Carbon Accounting, Disclosure, and Finance: A Corporate Guide to Sustainability

The Complexity and Urgency of Carbon Management

With growing global attention on climate change, carbon management is no longer optional but an essential strategic element for businesses. From policies and market mechanisms to specific carbon accounting and disclosure requirements, carbon management has undergone rapid changes in recent years. Companies must not only comply with existing frameworks but also quickly adapt to evolving global regulations and standards, establishing carbon management systems ready for the future.

Wayne Li

Policies and Regulations: Compliance Driven by Global and Local Forces

Policies and regulations are the primary drivers of carbon management. Globally, mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and the Battery Regulation set strict compliance frameworks. Additionally, the EU Corporate Sustainability Due Diligence Directive (CSDDD) imposes requirements on carbon management. These policies extend beyond mere carbon disclosure and reduction targets—they push global value chains towards greater transparency and stronger decarbonisation efforts.

In the US, the SEC’s carbon disclosure requirements are propelling publicly listed companies towards ESG (Environmental, Social, and Governance) transparency standards. Meanwhile, China’s dual carbon goals have accelerated the construction of domestic carbon markets, presenting both challenges and opportunities.

In the Chinese market, carbon disclosure requirements from exchanges such as the Hong Kong Stock Exchange are becoming a foundation for gaining competitive advantages in financing and capital markets. In response, companies must progressively improve carbon emission management, ensuring accuracy and transparency in their data.

Interpreting Carbon Accounting Standards: From ISO to the GHG Protocol

At the core of carbon management lies the understanding and implementation of standards. ISO 14064 series, ISO 14067, and ISO 14068-1 offer structured frameworks for carbon accounting and reporting, while the GHG Protocol remains the most widely adopted standard for greenhouse gas accounting worldwide. These standards enable organisations to ensure compliance at both corporate and product levels, supporting effective emission reduction and carbon neutrality claims.

Voluntary Carbon Mechanisms: Driving Accountability Beyond Compliance

In addition to mandatory regulations, voluntary carbon mechanisms such as the Science-Based Targets initiative (SBTi), Carbon Disclosure Project (CDP), and Task Force on Climate-related Financial Disclosures (TCFD) offer platforms for companies to address carbon-related risks, reduction planning, and holistic disclosure.

For example, SBTi provides clear reduction targets, validates them via its platform, and tracks progress, ensuring scientific credibility and feasibility in corporate carbon strategies.

Moreover, these mechanisms are continuously evolving, amplifying their influence. Companies must comprehensively understand greenhouse gas emissions, particularly Scope 3 (value chain emissions), and build robust data collection systems from upstream suppliers to downstream customers. Accurate and consistent data collection is vital for meaningful participation in these voluntary mechanisms.

Green Finance: Capital Power Behind Carbon Management

Green finance has become a critical driver of carbon management. Tools such as green bonds and green loans open pathways for green investments in capital markets while providing funding support for corporate emission reduction projects. Through green financing, companies can turn emission reduction performance into value, effectively lowering both financing and decarbonisation costs.

Future of Carbon Management – Strategy, Practice, and Capital Intertwined

Carbon management is more than regulatory compliance — it is a crucial element of corporate competitiveness. By establishing robust carbon management frameworks, businesses can not only meet policy requirements but also secure a foothold in green finance and global carbon markets. Carbon management is a systemic, global effort, and integrating it into corporate strategy, operations, and capital planning is the key to long-term sustainability.

Wayne Li is Solutions Manager for Sustainability Service, SCPA Greater China, DNV