadis. (2024). Measure, Monitor, and Reduce Scope 3 Emissions with Carbon Action Manager. https://ecovadis.com/solutions/carbon/
• GHG Protocol. (2024). Corporate Value Chain (Scope 3) Accounting and Reporting Standard. https://ghgprotocol.org/standards/scope-3-standard
• CDP. (2024). Supply Chain Program. https://www.cdp.net/en/supply-chain