Another Nerd Alert: The third in Roger Ballentine’s series of peer-reviewed articles on the urgency of updating greenhouse gas accounting and corporate climate leadership programs to better optimize the role that companies can play in meeting the challenge of the climate crisis was published yesterday in the Journal of Carbon Management. This paper is about incentivizing, reporting, and rewarding what matters most: impact.
Corporate climate decision-making is guided by a complex “rules and rewards ecosystem” of voluntary greenhouse gas accounting rules, disclosure platforms, and target setting frameworks. If assessed by the increase in the number of companies participating in these voluntary accounting, disclosure, and target-setting programs, the system has been a remarkable success. However, when assessed against metrics more closely tied to climate science – the amount of capital being deployed to fund the net zero transition as well as societal progress in reducing atmospheric greenhouse gases – the rules and rewards ecosystem is falling short. More than two decades on, the rules and rewards ecosystem remains focused on the creation and disclosure of corporate greenhouse gas “inventories”. The theory of change under these voluntary “attributional” accounting and disclosure systems is that “what gets measured gets managed”. While flawed, the incumbent approach largely serves the first step of “measurement”, but it is not well designed to incent the “management” of GHG emissions. It is time to finish the job and focus on management by elevating impact accounting, disclosure, and incentives and improve how companies are asked to set and execute against climate targets. Done properly, a “dual ledger” approach can better incentivize and reward corporate expenditures that provide actual climate benefits while reducing the significant non-impactful expenditures that companies are asked to make under the current – and unfinished – rules and reward ecosystem.
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Read the full journal article – The unfinished business of corporate greenhouse gas accounting and target-setting frameworks: incentivizing, enabling, and counting impact through a dual ledger
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