This insight article is the first in a series focused on GHG Accounting for Reality. The series will offer practical advice for organisations wanting to understand, or reduce their GHG emissions, helping them continue to make progress despite the complexity of carbon footprinting and the nuanced challenges faced by different sectors.
Our low carbon economy expert Michael Kirk-Smith examines current GHG accounting frameworks and their limitations, including where the avoided emissions of organisations’ whose business models prevent emissions remain outside formal GHG inventories.
Efforts to measure and reduce greenhouse gas (GHG) emissions are essential to tackling the climate crisis, and GHG accounting has become a central tool in helping organisations understand and reduce their impact. However, the current accounting frameworks—while robust and well intentioned—do not always capture the full picture. In particular, organisations whose business models prevent emissions from occurring in the first place often find that their contributions are not reflected in conventional reporting. This article explores these limitations and explains why avoided emissions remain outside formal GHG inventories, while encouraging organisations to continue making progress even where accounting frameworks fall short.
Understanding greenhouse gas accounting
GHG accounting refers to the process of quantifying an organisation’s GHG emission sources and sinks. Although its immediate purpose is measurement, its ultimate goal is reduction. The widely quoted maxim, “you can’t manage what you don’t measure,” reflects this principle.
Avoided emissions are defined as GHG emissions that would have occurred had a given product, service, or process not existed. For example, a company salvaging used textiles can argue that it avoids emissions in two ways: by preventing the materials from degrading or being incinerated, and by reducing demand for new textile production. While conceptually clear, avoided emissions remain outside the boundaries of Scope 1, 2, and 3 accounting.
The GHG Protocol, originally developed as the Corporate Standard, remains the foundation for most organisational GHG accounting. Designed in the early days of emissions reporting (2004)—and shaped by the industries involved at the time, such as automotive and petrochemical companies—the GHG Protocol prioritises quantifying emissions that had actually occurred, rather than on sinks or hypothetical avoided emissions. And emissions savings from recycling/reuse are incorporated by the GHG Protocol, but from the perspective of the materials purchaser (who benefits from the lower GHG-intensity materials compared to purchasing virgin materials), rather than from the perspective of organisations that facilitate the recycling/reuse of materials after they have been used. An organisation facilitating recycling can only count the emissions from its activities in its GHG Protocol account, not the benefits it brings to society from that effort.
Although additional guidance on avoided emissions has emerged over the years, the category continues to be treated separately from an organisation’s formal GHG inventory.
Why this creates challenges for some organisations
For organisations that fundamentally exist to reduce waste, extend product life cycles, or prevent emissions, the decision to exclude end of life benefits from the GHG Protocol can feel disheartening. As net zero targets become more stringent, many resource management businesses find that they are unlikely to meet them on paper—even when their work materially reduces society’s emissions.
This issue is particularly acute among circular economy organisations, including recyclers and charities that collect, repair, or resell clothing and other goods. These entities often reasonably contribute significantly to emissions avoidance. Yet GHG accounting frameworks such as the Science Based Targets initiative (SBTi), which are built on the GHG Protocol, do not count this impact toward corporate net zero pathways. For those organisations, avoided emissions accounting offers a route towards seeing some benefit from their work in the GHG Protocol accounting framework.
Why avoided emissions must remain separate
Although linked to the GHG Protocol framework, avoided emissions should not be integrated into GHG inventories. Avoided emissions are inherently hypothetical: they rely on assumptions about what would have happened in an alternate scenario. Consider an energy efficient lightbulb. To estimate avoided emissions, one must define the baseline lightbulb that would otherwise have been used. These calculations require assumptions about its efficiency, usage, lifespan, energy mix, and more. By contrast, a GHG inventory measures emissions that actually occurred—a fundamentally different exercise. This means there is a risk of greenwashing due to poorly designed avoided emissions accounting scenarios. Without controls, companies could easily choose a biased hypothesis to make themselves look better.
However, such controls do exist; perhaps the most meaningful is the refined Guidance on Avoided Emissions release in 2025 by the World Business Council for Sustainable Development (WBCSD). The guidance aims to reduce greenwashing risk by imposing strict criteria for defining baselines and requiring transparency around assumptions, such as grid electricity composition and product lifetimes. However, even with these improvements, the WBCSD continues to advise against subtracting avoided emissions from a company’s GHG inventory, acknowledging the conceptual and methodological differences between them.
Moving forward: Measuring progress beyond accounting standards
The GHG Protocol and the SBTi remain essential tools, but they are not the only methods available for understanding climate impact. Organisations that generate meaningful avoided emissions should absolutely report avoided emissions. While they cannot include them in their Scope 1, 2, and 3 inventories, they can and should report them alongside such information.
More and more guidance is emerging on how to report avoided emissions responsibly, consistently, and credibly while minimising the risk of misinterpretation or overstatement. Eunomia is working with organisations to navigate this complex landscape by identifying relevant standards, interpreting technical requirements, and developing robust reporting methodologies.
Ultimately, organisations should not let the imperfections of accounting frameworks impede climate action. Raising awareness of methodological limitations is important so that we don’t unwittingly encourage the wrong actions. However, it shouldn’t get in the way of taking action when the correct course is already clear. It is telling that the famous saying quoted at the top of this article (“you can’t manage what you don’t measure”) is, in fact a misquotation. W. Edwards Deming actually said the opposite of this, and that to believe otherwise was a “costly myth”. Measurement matters—but it should not overshadow progress.
At Eunomia, we’ve helped several clients in the circular economy space quantify their GHG Inventories: