Carbon Accounting Glossary

The concept that carbon offset projects must result in emission reductions that would not have occurred without the project. This ensures that offsets represent real, additional climate benefits beyond business-as-usual scenarios.

A reference point for measuring changes in greenhouse gas emissions over time. Baselines are typically established using historical data and represent the emissions that would occur without intervention or improvement measures.

The process of measuring, recording, and reporting greenhouse gas emissions and removals. Carbon accounting provides the foundation for understanding an organization's climate impact and tracking progress toward reduction goals.

A tradeable certificate representing one metric ton of CO2 equivalent that has been avoided, reduced, or removed from the atmosphere. Carbon credits can be purchased to offset emissions that cannot be eliminated directly.

The total amount of greenhouse gases produced directly and indirectly by an individual, organization, event, or product, usually expressed in equivalent tons of carbon dioxide (CO2e).

A measure of carbon emissions per unit of economic output, production, or activity. Carbon intensity metrics help normalize emissions data for comparison and benchmarking purposes.

A state where an organization's net carbon emissions are zero, achieved through a combination of emission reductions and carbon offsets. Carbon neutrality typically applies to a specific scope of emissions over a defined time period.

Activities that compensate for greenhouse gas emissions by funding projects that remove or avoid equivalent amounts of CO2 from the atmosphere, such as reforestation, renewable energy, or methane capture projects.

A metric used to compare the warming potential of different greenhouse gases to carbon dioxide. CO2e allows all greenhouse gases to be expressed in a common unit based on their Global Warming Potential.

European Union regulation requiring large companies to report on sustainability matters including climate-related risks, opportunities, and impacts. CSRD significantly expands sustainability reporting requirements compared to previous directives.

A concept in sustainability reporting that considers both how sustainability issues affect a company's financial performance (financial materiality) and how the company's activities impact society and the environment (impact materiality).

A coefficient that quantifies the emissions per unit of activity data. Emission factors are used to convert activity data (such as fuel consumption or electricity use) into greenhouse gas emissions.

A comprehensive accounting of greenhouse gas emissions from all sources within a defined boundary over a specific time period. An emissions inventory forms the basis for carbon management and reduction strategies.

Greenhouse gas emissions associated with financial institutions' investments and lending activities. Financed emissions are typically the largest component of Scope 3 emissions for banks, insurers, and asset managers.

The Greenhouse Gas Protocol is the world's most widely used greenhouse gas accounting standard, providing comprehensive frameworks for measuring and managing greenhouse gas emissions from private and public sector operations.

A measure of how much energy the emissions of one ton of a greenhouse gas will absorb over a given period of time, relative to the emissions of one ton of carbon dioxide. GWP values are used to convert different greenhouse gases to CO2 equivalents.

Gases in the atmosphere that trap heat and contribute to global warming. The main greenhouse gases covered by carbon accounting include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases.

A methodology for assessing the environmental impacts of a product or service throughout its entire life cycle, from raw material extraction through production, use, and end-of-life disposal or recycling.

An approach for calculating Scope 2 emissions that uses average emission factors for the electricity grids where energy consumption occurs. This method reflects the average emissions intensity of the grid.

An approach for calculating Scope 2 emissions that uses emission factors from contractual instruments such as renewable energy certificates, power purchase agreements, or supplier-specific emission rates.

The process of identifying and prioritizing the most significant environmental, social, and governance issues for an organization based on their potential impact on the business and stakeholders.

A state where greenhouse gas emissions are balanced by removals from the atmosphere. Net zero typically requires deep emission reductions (90-95%) with remaining emissions offset by permanent carbon removals.

The definition of which emissions sources are included in an organization's greenhouse gas inventory. The operational boundary determines whether emissions are classified as Scope 1, 2, or 3.

The definition of which operations and entities are included in an organization's greenhouse gas inventory. Organizations can choose equity share, financial control, or operational control approaches for setting boundaries.

The Partnership for Carbon Accounting Financials is a global partnership of financial institutions working to develop and implement a harmonized approach to assess and disclose greenhouse gas emissions associated with loans and investments.

The total greenhouse gas emissions generated by a product over its life cycle, from raw material extraction through production, distribution, use, and end-of-life treatment.

Emission reduction targets that are aligned with the level of decarbonization required to keep global temperature increase to 1.5°C above pre-industrial levels, as defined by climate science.

Direct greenhouse gas emissions from sources owned or controlled by an organization, such as fuel combustion in company vehicles, boilers, or manufacturing processes.

Indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by an organization. These emissions occur at the facility where energy is generated.

All other indirect greenhouse gas emissions that occur in an organization's value chain, including both upstream and downstream activities. Scope 3 often represents the largest portion of an organization's carbon footprint.

The Task Force on Climate-related Financial Disclosures provides recommendations for climate-related financial disclosures that help organizations provide better information to support informed capital allocation decisions.

The process of having greenhouse gas emissions data and methodologies reviewed by an independent third party to ensure accuracy, completeness, and compliance with relevant standards and requirements.