Myths vs. realities: Carbon accounting & MRV — what the evidence actually supports

Opening stat hook: Single-region input-output models used for Scope 3 accounting systematically underestimate global emissions by approximately 10%—roughly 2 gigatons of CO₂ equivalent annually (Nature Communications 2025). As the EU CSRD mandates detailed emissions reporting for 2024 financial years starting in 2025, and California's SB 253 creates new disclosure requirements for U.S. operations, the gap between measurement theater and decision-useful data has become a material compliance risk.

Why It Matters

Carbon accounting and Monitoring, Reporting, and Verification (MRV) form the backbone of climate commitments. Without accurate measurement, reduction targets become aspirational rather than operational. Yet the field remains plagued by methodological inconsistencies, data gaps, and verification challenges that undermine confidence in reported figures.

For U.S. policy and compliance professionals, the regulatory landscape shifted dramatically in 2024-2025. The SEC climate disclosure rules, California's twin climate accountability acts (SB 253 and SB 261), and the EU CSRD's extraterritorial reach mean that carbon accounting is no longer optional for large enterprises. The GHG Protocol—the foundational standard—is simultaneously updating its Corporate Standard, Scope 2 Guidance, and Scope 3 Standard, creating uncertainty about forward-looking compliance.

The stakes extend beyond regulatory compliance. Investors increasingly discount companies with poor emissions data quality, supply chain partners demand verified footprints, and consumers factor carbon performance into purchasing decisions. Organizations that treat carbon accounting as checkbox compliance rather than strategic capability forfeit competitive advantage while still bearing implementation costs.

Key Concepts

Myth 1: Scope 3 Emissions Are Too Complex to Measure Meaningfully

Reality: While Scope 3 represents 70-80% of most organizations' total footprint and involves significant data challenges, proven methodologies exist. The complexity is real—engaging thousands of suppliers with inconsistent data formats, tracking transport across multiple carriers, and accounting for product use-phase emissions—but not insurmountable.

The Pareto principle applies powerfully: 20% of suppliers typically drive 80% of Scope 3 emissions. Organizations achieving high-quality Scope 3 accounts focus data collection efforts on material suppliers while using reasonable estimation methods for the long tail. Apple's Supplier Clean Energy Program, which tracks energy sources for over 200 manufacturing partners, demonstrates that large-scale Scope 3 measurement is operationally feasible.

Myth 2: Carbon Accounting Software Solves the Data Problem

Reality: Software platforms are necessary but not sufficient. The fundamental challenge isn't calculation—it's primary data access. Even the best carbon accounting platforms (Watershed, Persefoni, Sweep) produce outputs only as reliable as their inputs. When organizations lack primary data from suppliers, the software defaults to industry-average emission factors that may diverge significantly from actual operations.

The 2024-2025 generation of platforms incorporates AI for supplier engagement and data quality assessment, but adoption remains uneven. Organizations report that 60-70% of implementation time goes to data gathering and validation rather than platform configuration.

Myth 3: Third-Party Verification Guarantees Accuracy

Reality: Verification provides assurance over process and methodology, not necessarily accuracy of underlying data. A "limited assurance" engagement—the most common level—confirms that reported figures are plausible and calculated consistently with stated methods. It does not independently verify supplier-reported data or detect systematic underreporting.

The verification market itself faces capacity constraints. Rigorous third-party audits for novel carbon removal methods can take 1.5-2 years (IEA GHG 2024). For standard corporate inventories, the 2-4 month verification timeline often compresses into final weeks before reporting deadlines, limiting depth of review.

KPI	Leading Practice	Industry Average	Common Pitfall
Primary data coverage (Scope 1-2)	>95%	70-85%	<50%
Primary data coverage (Scope 3)	60-70% (top suppliers)	10-30%	Industry averages only
Verification level	Reasonable assurance	Limited assurance	No verification
Update frequency	Quarterly	Annual	Irregular
Emission factor age	Current year	2-3 years old	>5 years old
Restatement frequency	Rare	Occasional	Frequent

Myth 4: Standards Alignment Is Straightforward

Reality: The alphabet soup of standards (GHG Protocol, ISSB, CSRD/ESRS, CDP, TCFD, SBTi) creates significant reconciliation burden. While converging in principle, implementation differences—particularly around Scope 2 market-based versus location-based accounting, carbon credit treatment, and financed emissions methodologies—require careful navigation.

The GHG Protocol's ongoing updates add uncertainty. WRI is developing a new Land Sector and Removals Standard while revising core guidance. Organizations building accounting systems now must design for flexibility to accommodate forthcoming changes without complete rebuilds.

Myth 5: Carbon Accounting Is Primarily a Finance/Sustainability Function Responsibility

Reality: Effective carbon accounting requires cross-functional integration. Procurement teams control supplier engagement essential for Scope 3 data. Operations teams manage facility-level energy monitoring. IT teams enable data infrastructure. Finance teams provide spending data for spend-based emissions estimation.

Organizations treating carbon accounting as a siloed sustainability team deliverable consistently underperform on data quality and face higher ongoing OPEX as manual data gathering persists.

What's Working

Digital MRV Platforms with Supplier Integration

Platforms enabling automated data collection from suppliers—pulling invoices, energy bills, and logistics data directly—achieve 3-5x improvement in primary data coverage compared to survey-based approaches. Sweep's API-first architecture and Persefoni's ERP integrations exemplify this approach.

Multi-Regional Input-Output Models

The Nature Communications research demonstrating 10% underestimation from single-region models has accelerated adoption of multi-regional input-output (MRIO) databases. EXIOBASE, GTAP, and Eora provide higher-resolution emission factors that better capture global supply chain realities, particularly for materials sourced from high-emission manufacturing regions.

Satellite-Based Verification

Climate TRACE and similar initiatives use satellite imagery to independently verify point-source emissions, providing a check against self-reported data. While not applicable to all emission categories, satellite verification has identified material discrepancies in reported emissions from power generation, oil and gas operations, and heavy industrial facilities.

What's Not Working

Survey-Based Supplier Data Collection

Manual surveys achieve 10-20% response rates with inconsistent data quality. The labor intensity makes annual updates economically challenging, leading to stale emission factors that don't reflect supplier decarbonization efforts.

Overreliance on Spend-Based Estimation

Spend-based methods (emissions per dollar spent) are accessible but inaccurate. A supplier's pricing power—higher margins or premium positioning—can make a low-emissions product appear more carbon-intensive than a cheaper, dirtier alternative. Organizations defaulting to spend-based methods for material categories forfeit decision-useful granularity.

Inconsistent Boundary Definitions

Different organizational boundaries (operational control, financial control, equity share) and inconsistent Scope 3 category inclusion undermine comparability. Two organizations with identical physical operations can report materially different footprints based on boundary choices. The lack of mandatory standardization allows strategic boundary-drawing that flatters reported figures.

Key Players

Established Leaders

Watershed (U.S.): Enterprise carbon accounting platform with strong CDP and CSRD integration; notable clients include Stripe, Airbnb, and Sweetgreen
Persefoni (U.S.): Carbon management platform emphasizing regulatory compliance and financed emissions for financial institutions
Sphera (U.S./Germany): ESG software combining carbon accounting with product lifecycle assessment capabilities
SAP Sustainability Control Tower (Germany): Enterprise integration advantage for existing SAP ERP environments
Salesforce Net Zero Cloud (U.S.): CRM-integrated carbon tracking with supplier collaboration tools

Emerging Startups

Sweep (France): API-first platform with strong European regulatory positioning and supplier engagement automation
Normative (Sweden): Google-backed platform focused on SME accessibility and automated data extraction
CarbonChain (UK): Supply chain emissions tracking specialized for commodities trading
Sinai Technologies (U.S.): Decarbonization planning tools combining measurement with pathway modeling

Key Investors & Funders

Sequoia Capital (U.S.): Lead investor in Watershed's $100M+ funding rounds
General Atlantic (U.S.): Major backer of Persefoni, signaling institutional confidence in carbon accounting software market
ICONIQ Growth (U.S.): Climate software portfolio including multiple carbon measurement platforms
European Investment Bank: Green financing for climate tech infrastructure across the EU

Real-World Examples

Nestlé Scope 3 Program: The food and beverage giant tracks emissions across 500,000+ farmers and suppliers through a combination of primary data collection from strategic partners (representing 80% of agricultural emissions) and improved modeling for smallholders. The company invests $1.2 billion annually in regenerative agriculture practices, requiring verification systems that can track on-farm emissions changes at scale.
Microsoft Carbon Negative Commitment: Microsoft's internal carbon fee ($15/ton for Scope 1-2, $100/ton for Scope 3) requires granular accounting to charge business units appropriately. The company's carbon accounting evolution—from basic GHG inventory to SKU-level carbon footprints for hardware products—demonstrates the operational depth possible when accounting drives internal capital allocation.
BlackRock Climate Risk Analysis: The world's largest asset manager requires portfolio companies to provide emissions data meeting minimum quality thresholds. Companies failing to meet standards face engagement pressure and potential divestment consideration. This investment-community demand has accelerated corporate accounting improvements more effectively than regulatory mandates alone in some sectors.

Action Checklist

Map current Scope 3 category coverage against CSRD/SB 253 requirements to identify disclosure gaps
Assess primary data coverage for top 20% of suppliers by emissions impact—this cohort drives reporting quality
Evaluate current emission factor databases for age and regional specificity; upgrade to multi-regional models where available
Establish data governance protocol including change control, audit trails, and restatement procedures
Design accounting system for GHG Protocol updates expected in 2025-2026; avoid over-customization to current guidance
Plan verification assurance level roadmap from limited to reasonable assurance over 2-3 year horizon

FAQ

Q: What level of verification assurance should we target given current regulations? A: CSRD requires limited assurance initially, with reasonable assurance expected by 2028. SEC rules similarly contemplate assurance escalation. Plan verification investments to achieve reasonable assurance for Scope 1-2 by 2027 and for material Scope 3 categories by 2029-2030. The capacity constraints in the verification market favor early mover advantage.

Q: How should we treat carbon credits in our inventory versus reduction claims? A: Keep inventory calculations (what you emit) separate from net claims (what you offset). The SBTi permits credits only for residual emissions beyond science-based targets, not as substitute for reduction. Regulators increasingly distinguish gross emissions (inventory) from net claims, making this separation essential for compliance flexibility.

Q: What's the risk of the GHG Protocol updates invalidating our current accounting? A: Moderate. The updates will likely refine rather than replace core methodologies, but Scope 2 market-based accounting treatment and Land Sector guidance are areas of potential significant change. Design systems with configurable emission factor databases and calculation engines that can accommodate new rules without full rebuilds.

Q: How do we handle data gaps for acquired companies or joint ventures? A: Establish acquisition integration protocols specifying timeline for bringing new entities to corporate accounting standards. For joint ventures, operational control typically determines consolidation approach, but verify consistency with financial reporting treatment. Plan 12-18 months post-acquisition for full data integration.

Q: What OPEX should we budget for ongoing carbon accounting? A: For Fortune 500 companies, expect $500K-$2M annually including software, data collection, internal FTEs, and verification. This scales down for smaller organizations but rarely below $100K for comprehensive Scope 1-3 coverage meeting regulatory standards. The initial implementation year typically costs 2-3x ongoing OPEX.

Sources

Nature Communications – Multiregional Accounting for Corporate Emissions 2025: https://www.nature.com/articles/s41467-025-67759-5
Mission Innovation CDR MRV Report December 2024: https://mission-innovation.net/wp-content/uploads/2024/12/2024-12_CDR-Mission-MRV-Report.pdf
Sweep – 2025 Scope 3 Emissions Playbook: https://www.sweep.net/guides/2025-scope-3-emissions-playbook-navigating-carbon-accounting-and-compliance
World Resources Institute – MRV of Carbon Removal Technical Perspectives: https://www.wri.org/technical-perspectives/measurement-reporting-verification-of-carbon-removal
IEA GHG – MRV and Accounting for Carbon Dioxide Removal 2024: https://ieaghg.org/publications/measurement-reporting-and-verification-and-accounting-for-carbon-dioxide-removal/
World Bank – MRV of Carbon Credits Feature 2024: https://www.worldbank.org/en/news/feature/2022/07/27/what-you-need-to-know-about-the-measurement-reporting-and-verification-mrv-of-carbon-credits