Accounting for carbon emissions

Carbon accounting - which reports on a business's greenhouse gas emissions – is an emerging field with massive financial implications. It is now part of the annual reporting cycle for most large companies worldwide, and has become mandatory for UK-quoted companies.

Dr Craig Mackenzie and Dr Francisco Ascui, both at the University of Edinburgh, published one of the first definitions of carbon accounting and developed new methods for benchmarking performance. The university spin-out company ENDS (Environmental Data Services) Carbon has benchmarked over 1,000 companies for 20 corporate clients.

In 2010 the international Carbon Disclosure Project launched the 'Carbon Action' initiative based partly on Mackenzie’s benchmarking research – recruiting over 90 global institutional investors with £4.5 trillion of assets.

The research has led to the development of carbon benchmarks for supermarket and mobile telecoms companies, with investment of over £500,000 from major companies into further research. It also prompted a new initiative from the UN Principles for Responsible Investment, a network of 1,200 investors, to test the effectiveness of shareholder engagement strategies through a randomised trial with 2,200 companies.