Carbon Accounting

Corporate decarbonization policy has stagnated under ideological divisions. Arguing that anthropogenic emissions are driven by customer preferences and that such preferences can shift with improved information, Karthik Ramanna advocates for a new approach: an economy-wide system of reliable and comparable accounts of the embedded emissions in products to allow customers (and investors) to make more-informed decisions aligned with underlying preferences. In part II of his two-part series (read part I here), Ramanna explores the principles of an accounting methodology to provide better greenhouse gas emissions data to business customers and consumers and the reasons why, based on historical precedent, such a system is readily adoptable and likely to prove effective. 

Corporate decarbonization policy has stagnated under ideological divisions. Arguing that anthropogenic emissions are driven by customer preferences and that such preferences can shift with improved information, Karthik Ramanna advocates for a new approach: an economy-wide system of reliable and comparable accounts of the embedded emissions in products to allow customers (and investors) to make better-informed decisions aligned with underlying preferences. In the first of two articles, Ramanna discusses why top-down regulatory approaches to reduce greenhouse gas emissions have failed to generate decarbonization at meaningful scales and the virtues of a pro-market approach to incentivizing and enabling greener corporate and consumer behavior.

Robert Kaplan and Karthik Ramanna propose a new approach for verifiable accounting on indirect corporate emissions that would apply to all corporations, increase incentives...