On October 20, 2025, a coalition of nineteen leading companies in the energy, finance, and logistics sectors, launched the Carbon Measures Coalition, proposing a significant departure from established carbon accounting frameworks. The Coalition represents a prominent industry-led effort to move away from traditional inventory-based emission calculation methods toward a new model: ledger-based emissions tracking system that mirrors financial accounting.

This initiative emerges amid concerns about the limitations of existing carbon accounting frameworks, in particular the Greenhouse Gas (GHG) Protocol, which has served as the global standard for corporate emissions reporting for over two decades and is currently undergoing revisions. You can read our recent blog post covering the GHG Protocol’s proposed revisions here.

Certain critics have long argued that the GHG Protocol’s approach to categorizing emissions into three distinct categories (Scopes 1, 2, and 3) allows for double counting across value chains, fails to produce consistently comparable emissions data, and operates on annual reporting cycles that limit real-time decision-making. The Carbon Measures Coalition seeks to address these gaps by building on the E-ledgers methodology, a carbon measurement approach developed by professors Robert Kaplan and Karthik Ramanna in 2021 that treats emissions as transferable liabilities passed through the value chain from each stage of production to the next, and ultimately to their end-use.

This post explains the E-ledgers methodology, its potential benefits and drawbacks, and what companies should watch for as the Carbon Measures Coalition starts developing its guidelines in 2026.

The E-Ledgers Methodology: Carbon Accounting as Transaction Tracking

The E-ledgers approach reimagines how emissions are measured and attributed. Rather than estimating value chain emissions based on industry averages or prior-year disclosures, the E-ledgers system requires every entity in a supply chain—whether manufacturer, utility, logistics firm, or retailer—to maintain its own emissions ledger.

Each ledger records both the emissions the entity generates directly and the “embedded emissions” it inherits from the full set of its upstream suppliers. When a good or service is sold, these embedded emissions must be passed along to the purchaser, similar to how a financial liability would be transferred in general accounting. This handling of emissions as transferable liabilities also mirrors a value-added tax (VAT) system: just as VAT is calculated and paid at each stage of production, emissions liabilities (“E-liabilities”) are tracked and transferred with each economic transaction, seeking to create an unbroken chain of accountability from raw material to finished product.

For example, a steel mill would record its direct emissions from blast furnaces, plus the embedded emissions from the iron ore, coal, and electricity it purchased from suppliers. When it sells steel to an automotive manufacturer, it transfers the total embedded emissions (i.e., its own production emissions plus those inherited from upstream suppliers as apportioned to the relevant ton of steel) as an E-liability attached to each ton of steel. The automotive manufacturer then adds its assembly emissions and passes the cumulative E-liability to the car dealer, who ultimately transfers it to the end consumer.

This transaction-based model eliminates the need for scope-divided emissions. Rather than dividing emissions into direct and value chain categories, which often leads to double counting across entities, E-ledgers treat all emissions as traceable flows through the supply chain. Each emission is assigned once and only once, enabling mutually exclusive accounting and near real-time tracking of emissions as products move, allowing for unprecedented temporal precision.

The Carbon Measures Coalition: Industry-Led Standard Setting and Product-Level Focus

E-liability accounting remains in the prototype stage. The Carbon Measures Coalition’s October 2025 launch marks a key step toward putting E-ledgers into practice. With support from the International Chamber of Commerce (ICC), the Coalition will appoint independent experts from academia, industry, accounting, and civil society to a Technical Expert Panel on Carbon Accounting. The Panel will assess existing approaches, address challenges, and develop guidelines for product-level and policy implementation worldwide. The panelists’ work will be supported by an Advisory Group of 25 members, comprising representatives of the private sector and non-profit organizations, who will act as ambassadors for the initiative.

The Coalition will also focus on developing carbon intensity standards for key industrial products—including electricity, fuel, steel, concrete, and chemicals—that underpin most supply chains and collectively account for the majority of global emissions. This product-level focus would shift carbon accounting from an annual corporate reporting exercise to a continuous measurement system embedded in commercial transactions. Early pilot sectors will likely include steel, energy, and chemicals, with framework completion expected within two years and broader rollouts anticipated through 2027–2032.

The aim is to enable customers to make informed procurement decisions: a construction company procuring structural steel would be able to compare the carbon intensity (tCO₂e per ton of steel) across multiple suppliers and select lower-emission products, creating market incentives for decarbonization.

Why Now? Drivers of E-Ledgers Momentum

Several factors explain why ledger-based accounting is gaining momentum now, particularly among industrial and energy sector leaders:

• Regulatory pressure on Scope 3 reporting: As jurisdictions worldwide implement mandatory climate disclosure rules according to the GHG Protocol (e.g., California’s Climate Corporate Data Accountability Act  and the EU’s Corporate Sustainability Reporting Directive (CSRD)), companies face growing scrutiny of their value chain emissions. The fact that Scope 3 accounting includes emissions from sold products means that selling certain products—particularly hydrocarbons—is inherently linked to higher Scope 3 emissions. Ledger-based systems that transfer emissions liabilities to buyers offer an alternative model to seek to apportion responsibility for emissions across the value chain without double counting.

• Carbon border adjustments creating demand for product-level data: As more countries implement carbon pricing or import tariffs based on embedded emissions, reliable product-level data becomes essential for calculating these border adjustments accurately. The European Union’s Carbon Border Adjustment Mechanism (CBAM), for example, requires importers to report the embedded emissions in covered products (i.e., cement, iron and steel, aluminum, fertilizers, hydrogen and electricity). E-ledgers systems are specifically designed to provide this data with greater accuracy than current estimation methods and will become more powerful as border adjustment applies to more complex products over time.

• Frustration with inconsistency and double counting: The GHG Protocol’s reliance on industry averages and supplier estimates for Scope 3 calculations has led to some concerns about potential inconsistency, double counting, and limited comparability. Ledger-based systems would be more grounded in primary data and could help to ameliorate some of these concerns.

Challenges and What Companies Should Watch

Despite growing momentum, E-ledgers present several challenges and drawbacks that companies and other stakeholders should consider when evaluating whether and in what form to support or adopt a ledger-based system:

• Data infrastructure requirements: The system relies on a high degree of data granularity and coordination across supply chains. Companies must collect real-time emissions data and integrate it into digital systems.

• Allocation complexity: E-ledgers still face technical challenges in developing clear, consistent methods to allocate emissions across multi-product facilities where processes and equipment are shared. In sectors like chemical refining, steelmaking, or cement production, emissions from a single process often contribute to several distinct products, making tracing exact emissions footprints difficult. Standardizing allocation methods across industries will take time and industry collaboration.

• Data confidentiality concerns: Sharing emissions data across companies can expose sensitive production information and pose competitive risks. Participation will depend on strong legal safeguards and governance measures that protect commercially sensitive data.

• End-user accountability: It remains unclear how E-liabilities transferred to individual consumers (e.g., drivers or homeowners) would be tracked or managed over time. This reveals a core tension in the E-Ledgers approach: focusing solely on entities’ individual responsibility could fragment accountability for companies earlier in the value chain whose actions have the highest impact on aggregate emissions.

• Requires standardization and interoperability: Finally, E-ledgers’ accounting methodology remains in early testing and lacks codified standards defining emission boundaries, allocation, and quantification methods. It also departs markedly from the longstanding GHG Protocol framework, which many companies are well versed in applying.

Conclusion

With the Coalition’s expert panel beginning its roadmap design in 2026 and early rollout expected in 2027-2030, the Carbon Measures Coalition’s ledger-based framework offers potential advantages for accounting, procurement, carbon border adjustments, and market-based decarbonization incentives. At the same time, it faces potential technical and implementation hurdles.

For companies navigating the evolving carbon accounting landscape, a key question is whether E-ledgers will replace, complement, or ultimately converge with existing frameworks like the GHG Protocol. Broader financial sector engagement could accelerate momentum, particularly if major institutions integrate E-ledger data into climate risk frameworks and sustainability-linked financing.

Ultimately, the Carbon Measure Coalition’s success will depend on adoption. Companies may consider evaluating how ledger-based accounting might affect their climate strategies, supplier relationships, and reporting obligations in the future.

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Covington’s Carbon Management and Climate Mitigation group has extensive experience and capabilities advising on climate mitigation strategies.  Our global team is ready to assist clients as they engage with the current public consultation processes, understand and apply the GHG Protocol, implement their corporate net-zero goals, and identify strategic partnerships and funding opportunities to accelerate the energy transition.