What is GHG Accounting? A reporting statement for corporate mitigation intervention impacts (Installment N.8)

Executive Summary

Current corporate greenhouse gas (GHG) accounting faces a fundamental disconnect between corporate actions and reported outcomes, as current Scope 3 and market-based inventory methods are often insensitive to specific mitigation efforts. To address this, we propose, as part of a multi-statement corporate GHG reporting framework, the Mitigation Intervention statement to credibly quantify and report the impacts of corporate climate actions.

1. The Multi-Statement Solution

The proposed framework acknowledges that no single metric can serve all GHG accounting needs. While a Physical Inventory statement tracks absolute emissions reductions within clearly defined boundaries, the Mitigation Intervention statement allows companies to report “Beyond-Inventory Mitigation” (BIM). This approach shifts the framing from “compensation” or “offsetting” to “contribution,” where actions taken outside a company’s inventory complement rather than substitute for internal emission reductions.

2. Consequential vs. Allocational Accounting

A key distinction of the Mitigation Intervention statement is its reliance on consequential accounting methods. Unlike allocational (inventory) methods that measure absolute changes over time, consequential methods isolate the causal effect of an intervention by comparing actual outcomes to a counterfactual baseline scenario. This process identifies “avoided emissions” or “enhanced removals” resulting specifically from the intervention.

3. Eligibility Principles

To ensure credibility and prevent greenwashing, the statement only recognizes interventions that meet two core eligibility principles:

• Ambitious: In keeping with the concept of additionality, the action must represent a significant deviation from “business as usual,” imposing a significant opportunity cost on the company (e.g., increased procurement costs or foregone profit).
• Quantifiable: The impacts must be measured using scientifically supported methods and be limited to interventions with short, direct causal chains where the effects are clearly attributable to the action.

4. Reporting and Goal Setting

The framework distinguishes between “targets” (for inventory reductions) and “contribution goals” (for intervention impacts). Contribution goals reflect a company’s capacity and size—such as revenue or profit—rather than being linked to its physical inventory totals, which helps avoid the perception that interventions are being used to “buy one’s way out” of internal reductions.

5. Governance and Verification

For the Mitigation Intervention statement to be trusted, it must be supported by institutional governance. This includes:

• Review and approval of intervention types to ensure they meet “ambitious” and “quantifiable” criteria.
• Standardized methodologies for baseline setting and impact quantification.
• Independent verification (ex post) of reported impacts to confirm actual implementation and appropriate application of accounting rules.

Ultimately, the paper argues that resources currently spent on unreliable Scope 3 estimates would be better utilized in identifying and quantifying high-impact mitigation interventions through this rigorous, complementary framework. This paper is intended to support the work of the GHG Protocol’s Actions and Market Instruments (AMI) Technical Working Group (TWG), future work by the Taskforce for Corporate Action Transparency (TCAT), as well as other initiatives. Draft Mitigation Intervention statement reporting tables are provided in an annex.