Interview: Practitioners on Carbon Accounting & MRV—What's Working, What Isn't, and the Startup-to-Enterprise Scale Story

The US carbon accounting software market is projected to reach $16.5 billion by 2032, yet practitioners across the ecosystem report a striking paradox: while tool proliferation has exploded—with over 800 vendors now competing for market share—the fundamental challenges of data quality, Scope 3 complexity, and verification bottlenecks remain stubbornly persistent. In conversations with sustainability leads, startup founders, and enterprise carbon managers, a consistent narrative emerges: the technology has matured dramatically, but organizational readiness and regulatory fragmentation continue to throttle meaningful progress. As one Fortune 500 sustainability director put it, "We went from having no tools to having too many tools. The bottleneck shifted from software capability to data infrastructure and stakeholder alignment."

Why It Matters

Carbon accounting and Measurement, Reporting, and Verification (MRV) systems form the backbone of credible corporate climate action. Without accurate emissions tracking, net-zero pledges remain aspirational statements rather than accountable commitments. The stakes have intensified considerably: as of 2024, over 5,200 companies worldwide have set Science-Based Targets, and corporate retirements in voluntary carbon markets hit a record 66.8 million credits globally. In the US specifically, regulatory pressure is mounting from multiple directions—California's SB 253 mandates verified Scope 1 and 2 reporting beginning in 2026 with Scope 3 requirements following in 2027, while the SEC's climate disclosure rules, though currently stayed pending litigation, signal the direction of federal policy.

The financial magnitude underscores the urgency. The global carbon accounting software market exceeded $18 billion in 2024, growing at a compound annual rate of 23-27%. North America accounts for 36.6% of this market, driven by both regulatory catalysts and voluntary corporate commitments. Meanwhile, the voluntary carbon credit market is projected to surge from $15.83 billion in 2025 to $120.47 billion by 2030—a trajectory that makes robust MRV infrastructure not merely desirable but essential for market integrity.

For US-based practitioners, the landscape presents both opportunity and complexity. Federal MRV certification frameworks lag behind the EU's Carbon Removal Certification Framework, creating a patchwork of state-level requirements and voluntary standards. Yet this fragmentation has also fostered innovation, with American startups pioneering digital MRV solutions that leverage satellite imagery, IoT sensors, and machine learning to automate verification processes that previously required expensive manual audits.

Key Concepts

Biodiversity-Carbon Integration: Practitioners increasingly recognize that carbon accounting cannot exist in isolation from broader ecosystem impacts. Leading MRV platforms now incorporate biodiversity metrics alongside carbon sequestration data, particularly for nature-based solutions. This integration addresses growing buyer demand for "charismatic carbon"—credits that deliver verifiable co-benefits for habitat preservation, water quality, and species protection.

Standards Convergence: The alphabet soup of carbon accounting standards—GHG Protocol, PCAF (Partnership for Carbon Accounting Financials), ISSB (International Sustainability Standards Board), and sector-specific frameworks—is gradually consolidating. Practitioners report that interoperability between standards has improved significantly, with platforms like Persefoni and Watershed building calculation engines that automatically map data across multiple reporting frameworks.

Grid Emissions Factors: Accurate Scope 2 accounting depends critically on understanding the carbon intensity of electricity consumption. Location-based versus market-based accounting methods can yield dramatically different results, and practitioners emphasize that real-time grid data—rather than annual averages—increasingly differentiates rigorous carbon accounting from approximation.

Heat Pump Electrification: For organizations targeting Scope 1 reductions, building electrification through heat pumps represents one of the most tractable decarbonization levers. Carbon accounting systems must accurately capture the emissions impact of fuel-switching, accounting for both eliminated combustion emissions and increased electricity consumption with appropriate grid factors.

Offset Integrity: The voluntary carbon market's credibility challenges have reshaped how practitioners approach offsets. High-quality offsets now require robust MRV demonstrating additionality, permanence, and accurate quantification. The market is bifurcating between low-cost avoidance credits and premium removal credits, with sophisticated buyers like Microsoft developing detailed quality criteria that emphasize durable carbon dioxide removal over avoidance claims.

What's Working and What Isn't

What's Working

Enterprise Platform Maturation: The first generation of carbon accounting platforms has achieved genuine enterprise readiness. Watershed, serving clients including Walmart, Airbnb, BlackRock, and FedEx, demonstrates that Scope 3 supply chain emissions tracking at scale is now operationally feasible. The platform's acquisition of VitalMetrics—a GHG emissions database—exemplifies how market leaders are building comprehensive data infrastructure to reduce client friction.

AI-Powered Data Automation: Practitioners consistently highlight artificial intelligence as the breakthrough enabling scalable carbon accounting. Persefoni's generative AI capabilities—including automated data interpretation, anomaly detection, and procurement activity mapping—have compressed what previously required weeks of consultant time into hours. One mid-market CFO reported reducing their emissions inventory timeline from four months to six weeks after implementing AI-assisted accounting.

Digital MRV for Nature-Based Solutions: Satellite-based verification has transformed the economics of carbon project monitoring. Companies like Pachama and Sylvera use machine learning to analyze satellite imagery, detecting deforestation, measuring biomass changes, and flagging project anomalies at a fraction of traditional verification costs. This technological shift has enabled more frequent monitoring cycles and faster credit issuance.

Supplier Engagement Platforms: Walmart's Project Gigaton achieved its 1-gigaton emissions reduction goal six years ahead of schedule, demonstrating that structured supplier engagement can drive meaningful Scope 3 impact. The program now engages over 5,900 suppliers globally, providing a template for how large buyers can aggregate climate action across fragmented supply chains.

What Isn't Working

Scope 3 Data Quality: Despite platform improvements, Scope 3 emissions remain fundamentally estimation-heavy. Practitioners report that supplier-provided primary data covers only 15-30% of value chain emissions for most organizations, with the remainder filled by spend-based or industry-average proxies. This estimation dependency undermines comparability across companies and makes year-over-year progress difficult to validate.

Verification Bottlenecks: The supply of accredited Verification and Validation Bodies (VVBs) has not kept pace with demand for third-party assurance. Several practitioners noted audit wait times exceeding six months, creating particular challenges for companies needing timely verification for regulatory filings or offset credit issuance.

Regulatory Fragmentation: US practitioners navigate a patchwork of requirements—California's climate disclosure laws, potential SEC rules, EU CSRD implications for American multinationals, and voluntary framework expectations—that lack harmonization. Multiple sustainability leads described spending as much time on compliance mapping as on actual emissions reduction planning.

Small Business Accessibility: While enterprise solutions have matured, affordable options for SMBs remain limited. Platforms priced at $50,000-$250,000 annually are inaccessible for most small businesses, yet climate-conscious procurement increasingly requires supply chain partners to provide emissions data regardless of company size.

Key Players

Established Leaders

Persefoni: Recognized by Forrester as a carbon accounting leader, Persefoni specializes in audit-grade platforms for financial institutions and large enterprises. The platform's PCAF alignment and XBRL tagging workflows position it particularly well for SEC registrant compliance.

Watershed: The gold standard for complex supply chain emissions management, Watershed's comprehensive carbon, water, and waste accounting modules serve enterprise clients including major retailers, logistics companies, and financial institutions.

Microsoft Sustainability Cloud: Integrated with the broader Microsoft ecosystem, this platform offers ESG analytics with AI capabilities, making it particularly suitable for organizations already embedded in Microsoft infrastructure.

IBM Envizi: With predictive analytics and climate planning features, IBM Envizi targets multinational corporations requiring sophisticated scenario modeling alongside carbon accounting.

SAP Sustainability Control Tower: For organizations running SAP ERP systems, the native sustainability module provides seamless integration with transactional data, simplifying Scope 3 calculations from procurement records.

Emerging Startups

Sinai Technologies: Specializing in decarbonization modeling and internal carbon pricing, Sinai serves heavy industry clients including ArcelorMittal, Siemens, and Bayer who require sophisticated abatement planning tools.

ClearTrace: Focused on renewable energy verification and climate claims substantiation, ClearTrace addresses the growing need for granular, hourly-matched renewable energy certificates.

Carbonfact: This fashion industry vertical platform has attracted 150+ apparel brands including New Balance, Columbia, and Allbirds, demonstrating the viability of sector-specific carbon accounting solutions.

Sweep: Named among the top ESG solutions for 2025, Sweep combines carbon accounting with offset marketplace integration, streamlining the path from measurement to action.

Plan A: Raised $27 million in Series A funding, Plan A targets CSRD compliance with clients including BMW, Deutsche Bank, and Visa, bridging European regulatory requirements for US multinationals.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates' climate investment vehicle has deployed $3.5 billion across 110+ companies, with carbon management as a core focus area. Their 2024 fund raised $839 million.

Lowercarbon Capital: This fund specifically targets carbon reduction technologies at seed through Series B stages, with particular emphasis on carbon accounting software and direct air capture.

Clean Energy Ventures: Investor in ClearTrace and other climate accounting platforms, Clean Energy Ventures bridges the gap between traditional cleantech and climate software.

Prelude Ventures: Active in energy software and carbon management, Prelude has backed multiple companies in the emissions tracking ecosystem.

SOSV: Ranked by PitchBook as the most active climate tech investor from 2018-2024, SOSV's Climate Tech 100 list includes numerous MRV and carbon accounting companies.

Examples

Microsoft's Carbon Removal Procurement Program: Microsoft signed deals totaling 11.8 million metric tons of carbon dioxide removal in 2024 alone, including an $800 million, 15-year contract with AtmosClear/Fidelis for BECCS (bioenergy with carbon capture and storage)—the largest carbon removal deal in history. Their procurement explicitly requires audit-grade MRV, with Carbon Direct-developed quality criteria covering durability, additionality, and lifecycle accounting. This demand signal has catalyzed investment in verification infrastructure across the removal sector.

Walmart's Project Gigaton Achievement: By 2024, Walmart's supplier engagement program had achieved 1.19 billion metric tons of cumulative avoided emissions—surpassing their 1-gigaton goal six years ahead of schedule. The program engaged 5,900+ suppliers across six emissions pillars: energy, waste, packaging, nature, transportation, and product design. Notably, Walmart's internal reporting acknowledges these avoided emissions "cannot be fully reconciled" with traditional Scope 3 accounting methodologies, highlighting the tension between action-oriented metrics and standardized emissions inventories.

California SB 253 Implementation: California's Climate Corporate Data Accountability Act requires companies with over $1 billion in annual revenue doing business in California to report verified Scope 1 and 2 emissions beginning in 2026, with Scope 3 reporting following in 2027. Affected companies—estimated at over 5,000 organizations—have accelerated carbon accounting platform adoption, with several practitioners reporting that the California mandate, rather than federal SEC requirements, is driving their compliance investments.

Action Checklist

• Conduct a carbon accounting maturity assessment to identify current data gaps across Scope 1, 2, and 3 categories
• Evaluate at least three carbon accounting platforms against your specific industry requirements, data integration needs, and budget constraints
• Establish primary data collection processes for your top 10 suppliers by emissions contribution
• Map your disclosure obligations across California SB 253, potential SEC requirements, EU CSRD (if applicable), and voluntary frameworks
• Implement real-time grid emissions factors for electricity consumption rather than relying on annual averages
• Develop internal carbon pricing mechanisms to integrate emissions data into capital allocation decisions
• Build verification timelines into your annual planning, accounting for 3-6 month VVB capacity constraints
• Create a Scope 3 data quality improvement roadmap prioritizing categories with highest emissions and lowest data fidelity
• Establish offset procurement criteria aligned with Microsoft/Carbon Direct quality standards before purchasing credits
• Train finance and procurement teams on carbon accounting fundamentals to embed emissions thinking in operational decisions

FAQ

Q: How do we choose between spend-based and activity-based Scope 3 accounting? A: Spend-based methods offer faster implementation using procurement data you likely already have, but yield less precise estimates and obscure year-over-year progress from actual emissions reductions versus spending changes. Activity-based methods require more granular data—quantities, materials, transportation modes—but produce results that better reflect physical reality. Most practitioners recommend a hybrid approach: use spend-based methods to establish baseline estimates and identify hotspots, then progressively shift to activity-based methods for your highest-emission categories as you build supplier data collection capabilities.

Q: What level of assurance should we target for our emissions disclosures? A: Assurance levels should align with your disclosure context. For voluntary reporting and initial years of regulatory compliance, limited assurance typically suffices and is more widely available from auditors. Reasonable assurance—equivalent to financial statement audit standards—will become increasingly expected as climate disclosure matures, particularly under SEC and California requirements. Begin with limited assurance to build systems and processes, then plan a transition to reasonable assurance over 2-3 years.

Q: How do we handle emissions from electrification investments like heat pumps? A: Electrification shifts emissions from Scope 1 (direct combustion) to Scope 2 (purchased electricity). Track both the eliminated natural gas or heating oil consumption and the incremental electricity demand. Use market-based Scope 2 accounting if you're procuring renewable energy to match the new electrical load; otherwise, location-based accounting will show the grid carbon intensity of your increased consumption. The net impact depends critically on your local grid's emissions factor—electrification in a coal-heavy grid may temporarily increase total emissions before grid decarbonization delivers benefits.

Q: What's the current state of Scope 3 Category 15 (investments) accounting for financial institutions? A: PCAF (Partnership for Carbon Accounting Financials) has become the de facto standard, with over 500 financial institutions representing $90+ trillion in assets committed to the methodology. However, practitioners report significant challenges with data availability for private markets, sovereign debt, and complex instruments. Most institutions begin with listed equities and corporate bonds where data quality is highest, then progressively expand coverage. Persefoni and Watershed both offer PCAF-aligned modules specifically designed for this use case.

Q: How should startups approach carbon accounting with limited resources? A: Start with the GHG Protocol's simplified guidance for small businesses and leverage free tools like the EPA's Simplified GHG Emissions Calculator. For more sophisticated tracking, Greenly and similar platforms offer more accessible pricing than enterprise solutions. Prioritize Scope 1 and 2 completeness before tackling Scope 3—investors and enterprise customers will expect accurate operational emissions before supply chain estimates. As you scale, build data infrastructure that can feed into enterprise platforms to avoid costly re-implementation.

Sources

• Fortune Business Insights, "Carbon Accounting Software Market Size, Share & COVID-19 Impact Analysis," 2024
• Mordor Intelligence, "Carbon Accounting Market Size & Share Outlook to 2030," 2024
• U.S. Securities and Exchange Commission, "The Enhancement and Standardization of Climate-Related Disclosures for Investors," Final Rule Release No. 33-11275, March 2024
• Microsoft and Carbon Direct, "2024 Criteria for High-Quality Carbon Dioxide Removal," July 2024
• Walmart Corporate Sustainability Report, "Project Gigaton Progress Update," 2024
• California State Legislature, Senate Bill 253 (Climate Corporate Data Accountability Act), Enacted 2023
• PwC, "State of Climate Tech 2024," Annual Report
• GHG Protocol Corporate Standard and Scope 3 Standard, World Resources Institute and WBCSD