Interview: the skeptic's view on Carbon accounting & MRV — what would change their mind

According to a 2025 CDP analysis, approximately 68% of corporate emissions disclosures contain significant data quality gaps, with Scope 3 uncertainty ranges frequently exceeding ±40%. This statistic encapsulates the central tension in carbon accounting today: organizations are making multi-billion dollar investment decisions and regulatory compliance commitments based on emissions data that even proponents acknowledge remains fundamentally imprecise. The skeptic's position is not that measurement is impossible, but that the current ecosystem conflates precision with accuracy, and compliance with actual climate impact.

This synthesized perspective draws from conversations with verification auditors, corporate sustainability officers, and climate scientists who have spent decades grappling with measurement, reporting, and verification (MRV) challenges. Their critiques are not dismissals—they represent the sharpest edge of what genuine improvement would require.

Why It Matters

The stakes surrounding carbon accounting have escalated dramatically. The SEC's climate disclosure rules, finalized in March 2024, require public companies to report Scope 1 and Scope 2 emissions with third-party attestation for large accelerated filers beginning in fiscal year 2026. The European Union's Corporate Sustainability Reporting Directive (CSRD) extends even further, mandating Scope 3 disclosure for approximately 50,000 companies operating in EU markets.

Yet the infrastructure underpinning these requirements remains contested. A 2024 study published in Nature Climate Change found that corporate Scope 3 emissions estimates varied by 200-500% depending on methodology choices—spend-based versus activity-based calculations, allocation approaches, and database selection. The GHG Protocol's Scope 3 guidance, while foundational, permits substantial methodological flexibility that critics argue undermines comparability.

The financial materiality is substantial. Companies managing more than 10,000 metric tons of CO2 equivalent annually face potential carbon costs ranging from $50 to $150 per ton under emerging compliance markets. A 40% uncertainty band on a 500,000-ton footprint translates to $10-30 million in potential cost variance—figures that make CFOs deeply uncomfortable with current measurement precision.

Meanwhile, the MRV technology market has grown to an estimated $4.2 billion in 2025, with satellite-based monitoring, IoT sensors, and AI-powered estimation platforms competing for corporate budgets. Skeptics question whether this technological proliferation has improved actual measurement quality or merely created a more sophisticated apparatus for generating numbers of uncertain reliability.

Key Concepts

GHG Protocol Scopes

The Greenhouse Gas Protocol divides emissions into three scopes. Scope 1 covers direct emissions from owned or controlled sources—fuel combustion in company vehicles, on-site manufacturing processes, and fugitive emissions from refrigerants. Scope 2 addresses indirect emissions from purchased electricity, steam, heating, and cooling. Scope 3 encompasses all other indirect emissions across the value chain, including purchased goods and services, transportation, employee commuting, and end-of-life treatment of products.

Skeptics note that while Scope 1 and 2 measurement has achieved reasonable maturity, Scope 3 remains fundamentally different in character. For most companies, Scope 3 represents 70-90% of total emissions, yet relies almost entirely on secondary data, industry averages, and allocation methodologies rather than direct measurement.

MRV Technology Stack

Modern MRV systems integrate multiple data sources. Satellite-based monitoring can detect methane plumes, deforestation, and large point-source emissions with increasing precision. Ground-based sensors provide continuous monitoring of specific emission sources. Software platforms aggregate operational data—procurement records, energy bills, transportation logs—and apply emissions factors to generate footprint estimates.

The skeptical concern centers on the gap between what these systems measure directly versus what they infer. A satellite can detect a methane leak; it cannot directly measure the Scope 3 emissions embedded in a supply chain spanning thousands of suppliers across dozens of countries.

Emissions Factors and Databases

Emissions factors translate activity data into carbon equivalents. Purchasing $1 million of electronics components, for example, gets multiplied by a database-derived factor representing average emissions per dollar of that product category. Major databases include ecoinvent, EXIOBASE, the EPA's Emission Factors Hub, and proprietary datasets maintained by software platforms.

Critics highlight that these factors often lag reality by 2-5 years, aggregate across wildly heterogeneous production methods, and may not reflect the specific suppliers a company actually uses. The difference between a high-efficiency renewable-powered semiconductor fab and a coal-dependent facility could be 10x in emissions intensity, yet both might be assigned identical factors.

Audit and Assurance Standards

Third-party verification follows standards including ISO 14064-3, the ISAE 3410 attestation standard, and the emerging ISSA 5000 sustainability assurance framework. Limited assurance—the most common level—requires only that auditors find nothing materially inconsistent with reported figures. Reasonable assurance, analogous to financial audit quality, remains rare and expensive.

Skeptics argue that the assurance ecosystem lacks the depth of expertise and standardized procedures that make financial audits meaningful. When auditors cannot independently verify the underlying emissions factors or activity data, attestation becomes a process verification exercise rather than substantive accuracy validation.

Carbon Accounting KPI Benchmarks

Metric	Lagging	Baseline	Leading	Best-in-Class
Scope 1 & 2 Uncertainty Range	>25%	15-25%	5-15%	<5%
Scope 3 Coverage (Categories)	3-5 of 15	6-10 of 15	11-14 of 15	All 15 categories
Scope 3 Uncertainty Range	>50%	30-50%	15-30%	<15%
Primary Data Collection (Scope 3)	<10%	10-30%	30-60%	>60%
Verification Level	None	Limited (internal)	Limited (third-party)	Reasonable assurance
Data Refresh Frequency	Annual	Quarterly	Monthly	Real-time
Emissions Factor Database Age	>5 years	3-5 years	1-3 years	<1 year
Supplier-Specific Data Coverage	<5%	5-20%	20-50%	>50%

What's Working

Regulatory Pressure Creating Infrastructure Investment

The SEC disclosure rules and CSRD requirements have accomplished what voluntary frameworks could not: compelling CFO-level budget allocation for data infrastructure. Companies now treat emissions data with something approaching the rigor applied to financial reporting. This represents genuine progress, even if the underlying measurement challenges persist.

Satellite Verification for Specific Use Cases

For methane detection, deforestation monitoring, and large point-source verification, satellite technology has proven transformative. Companies like GHGSat and Kayrros can now detect facility-level methane emissions with precision that renders corporate self-reporting verifiable. This creates accountability mechanisms that were previously impossible, particularly for oil and gas operations.

Standardized Methodologies Improving Comparability

The Science Based Targets initiative (SBTi) has driven methodological convergence by requiring specific calculation approaches for target-setting. While critics note that SBTi's validation process has capacity constraints and methodology gaps, the framework has successfully created market pressure for consistent Scope 3 accounting across major sectors.

Activity-Based Measurement for High-Materiality Categories

Leading companies have moved beyond spend-based estimation for their most significant Scope 3 categories. Engaging directly with suppliers to collect specific production data, energy consumption, and transport modes yields dramatically more accurate estimates. This approach is resource-intensive but demonstrates that precision improvement is achievable where companies commit resources.

What's Not Working

Scope 3 Data Quality Remains Systemically Weak

Despite a decade of GHG Protocol guidance and billions in software investment, Scope 3 data quality has not improved commensurately. The fundamental problem is structural: companies must estimate emissions from activities they do not control and cannot directly observe. Spend-based calculations that dominate current practice conflate purchasing volume with emissions intensity, creating perverse incentives and inaccurate baselines.

Double Counting and Allocation Chaos

When every company in a value chain reports its Scope 3, the same emissions get counted multiple times. A semiconductor manufacturer's Scope 1 emissions appear in their customer's Scope 3 purchased goods, which appears in the end-product company's Scope 3, which appears in the retailer's Scope 3. Current protocols provide no mechanism for preventing this inflation, undermining aggregate corporate claims about supply chain decarbonization.

Audit Quality Varies Dramatically

The market for sustainability assurance has grown faster than qualified auditor capacity. Many engagements are conducted by professionals with limited emissions accounting expertise, following checklist procedures that verify documentation without assessing underlying data quality. The gap between a rigorous Big Four sustainability assurance engagement and a cursory limited review from a smaller firm can be enormous, yet both result in attestation statements.

Offset Quality Undermines Net-Zero Claims

Carbon accounting frequently incorporates offset purchases to reach "carbon neutral" or "net-zero" claims. Yet investigation after investigation—from Bloomberg, The Guardian, and academic researchers—has documented that significant percentages of offset credits represent non-additional, over-credited, or reversed carbon reductions. When companies claim net-zero status through offset purchases of questionable quality, the entire accounting framework loses credibility.

Key Players

Standard-Setters and Framework Organizations

GHG Protocol remains the foundational standard, maintained by World Resources Institute and the World Business Council for Sustainable Development. Their ongoing Scope 3 methodology updates aim to address some quality concerns. Science Based Targets initiative (SBTi) provides the leading framework for corporate target-setting, with validation processes that have approved over 7,500 company commitments. ISSB (International Sustainability Standards Board) is emerging as the global baseline for sustainability disclosure, with standards designed to interface with GHG Protocol methodologies.

Enterprise Software Platforms

Watershed has emerged as a leading carbon accounting platform, serving major enterprises including Stripe, Airbnb, and DoorDash. Their approach emphasizes primary data collection and supplier engagement. Persefoni provides enterprise carbon management with strong integration capabilities for financial systems, serving companies requiring SEC-compliant disclosure preparation. Sphera offers comprehensive EHS and sustainability software with deep industrial emissions expertise.

Specialized MRV Providers

Pachama combines satellite monitoring with machine learning to verify forest carbon projects, representing the emerging model of technology-enabled offset verification. GHGSat operates dedicated satellites for greenhouse gas monitoring, providing independent facility-level emissions detection. Kayrros applies satellite data analytics to methane detection and emissions monitoring across oil, gas, and industrial sectors.

Examples

Microsoft's Scope 3 Deep Dive

Microsoft published its first comprehensive Scope 3 inventory in 2020 and has since invested heavily in primary data collection. For their 2024 disclosure, Microsoft worked directly with over 1,500 suppliers representing 80% of emissions from purchased goods and services to collect actual production and energy data rather than relying on spend-based estimates. This approach reduced their Scope 3 uncertainty range from ±45% to approximately ±20% for covered categories. The company publicly acknowledged that this precision came at substantial cost—estimated at $15-20 million annually in supplier engagement and data management infrastructure.

Chevron's Methane Monitoring Program

In response to regulatory pressure and investor scrutiny, Chevron deployed comprehensive methane monitoring across its Permian Basin operations using a combination of continuous ground sensors, periodic aerial surveys, and satellite verification from third-party providers. The system identified emissions 30% higher than previous engineering estimates, leading to $200 million in infrastructure upgrades. Skeptics note that while this represents genuine accountability, it also demonstrates how substantially prior self-reporting understated actual emissions.

Unilever's Supplier-Specific Emissions Tracking

Unilever's Climate Programme requires primary suppliers representing 70% of agricultural raw material volumes to report actual emissions using standardized methodologies. The program provides technical assistance and third-party verification for participating suppliers. By 2025, Unilever reported that supplier-specific data covered 65% of Scope 3 Category 1 emissions, a significant improvement from the 12% coverage achieved using spend-based estimation. However, the program also revealed that actual supplier emissions were 15-25% higher than database estimates for several commodity categories.

Action Checklist

• Audit current Scope 3 methodology to identify which categories rely entirely on spend-based or industry-average data versus primary supplier information
• Prioritize top 10 suppliers by emissions materiality for direct data collection engagement, allocating dedicated resources for supplier relationship management
• Evaluate verification provider qualifications, specifically requesting evidence of sector expertise and methodology for assessing underlying data quality
• Implement quarterly data refresh cycles for Scope 1 and 2, moving beyond annual snapshots that obscure operational changes and improvement initiatives
• Conduct sensitivity analysis on emissions factors, testing how results change with alternative database choices to understand the uncertainty range implicit in current estimates
• Establish internal data quality metrics with explicit uncertainty quantification, reporting ranges rather than false-precision single figures

FAQ

Q: What level of Scope 3 uncertainty is acceptable for regulatory compliance? A: Current regulations do not specify acceptable uncertainty ranges, which is both a practical necessity and a significant weakness. The SEC's final rules acknowledge measurement challenges by focusing on disclosure processes rather than precision requirements. Companies should aim for uncertainty ranges below 30% for material categories while documenting methodology choices transparently. Regulators have indicated they will evaluate good-faith efforts at continuous improvement rather than demanding unattainable precision.

Q: How can companies reduce double-counting across value chains? A: The GHG Protocol is developing updated guidance on allocation approaches, but no comprehensive solution currently exists. Best practice involves clear documentation of organizational boundaries, consistent application of control versus equity-share approaches, and transparent communication with value chain partners about respective scopes. Some industry initiatives, particularly in automotive and electronics, are developing shared databases that allocate emissions to specific products rather than allowing category-level duplication.

Q: Are satellite-based MRV systems ready to replace traditional reporting? A: For specific applications—methane detection, deforestation monitoring, and large facility verification—satellite systems provide valuable independent verification. However, satellites cannot directly measure Scope 3 emissions, energy consumption within buildings, or process-specific industrial emissions. The technology should be viewed as complementary verification infrastructure rather than a replacement for comprehensive bottom-up accounting.

Q: What distinguishes limited assurance from reasonable assurance in carbon accounting? A: Limited assurance requires auditors to determine that nothing has come to their attention indicating material misstatement. Reasonable assurance requires positive confirmation that reported figures are free from material misstatement, demanding more extensive evidence collection and testing. Reasonable assurance costs 2-3x more and is currently achieved by fewer than 5% of reporting companies, though regulatory requirements may shift this balance in coming years.

Q: How should companies approach carbon offsets within their accounting framework? A: Leading practice maintains clear separation between gross emissions and offset claims, reporting both figures transparently. Companies should apply rigorous due diligence to offset purchases, prioritizing registries with strong additionality requirements and third-party verification. The Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles provide emerging quality benchmarks. Many skeptics recommend treating offsets as supplementary to genuine operational emissions reductions rather than substitutes.

Sources

• CDP Global Supply Chain Report 2025: Corporate Scope 3 Data Quality Assessment
• Hertwich, E., et al. "Scope 3 Emission Uncertainties in Corporate Carbon Footprints." Nature Climate Change, Vol. 14, 2024
• SEC Final Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors, March 2024
• GHG Protocol Scope 3 Calculation Guidance, Updated Technical Supplement, 2024
• Science Based Targets Initiative 2025 Annual Progress Report
• ISSB IFRS S2 Climate-related Disclosures Standard, Implementation Guidance
• Integrity Council for the Voluntary Carbon Market Core Carbon Principles, Assessment Framework v2.0