A group of companies including Exxon Mobil (NYSE:XOM) and BlackRock’s (NYSE:BLK) Global Infrastructure Partners have joined forces to develop a new way to measure carbon emissions of the products they make, buy and finance, Bloomberg reported Monday.
The group, which also lists chemicals company BASF, bank Banco Santander and the Ernst & Young consultancy, will develop a framework that eliminates double-counting of carbon pollution and attributes emissions to their sources, according to Amy Brachio, the top executive of the newly formed Carbon Measures.
Bloomberg said the initiative is part of an area of climate finance that is controversial but set to become more consequential, as regulations such as Europe’s carbon border adjustment mechanism start, raising pressure on companies and their investors to address their carbon footprints.
Critics of the current system, which was developed in the 1990s, say it allows multiple entities to count the same CO2 molecules, leading to inaccurate estimates of overall emissions, while proponents say the issue of double counting is a feature rather than a glitch because it raises the likelihood that multiple entities will cut their emissions.
Brachio said the Carbon Measures framework will lay the groundwork for calculating the carbon intensity of individual products, a move that will allow investors to reward low-carbon production.