Corporate Carbon Accounting: Current Practices and Opportunities for Research

This article reviews current corporate carbon accounting practices, future research opportunities in this field, explores challenges, and suggests remedies to address those challenges. This research utilises secondary data, including article reviews, and examines various greenhouse gas protocols and frameworks, such as the GHG protocol, ISO, GRI, and sustainability reports. This study highlights the current carbon accounting practices, opportunity of research in this field, challenges of carbon accounting and finally remedies to over with these challenges. At last, we conclude that carbon accounting has many benefits and challenges too. A company must implement carbon accounting as sustainability is become essential.

The economic consequences of climate change and the function of carbon accounting in climate change have attracted increased attention from the research community. Although various studies have investigated climate change and carbon accounting, no systematic literature analysis has been conducted to provide a comprehensive overview of carbon financial accounting. Thus, the current paper gains insights into the key research domains and outlines future research directions and opportunities for carbon financial accounting by using systematic literature review. This paper adopts a methodological approach of systematic literature review, as suggested by Linnenluecke et al. (2020) with a final sample of 43 academic papers published from 2002 to 2022. Papers in this domain discuss seven topics: debates on IFRIC 3, the diversity of approaches to accounting practices, redefining emission allowance, valuation of emission allowance, a high level of non-disclosure, carbon accounting for sustainability governance, and responses of accountancy professionals. There are several issues to explore in future research, including investigating the interactions among different carbon accounting frames, applying new theoretical views and empirical methods to develop how decisions around carbon financial accounting are made, and providing more research on less developed countries. This paper conducts a systematic literature review of the theories and practices of carbon financial accounting. It makes contributions to the academic community by highlighting several key topics and research avenues that may impact the theory and practice related to carbon financial accounting and climate change. Keywords: carbon financial accounting, systematic literature review, carbon emission allowance, climate change. DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.60.91

This paper describes the development of and gaps in knowledge in research on carbon accounting based on a systematic review of 117 papers published in influential accounting journals between 2005 and 2018. The review shows the literature has developed into four major streams of carbon accounting: carbon disclosure, management, performance and assurance, and that carbon accounting is emerging as a distinct discipline. Finally, our paper highlights future research opportunities to improve carbon accounting, so it can play an even more important role to help business achieve the climate goals of the Paris Agreement.

The Influence of Institutional and Stakeholder Pressures on Carbon Disclosure Strategies: An Investigation in the Global Logistics Industry

China’s carbon accounting system in the context of carbon neutrality: Current situation, challenges and suggestions

The study examined the theoretical motivation for carbon disclosure and its adequacy for deliberate responsible action. Generally, there is an increase in corporate carbon disclosures in the business sector. Organizations are mostly disclosing their carbon emissions through annual reports, integrated reports, or stand-alone sustainability reports for different reasons and motives. However, the study infers that the quality and adequacy of the current disclosures are debatable due to a lack of consistency and technical details. The causal reason may be due to the inherently voluntary nature of the corporate carbon disclosure. The study finds that there is less research on carbon accounting and disclosures in developing countries especially, in Africa. There is a need for organizations to streamline the application and approaches to carbon accounting. The study suggests the necessity for government regulators and standard setters in accounting to provide a framework that will guide carbon disclosure practices.

Background: As climate change accelerates, corporations are under pressure to manage and report their greenhouse gas (GHG) emissions. While various carbon accounting tools and environmental management practices exist, adoption is inconsistent and effectiveness in reducing emissions is debated. Small and mediumsized enterprises (SMEs) which make up a significant portion of global economic activity and pollution are often overlooked in policy and research. Objective: To systematically review the empirical evidence on the drivers, barriers and outcomes of corporate GHG accounting and management practice adoption with a focus on the role of managerial, organisational and policy factors in large corporations and SMEs. Methods: A systematic search was conducted across Scopus, Web of Science and Google Scholar from inception till date using comprehensive search terms for corporate environmental management, GHG accounting and performance outcomes. The search process was supplemented by screening reference lists of included articles. From an initial pool of 1249 identified records, 52 full text articles were assessed for eligibility resulting in 24 studies that met the predefined criteria. The diverse methodologies of the included studies (e.g. econometric analyses, case studies, surveys and literature reviews) precluded a quantitative metaanalysis; therefore, a narrative synthesis was performed. Study quality was critically appraised using design appropriate criteria. Results: The evidence shows a complex interplay of factors influencing GHG management adoption. Key external drivers are regulatory pressure, investor and stakeholder demands and the pursuit of legitimacy. Internal motivations are dominated by financial benefits (cost savings and competitive advantage) and managerial values and environmental awareness. For SMEs the barriers are severe: (1) resource constraints (financial, personnel and time); (2) lack of specialist knowledge and technical expertise; (3) difficulty in getting reliable data for comprehensive accounting. Managerial characteristics (executive ability, personal values and environmental attitudes) emerged as key determinants of both adoption and environmental performance. Several studies found a troubling disconnect where formal environmental practices were adopted but didnot lead to significant emissions reductions – greenwashing. Others found ―green blushing‖ where SMEs took substantive environmental action without formal reporting. Conclusion: Corporate carbon management is a balance of external pressure and internal capability with managerial will and ability being the oftenoverlooked key. The big implementation gap especially in SMEs shows that current policies and tools are not aligned with their reality. Future policy must move beyond one size fits all mandates to offer targeted, resource appropriate support and simple accounting frameworks to bridge the gap between corporate intention and climate action.

Current corporate disclosures regarding carbon emissions lack generally accepted accounting rules. The transactional carbon accounting system described here takes the rules of historical cost accounting for operating assets as a template for generating carbon emissions (CE) statements comprising a balance sheet and a flow statement. The asset side of the CE balance sheet reports the carbon emissions embodied in operating assets. The liability side conveys the firm’s cumulative direct emissions into the atmosphere as well as the cumulative emissions embodied in goods acquired from suppliers less those sold to customers. Flow statements report the company’s annual corporate carbon footprint calculated as the cradle-to-gate carbon footprint of goods sold during the current period. Taken together, balance sheets and flow statements generate key performance indicators of a company’s past, current, and future performance in the domain of carbon emissions.

This paper is based on a systematic review of the development of carbon accounting research and knowledge gaps. The audit shows thewriting has formed into four significant floods of carbon bookkeeping: carbon disclosure, management, performance, and assurance, in addition to the fact that carbon accounting is beginning to emerge as its distinct Field. Last but not least, our paper highlights future research opportunities to enhance carbon accounting to aid businesses even more in achieving the Paris Agreement's climate goals and GHG protocol

This paper examines the effectiveness of carbon accounting as a strategic tool for reducing corporate carbon footprints. Carbon accounting, which involves quantifying and managing greenhouse gas (GHG) emissions, has gained traction as corporations face increasing regulatory pressures and stakeholder demands for sustainable practices. Through a review of empirical studies and corporate case analyses, this paper assesses how carbon accounting influences environmental strategies, decision-making, and overall emissions reduction in various sectors. Findings indicate that carbon accounting is most effective when integrated into broader environmental management systems, supported by transparent reporting practices, and paired with corporate commitments to emissions reduction targets. Additionally, carbon accounting enhances corporate accountability by enabling better tracking of Scope 1, 2, and 3 emissions, fostering more precise identification of emissions hotspots. However, challenges remain, particularly in accurately capturing indirect emissions (Scope 3) and establishing standardized methodologies across industries. This study underscores the role of carbon accounting as an essential component in corporate sustainability efforts, while also identifying areas for further improvement, including the need for standardization, improved data quality, and integration with emerging digital tools like blockchain. The findings contribute to understanding carbon accounting’s impact on sustainability practices, supporting companies in achieving more measurable and transparent carbon reduction outcomes.

Introduction:Research has shown the negative impacts of climate change on the economy and how the state of the environment has been a complex global challenge. Prior studies have suggested immediate actions to avoid any unforeseen circumstances for all living things on Earth. Previous research has also supported all kinds of sustainability efforts as resolutions to address the deterioration of climate change caused by business activities. Originality: There is a need for companies to start acting and assigning employees to mitigate carbon emitted by corporations. This study is motivated by the lack of empirical evidence that examines how corporate carbon governance influences better carbon performance of organizations and authorizes organizations to implement and embed carbon accounting. Objective: This study used evidence from Malaysia to explore this subject matter and examined the association between carbon governance and carbon performance of corporations. The research also investigated the mediation effect of carbon accounting with respect to carbon governance and carbon performance. Findings: It is revealed that carbon governance had no significant influence on an organization’s carbon performance although carbon accounting implementation positively influenced carbon performance. The findings imply that despite its insignificance, carbon accounting remains a vital matter to be deployed by organizations for better carbon emission mitigation.

While climate change policies and negotiations are developing and scientist are urging for more action, in most countries progress remains on a low level and the macro figures indicate that climate change becomes even more critical. As a reaction to this, some advanced business leaders have initiated various actions and projects with their companies, and various regulations have been introduced by governments with varying levels of effectiveness. In this context of a mix of international initiatives, media attention, customer irritation, diverse regulatory changes and partial political lethargy, ever more companies are challenged to identify and reduce their exposure to climate change issues. Whereas the reduction of climate change emissions is an important topic, it has also become obvious that climate change is not just a future risk but is already happening. This invokes adaptation activities in addition to mitigation strategies and measures. A basic requirement to design the corporate climate strategy is the knowledge about the company’s exposure as well as about options, effects and costs of emission reductions and adaptation measures. This is where climate change accounting as a specific kind of environmental management accounting comes into play. This introductory section outlines core questions and approaches.

Corporate Carbon and Climate Accounting

Greenhouse gas (GHG) emissions control requires coordinated efforts and collaboration at all levels of governmental bodies, non-for-profit organizations, and private sectors. However, the target is difficult to achieve due to challenges arising from conflicts of interest and lack of trust between stakeholders. Thus, we propose a distributed carbon ledger (DCL) system using blockchain technology. Our analysis suggests that the adoption of DCL not only strengthens the corporate accounting system for carbon asset management but also fits within existing market-based emissions trading schemes (ETSs). Blockchain-enabled DCL allows the integration of national emission trading schemes (ETSs) and corporate carbon asset management into a synthetic single mechanism. JEL Classifications: M41; O44.

Rapid transformation from agriculture to industrialized economy in Malaysia has evidently attributed to the accelerated increase in carbon emissions. Carbon emission growth that led to climate change is a very complex spectacle and that is when carbon accounting has emerged. The emergence of carbon accounting has assisted and motivates organizations in achieving their carbon reduction objectives because the system is considered essential in combating climate change. Despite that, the accounting methodology used for climate change remains poorly understood in the current business sphere. As such, it is argued that if carbon strategy is deliberated properly by an organization, carbon accounting will effectively outlines the effects on carbon performance. Enhancing profits is the focal point, but the focus on the sustainable development of the business in the future is crucial. This paper discusses interlinks of corporate carbon strategies, carbon accounting and carbon performance of organizations in Malaysia.