Frequently Asked Questions
On the E-ledgers approach
E-ledgers helps companies to decarbonize their operations and supply chains.
Today, most emissions data is based on high-level estimates. That makes it hard for companies to manage, compare, or reduce emissions effectively.
The E-ledgers approach creates incentives for accurate, transaction-level emissions data to flow through value chains so companies can see where emissions actually occur and act on them. This allows companies to compete on emissions performance–just as they do on cost, quality, and delivery–and provides the accounting foundation needed for carbon markets to grow with credibility and scale.
The approach was developed by Professors Karthik Ramanna (Oxford) and Robert S. Kaplan (Harvard) in 2021.
The Institute is a nonprofit organization funded via grants from philanthropy active in the climate space.
E-ledgers is based on principles of financial accounting and cost accounting, and it works similar to a value-added approach:
- A company first calculates the emissions from its own operations.
- It then obtains emissions data from its immediate suppliers for the products it purchases.
- The company adds these direct and purchased emissions (E-liabilities) and allocates the total to the outputs it produces, less any removal offsets (E-assets).
- When those outputs are sold, the associated net emissions are transferred to the customer.
Markets function reliably at scale when there is trust in accounting numbers.
Financial markets work today because companies follow rigorous accounting rules. But that wasn’t always the case. In the early 20th century, financial reporting was inconsistent, opaque, and difficult to compare. The creation of Generally Accepted Accounting Principles (GAAP) made financial information accurate, comparable, and reliable. The resulting trust unlocked capital formation and enabled modern financial markets to scale.
We are at a similar moment with carbon emissions. Today, emissions data is fragmented, inconsistent, and difficult to verify across companies, sectors, and borders.
E-ledgers aims to do for carbon markets what GAAP did for financial markets: provide a robust and auditable accounting infrastructure that can be applied systemically and adopted across sectors and geographies.
Just as GAAP commodified financial information and unlocked modern capital markets, E-ledgers provides the foundational infrastructure that can underpin global competitiveness, carbon markets, and fair trade.
E-ledgers and the GHG Protocol serve different purposes:
- E-ledgers is an accounting system. It records emissions based on actual transactions and ensures the numbers add up across different companies. Its focus is accuracy, fungibility, comparability, verifiability, representational faithfulness, and avoidance of double counting.
- GHG Protocol is a disclosure framework. It can guide how companies report emissions publicly, including forward-looking information and estimates.
Accounting and disclosure are complementary and both matter for accountability and the effective functioning of markets. By providing an accounting foundation, E-ledgers can improve the quality of the data that companies can then disclose under existing reporting standards.
No. Broad participation improves accuracy, but universal adoption is not required on day one.
E-ledgers works “recursively” which means it improves period by period. A company starts by measuring its own emissions and collecting verified batch-specific primary data from its largest or most emissions-intensive suppliers. If supplier-specific data is not available, the company can use credible secondary data instead. The penalty for using secondary data increases with time, creating a progressive incentive for buyers to demand and suppliers to provide primary data.
As more entities begin using E-ledgers, primary data replaces estimates across the system. Each time a product’s emissions are calculated using the method, the accuracy of product emissions further down the value chain improves as well. Given the circularity of value chains, every new participant in the E-ledgers approach strengthens the quality of data across the system.
Over a few accounting cycles, this recursive process enables the replacement of estimates with verified primary data, allowing companies to credibly compete at scale on their low-emissions capabilities. The recursive process was used previously to introduce and improve the performance of GDP accounting worldwide, providing a precedent for E-ledgers’ theory of implementation.
Learn from organizations that have piloted the E-ledgers framework
Read about the journey to the end-state of E-ledgers adoption
Unlike current approaches, E-ledgers operates dynamically, which means data is continuously updated–as in an accounting system.
Traditional product-level tools, such as Life Cycle Assessments (LCAs) or Environmental Product Declarations (EPDs), are a first step toward a full E-ledgers system. These existing product-level tools typically rely on industry estimates and provide high-level static snapshots of product emissions, but they are often not useful for accurate comparisons across competing products and over time.
In the E-ledgers approach, emissions are calculated where they occur, allocated to outputs, and transferred alongside actual sales. The result is data that reflects real sourcing and production decisions, at the batch level, rewarding continuous innovation and decarbonization efforts.
No. E-ledgers accounting operates at the product-, entity-, jurisdiction-levels, just like financial accounting.
E-ledgers begins at the product level because that is where transactions occur, but the data aggregates consistently upward. Product-level accounts roll up to company-level totals. Company data can aggregate to sectors, jurisdictions, and ultimately to the global level. Because emissions are counted once and only once, totals remain coherent at every level.
This bottom-up structure ensures that the overall system can be “trued up” to actual anthropogenic emissions globally.
Learn how E-ledgers aggregate across levels
Watch a video on how E-ledgers track and aggregate emissions across the economy
No. All emissions within corporate, governmental, and consumer value chains are included in the E-ledgers system.
Moreover, end-use consumer emissions, such as from fuel combustion, can still be disclosed transparently by corporations alongside E-ledgers accounting. E-ledgers improves the accuracy of corporate emissions data, including in downstream reporting; it does not eliminate responsibility or reduce transparency.
No. E-ledgers is an emissions accounting system that tracks physical emissions–such as kgs of CO₂–regardless of the source of those emissions.
Activities that emit more GHGs carry higher emissions liabilities. Activities that emit less carry lower ones.
Yes, but only where offsets represent genuine carbon removals.
To reduce an emissions liability, offsets must represent real, durable removals, and not be double counted.
Carbon markets can only work well if the underlying emissions data is reliable. Today, those markets often rely on estimates, inconsistent methodologies, and fragmented reporting. That weakens trust, makes prices harder to interpret, and increases the risk of double counting.
E-ledgers strengthens carbon markets by providing a standardized accounting foundation. It records emissions once, tracks them through supply chains, and clearly separates emission reductions from carbon removals. This makes climate claims easier to verify and harder to overstate.
With more reliable data, carbon offsets can be compared more easily, reductions are clearer and counted, and audits are more straightforward. As a result, investors and buyers can direct capital toward lower-emissions producers and high-quality removal projects with greater confidence.
On the Institute’s work
There are several ways to collaborate with the E-ledgers Institute, depending on your organization’s goals, capabilities, and stage of emissions accounting readiness.
i. Pilot the E-ledgers approach
We work with companies, governments, and other organizations to test and refine the E-ledgers methodology through real-world pilots. We disseminate the experiences and learnings from these pilots, including recommending economy-wide standards for best practice.
Learn more about the pilot process
ii. Help move E-ledgers to enterprise-wide scale
We collaborate with technology providers, audit firms, and consulting firms to build the infrastructure and enabling processes required for organizations to move from pilot projects to widespread adoption of E-ledgers. Scalable solutions are essential to achieving widespread, reliable, and interoperable implementation across industries and jurisdictions.
We are especially interested in working with organizations that are testing platforms with corporate users and gathering insights on how those users are deploying the E-ledgers framework in practice.
Learn more about enabling E-ledgers to scale
Watch a video on how E-ledgers scales from pilots to global adoption
iii. Join our global network of collaborators
Transforming emissions accounting requires a broad coalition of champions across industries, governments, academic institutions, and civil society. Whether you’re advancing policy, supporting research, or building enabling infrastructure, we’d love to connect.
Piloting the E-ledgers method gives your organization access to accurate, verifiable, and real-time emissions data at the product-level, enabling smarter decision-making, and more credible sustainability claims.
By adopting the E-ledgers approach, your organization can:
- Simplify and strengthen emissions accounting: Reduce reliance on industry estimates and streamline reporting with precise, transaction-based data that can aggregate up to the entity-level.
- Compete on emissions performance: Provide trusted, product-level emissions information to customers, turning lower-emission products into a meaningful market advantage.
- Unlock energy-efficiency opportunities: Identify where emissions occur across your operations and supply chain, and collaborate with key partners to reduce them.
- Demonstrate accountability: Show shareholders, investors, regulators, and NGOs that you’re measuring what matters and creating value therein.
Learn about what a pilot looks like
Learn from organizations that have piloted the E-ledgers framework
E-ledger pilots are designed around a specific problem an organization wants to solve. The goal of the pilot is to build a first version of a system that can dynamically calculate the carbon content of inputs, processes, and outputs.
Key steps in the pilot process include:
- Scoping the pilot by identifying one or more products to assess, mapping production processes, and defining key emissions sources.
- Engaging suppliers and other partners to gather primary data and build buy-in.
- Collecting emissions data to allocate across outputs.
- Analyzing the results to generate insights and then sharing these results internally and externally.
Our Proto-Standards are freely available for public use, and we offer, where feasible, pro-bono technical guidance to organizations piloting E-ledgers accounting. The Institute works closely with pilot teams at every stage–from scoping to final analysis–and typically meets every 2-4 weeks to support progress and address questions. Most pilots take about 6 months from start to finish, depending on data availability, supplier engagement, and internal alignment.
On E-ledgers principles
Looking for detailed guidance on implementing the E-ledgers framework? Start with the Proto-Standards for the auditing and accounting of product-level emissions and carbon removals.
For additional support, explore the technical FAQs below, where we answer common questions about data, methodology, and system integration.
Embedded emissions are those from all upstream activities through to those from an entity’s own operational activities to produce an output. Embedded emissions are often referred to as cradle-to-gate emissions.
An organization can account for their embedded emissions as follows:
- Measure the direct emissions from its own operations .
- Obtain emissions data from its immediate (or tier-one) suppliers for the products it has purchased.
- Allocate the sum of (1) and (2) to the outputs produced, less any removal offsets.
- When those outputs are sold, transfer those emissions to the customer, akin to inventory accounting.
Electricity is treated like any other purchased input. The electricity supplier reports emissions per kilowatt-hour (kWh), covering, for instance: direct emissions from fossil fuel use (where relevant); depreciation of emissions from generation, transmission, and distribution infrastructure; and emissions from line losses during delivery.
In E-ledgers, the responsibility of reporting electricity emissions therefore sits with the producer, not the buyer, and the embedded emissions data includes both capital and operating emissions.
Learn more about the treatment of electricity emissions on page 25 of the E-liability Proto-Standard
Emissions should be allocated using causal logic: a deductive, empirically grounded method that reflects what causes emissions in the production process. This ensures allocations are grounded in physical reality, auditable, and consistent with input-process-output flows.
The total emissions from a process must equal the total emissions allocated to outputs. Allocation cannot add or remove emissions.
Learn more about the causal logic principle on pages 17-18 of the E-liability Proto-Standard
E-ledgers is a full-allocation system. This means all emissions created by an organization must eventually be assigned to its outputs over a reasonable time period.
This includes emissions that are not directly tied to a specific product or service (i.e., the equivalent of indirect costs). Examples include overhead activities, like CEO jet travel and headquarters administration, as well as joint and site-level emissions like shared infrastructure or utilities.
Watch a video on how emissions are allocated to outputs
Learn more about full allocation of emissions on pages 28-31 of the E-liability Proto-Standard
Emissions from capital equipment should be allocated to the products it helps to produce. Capitalized emissions are depreciated over the equipment’s useful life, typically the shorter of when the equipment becomes technologically outdated or when it physically wears out. The simplest approach is straight-line depreciation, which spreads emissions evenly over the asset’s life.
If production is expected to change over time, the depreciation schedule can be adjusted so emissions are allocated in a way that better reflects actual production patterns.
Learn more about the treatment of capitalized emissions on page 28 of the E-liability Proto-Standard
Organizations should account for the future emissions expected when their capital assets are disposed of or decommissioned. Because these emissions arise from using the assets today, they are related to current operations. If they are material, organizations should make reasonable estimates of these future emissions and allocate these proportionally to current and future outputs using a causal logic.
E-ledgers accounting does not include downstream emissions for three reasons:
- Accounting for downstream emissions requires speculation about emissions quantities yet to occur by parties that are not necessarily known to the company.
- A company has limited-to-no control over how its downstream customers use its products.
- A downstream company is already accountable for all its cradle-to-gate emissions generated through its purchasing and production decisions.
Multi-counting diffuses accountability. Theoretically, accountability of emissions should lie with the entities that have some control over them. However, we can’t realistically expect all individual end-consumers worldwide to maintain personal E-ledgers. This introduces a need for companies to assume some downstream accountability through disclosure (not accounting).
Explore the three guiding principles for downstream emissions disclosures
Read the paper on Principles and Content for Downstream Emissions Disclosures