What Changed
- The Technical Expert Panel on Carbon Accounting introduced a double-entry style accounting framework to trace embedded emissions across global supply chains.
- Public consultations are scheduled for the Conceptual Framework in December 2026 and selected Accounting Rules chapters in Q1 2027.
- The initiative directly addresses compliance needs under trade mechanisms including the EU CBAM, UK carbon border measures, and public procurement rules.
Background and Context
Tracking the carbon footprint of industrial goods as they pass through global value chains remains one of the most complex challenges in modern climate governance and international trade. While measuring direct emissions at an individual facility—such as a steel mill or cement plant—is relatively well understood, tracking those embedded emissions as raw materials move through multiple processing stages into finished consumer goods, such as automobiles or buildings, presents significant technical hurdles. Under current practices, specific operational emissions figures are frequently replaced with broad industry averages by the time a finished product reaches market. This lack of granular traceability masks the actual emissions performance of individual producers.
This accounting shortfall has immediate economic consequences for businesses operating internationally. Since January, the European Union's Carbon Border Adjustment Mechanism (CBAM) has levied charges on importers of steel, cement, aluminium, fertiliser, and hydrogen based on the carbon embedded in their products. Certificates covering emissions for 2026 imports are scheduled to go on sale in February 2027. Concurrently, Britain is initiating its own border carbon adjustment regime starting in January, and numerous governments are introducing explicit carbon limits into public procurement tenders. Because corporate value chains account for the vast majority of global greenhouse gas emissions—according to the Intergovernmental Panel on Climate Change (IPCC)—the inability to trace carbon accurately along supply chains prevents procurement teams, regulators, and consumers from rewarding low-emission manufacturing.
The TEP Carbon Accounting Framework
To address this gap, the Technical Expert Panel on Carbon Accounting, convened by the International Chamber of Commerce (ICC) and Carbon Measures, is developing the TEP Carbon Accounting Framework. Co-chaired by Amy Brachio, CEO of Carbon Measures, and Karthik Ramanna, Professor at Oxford University's Blavatnik School of Government, the panel seeks to establish a standardized, shared methodology for recording embedded emissions and transferring those records along supply chains alongside physical goods.
The framework proposes treating carbon flows in a manner analogous to financial accounting inventory management. Under this approach, each enterprise records the emissions generated by its own operations, adds the emissions associated with incoming purchases, allocates the cumulative total to its outputs, and transfers that data to buyers upon sale. When aggregated across an entire supply chain, these double-entry style ledgers can be reconciled in the same way financial accounts are audited.
The ecosystem operates across three interconnected layers:
1. Data and quantification: Establishing physical emissions quantities;
2. Accounting rules and systems: Governing the recognition, allocation, transfer, and reconciliation of emissions records;
3. Applications: Utilizing finalized records for procurement decisions, regulatory filings, corporate disclosures, environmental product declarations (EPDs), and investment assessments.
Critically, the framework is designed to complement—rather than replace—existing standards such as the Greenhouse Gas Protocol (GHG Protocol) and EPDs by supplying them with traceable, audit-ready underlying data from a single set of books.
Practical Implications for Global Enterprise
The implementation of a standardized carbon ledger system introduces several practical shifts for cross-border commerce:
- Smart Procurement: Purchasing managers inheriting verifiable supplier emissions data can directly demonstrate lower carbon intensity in their own products, creating market incentives for carbon-efficient suppliers.
- Administrative Efficiency: A single ledger record can simultaneously satisfy the distinct reporting requirements of corporate customers, customs authorities, and EPD certifiers, eliminating the need to calculate separate figures from scratch for different entities.
- Auditability: Emissions data can be independently verified by third-party auditors by reconciling figures against upstream supplier ledgers.
- Emerging Economy Safeguards: The framework plans to incorporate phase-in rules and proportionate arrangements to ensure smaller producers, particularly those in emerging economies, are not excluded from international supply chains.
Open technical challenges remaining under review include methodologies for allocating emissions among co-products, accounting for biogenic carbon, measuring electricity emissions, and handling carbon removals cost-effectively.
Development Roadmap and Next Steps
The panel is structuring the framework across three pillars:
- Conceptual Framework: Establishing core definitions, scope, and guiding principles. Public consultation is scheduled for December 2026.
- Accounting Rules: Standardizing ledger design, operational boundaries, measurement, allocation, transfers, removals, and audit assurance. Selected chapters will be released for consultation in Q1 2027.
- Implementation Guidance: Providing practical rules for digital integration, supply chain adoption, and small business accommodations, with publication timing aligned with the accounting rules.
The panel continues to solicit stakeholder feedback from governments, standard-setters, and private enterprises, with planned engagements at COP31 in Antalya and subsequent international forums.
Frequently Asked Questions
Q1: What problem in current carbon reporting does the TEP framework aim to solve?
A1: Currently, companies often calculate different emissions figures from scratch for different stakeholders (such as customs, customers, or EPDs) or rely on industry averages. The TEP framework introduces a standardized, ledger-based system that allows embedded emissions to be consistently recorded, transferred, and audited across multi-tier supply chains.
Q2: How does the framework interact with existing standards like the GHG Protocol?
A2: The framework does not replace existing standards. Instead, it operates as an underlying accounting layer that feeds consistent, auditable data into established disclosure frameworks like the GHG Protocol and Environmental Product Declarations (EPDs).
Q3: When will draft sections of the framework be released for public feedback?
A3: The Conceptual Framework is scheduled for public comment in December 2026, followed by the publication of selected chapters of the Accounting Rules for consultation in the first quarter of 2027.
Q4: What technical and policy issues remain under development by the expert panel?
A4: Remaining technical topics include the allocation of emissions across co-products, accounting for biogenic carbon, electricity emissions, carbon removals, and establishing phase-in rules for smaller producers in emerging economies.
Who May Be Affected
Exporters, importers, manufacturers, procurement teams, auditors, and standard-setters dealing with carbon-intensive goods such as steel, cement, aluminium, fertiliser, and hydrogen.
Cross-Border Context
Importers into the European Union and the UK must account for embedded emissions under CBAM and related regulations; the TEP framework provides a standardized international ledger to pass auditable emissions data across cross-border supply chains.
What to check next
- Public comment release of the Conceptual Framework in December 2026
- Consultation on selected Accounting Rules chapters in Q1 2027
- Panel discussions and input at COP31 in Antalya
This article provides general information and does not constitute legal advice. Consult the official text and obtain advice appropriate to your circumstances where needed.