BlackRock & ExxonMobil Want New Measure for Carbon Emissions

BlackRock's Global Infrastructure Partners, ExxonMobil and Santander have joined a coalition to develop a new framework for measuring carbon emissions across products, supply chains and financial portfolios.

The group, known as Carbon Measures, has a simple aim: to eliminate double-counting of carbon pollution and create standards for measuring the carbon intensity of specific products.

Amy Brachio, CEO of Carbon Measures and former Global Vice Chair for Sustainability at EY, will be leading the initiative alongside backers including chemicals giant BASF SE, consultancy EY, industrial gas company Linde Plc and Japanese conglomerate Mitsui.

But why are so many major companies in favour of changing the way emissions reporting works?

Why existing standards can be challenging

Carbon Measures represents a departure from the GHG Protocol, the de-facto global standard used by the vast majority of S&P 500 companies to report emissions.

Critics like BlackRock and Exxon argue that the current system, developed in the late 1990s, allows multiple actors to count the same CO₂ molecules.

However, those responsible for the GHG Protocol's design counter that double-counting is one of the framework's "greatest strengths" because it encourages "comprehensive" greenhouse gas management.

Carbon Measures will support development of a ledger-based framework similar to traditional financial accounting, tracking emissions as products move through supply chains.

"If you are buying a tonne of steel, you need to understand how much carbon went into producing that tonne of steel, so that when it's sold you're not only selling the asset of the steel, but you're selling the liability – so to speak – of the carbon emissions that go along with it," Amy says.

The framework is expected to take two years to develop and between five and seven years to reach scale.

Brachio said the group expects to grow from roughly 20 backers today to about 100 over time, with an emphasis on attracting high-carbon industries.

The regulatory context

The initiative comes as regulations such as Europe's carbon border adjustment mechanism increase pressure on companies and investors to address their carbon footprints.

Carbon Measures intends to help design carbon intensity standards for key industrial products that account for the majority of global emissions, including electricity, fuel, steel, concrete and chemicals.

The group will also advocate for policies that support emissions reductions and push for carbon intensity standards that governments could use to set corporate policies.

Why heavy industry and finance are aligned on this issue

Ana Botin, Executive Chair of Santander, says that accurate and transparent calculation of carbon emissions "is the foundation for meaningful climate action."

Elsewhere, Francois Jackow, CEO of Air Liquide, another backer of the initiative, said harmonised product-level carbon intensity standards will enable investors "to reward low-carbon solutions."

And Exxon's CEO, Darren Woods, believes that "the first step to reducing global emissions is to know where they're coming from". 

"Today, we don't have an accurate system to do this," he adds.

The oil major has been advocating for a global system for measuring the carbon intensity of different products for several years.

BlackRock's GIP declined to comment but states on its website that it views the clean-energy transition as the "single biggest investment opportunity" and wants to use its relationships with businesses and governments to help drive decarbonisation.

'A holy grail'

For Amy, "precise and comparable data has proven something of a holy grail" in emissions tracking. She argues that the current approach "simply won't be sufficient going forward."

The controversy surrounding double-counting in carbon accounting remains contentious, with proponents arguing it incentivises multiple actors to reduce emissions rather than creating confusion about overall pollution levels.

Whether Carbon Measures can bridge this divide whilst attracting the scale of industry participation needed remains to be seen.