Carbon accounting as a new measurement standard

Carbon accounting is a system of measurement technologies designed to gather data on CO₂ emissions, collate it, and communicate it – both within and between social entities. In this, I follow Bebbington and Larringa-Gonzalez (2008: 698) in broadening a narrow view of carbon accounting from ‘the valuation of assets (such as granted pollution rights) and liabilities (if an organisation is obliged to cover their emissions)’ to ‘the diverse ways in which accounting is involved in the broader process of change associated with global climate change’. In the next decade or so, we can expect carbon accounting processes, norms and procedures to be standardised, resulting in a core set of dominant designs. However, the norms currently around carbon accounting are not yet settled, so there is considerable uncertainty about which measurement and reporting conventions will become widely adopted and become the eventual standard.

Carbon accounting technologies are evolving at the scientific, organisational and nation-state levels. Carbon accounting has many similarities with other accounting systems: it is a quantitative record of a particular unit that is established according to measurement rules and procedures and then communicated within and beyond measuring entities. However, accounting for carbon also differs from other accounting systems in that it is directly tied to emerging GHG regulatory or voluntary schemes and in that the value of the unit recorded is not monetary unless translated through the price of carbon on a commodity market. The carbon accounting system is also unusual in that it is evolving within the context of innovations in developing consensus on scientific facts and with the engagement of experts from a variety of unconventional sources (especially NGOs) (Callon Reference Callon2009). Investment in carbon accounting is an example of corporate environmentalism in that firms commit resources to measuring, disclosing and reporting their carbon performance either as a precursor to enhancing their performance in managing carbon emissions or as an audience-seeking signal to interested stakeholders.

Economists analyse carbon markets as a set of technical questions for solving market failures by including externalities, focusing on the costs and benefits of various instruments to incorporate environmental costs (Hepburn Reference Hepburn2006). Yet, there is increasing recognition that these markets are developed through ‘a laborious and ongoing process of construction of spaces for calculation and transaction, of accounting systems that determine both who is accountable and how and what to count and not to count’ (Lohmann Reference Lohmann2009: 500). These constructions, as well as the design of carbon measurement and accounting arrangements, are themselves a strategic activity (Callon Reference Callon2009). The evolution of carbon accounting provides an opportunity to observe how the interests, positions and meaning systems of multiple actors influence the design of a new measurement standard.

The Intergovernmental Panel on Climate Change’s (IPCC) Guidelines for National Greenhouse Gas Inventories (IPPC 2006) emphasise that ‘good practice’ carbon accounting procedures should be transparent, complete, internally consistent, comparable and accurate. Five volumes of guidelines cover the detailed procedures for measurement and reporting of GHG inventories designed to meet these principles. The national inventory guidelines are a foundational carbon accounting technology that provides a governance context and motivation for the development of carbon counting and accounting. However, Callon (Reference Callon2009) questioned the attainability of these theoretical principles by constructing markets as ‘problematic networks’ crossing arbitrary divisions among economics, politics and science. Similarly, the IPCC’s apparently scientific and neutral national GHG inventory procedures are evolving within a highly politicised environment, wherein each measurement principle has different implications for who wins and who loses in the new carbon accounting regime (Kolk, Levy, and Pinkse Reference Kolk, Levy and Pinkse2008).

Carbon accounting is a ‘stem issue’ (Callon Reference Callon2009) that is problematised in different ways across a wide range of actors involved in developing a new measurement technology. Each of the IPCC’s measurement principles is theoretically desirable. However, each is prioritised differently within the discourse across three arenas in which organisations vie for power to devise carbon accounting methodologies and systems. The first arena includes scientific organisations struggling with ways to identify GHG emissions, capturing their existence at the molecular level, and modelling their atmospheric impacts. The second arena includes traditional professional accounting actors and firms that are experimenting with ways to set up carbon accounting systems within and across organisations to record carbon decision-relevant data. The third arena includes policy makers, industry associations, NGOs and lobbyists who are devising carbon accountability systems and inventories across countries to collate GHG emission data and make them verifiable and comparable.

Each set of practitioners interacts with one another, ‘participates in the same meaning systems’ and ‘is defined by similar symbolic processes’ (Scott and Meyer Reference Scott and Meyer1994: 71). As discussed in Chapter 6, Bourdieu (Reference Bourdieu1995) emphasises the recursive relationship between the distribution of actors’ interests and capitals within a field and discourses that legitimise particular activities. According to this view, the particular measurement standards that eventually become institutionalised are those that are consistent with the meaning systems, discourses and practices of the most powerful actors in the field – even if that power is not fully acknowledged. We know that much corporate environmentalism eventually is about symbolic rather than substantive performance. But questions remain on what influences the extent to which new measurement standards are based on symbolic rather than substantive criteria. In this chapter, I explore an answer to this question by focusing on the field structure and discourses about performance criteria surrounding the emerging issue of carbon measurement and disclosure.

Research approach

To explore the current state and likely future evolution of the carbon accounting domain, we hosted an ‘Accounting for Carbon’ workshop at the University of Oxford.² We invited representatives who participate in the science, reporting and governance of carbon accounting to highlight the contentious conversations within their domain, and we facilitated an across-arena exploration of how to address current carbon accounting challenges in the United Kingdom. Participants included senior scientists and executives from a national measurement and standards-setting laboratory, accounting professionals and academics, representatives from early-adopter firms, participants in professional consortia and joint projects that are designing the reporting frameworks, and NGO and policy representatives.

We designed the workshop so as to draw out the controversies, implicit assumptions and dominant discourses within each field. A team of note takers recorded the details of focus group and larger group discussions. During the workshop, we analysed interactions among participants within and between the three carbon accounting arenas. Afterwards, we supplemented and reinforced our findings by conducting interviews with some of the participants and by gathering secondary data. Similar to the CCS project described in Chapter 6, our analytic goal was to identify ‘compelling narratives about what a technology is, what a technology might become and why it is needed and preferable to competing technologies’ (Lounsbury and Glynn Reference Lounsbury2001). The carbon accounting technologies under investigation varied from scientific measurement technologies to corporate carbon reporting to national GHG inventories. We gave attention to how members of each arena discussed the issues among themselves and particularly to how they explained their carbon accounting approach to actors in other arenas.

With Bettina Wittneben, I previously analysed and published most of the results section that follows in an accounting journal (Bowen and Wittneben Reference Bowen2011). However, I subsequently realised that the material can be usefully recast in a Bourdesian frame to further advance the implications. Specifically, Tatli’s (Reference Tatli2011) operationalisation of Bourdieu’s conception of a field by examining practices, practitioners and discourses is similar to our original coding scheme but it has the advantage of systematising our earlier ideas. Therefore, I structure the findings in the next section around the practices, practitioners and discourses within our workshop and interview data.

Three fields in carbon accounting

Our conversations with participants on the current state of carbon accounting in the United Kingdom suggest that there are at least three arenas in which organisations vie for power in devising carbon accounting methodologies and systems. The first field consists of scientific organisations charged with measuring GHG emissions and modelling their atmospheric impacts. The second field includes traditional professional accountants and firms involved in setting up firm-level carbon accounting systems to record carbon decision-relevant data. The third field includes policy makers, industry associations, NGOs and lobbyists in the broader governance system that are leading efforts to collate GHG emission data and make data verifiable and comparable across firms and countries.

Table 7.1 outlines the primary differences and similarities among three subfields related to the emergence of a new environmental measurement technology. The three fields of ‘counting carbon’, ‘carbon accounting’ and ‘accountability for carbon’ are not entirely separate from one another. Some boundary-spanning practitioners include NGOs and environmental consultancies that bridge the science, reporting and governance fields; some professional accounting practitioners have crossed over into the transnational governance arena (Suddaby, Cooper, and Greenwood Reference Suddaby, Cooper and Greenwood2007). Nevertheless, delineating some boundaries wherein the discourse, practices, practitioners and symbolic processes are more similar among actors within rather than between fields is useful for understanding the evolution of a new set of social technologies (Tatli Reference Tatli2011).

Table 7.1 Three carbon accounting organisational fields

Source: Adapted from Bowen and Wittneben (Reference Bowen2011).

Discourses

As noted previously, the IPCC’s (2006) guidance on the development of carbon measurement technologies states that carbon accounting procedures should be transparent, complete, consistent, comparable and accurate. Table 7.2 defines each of these desirable characteristics for the eventual dominant design of this new environmental measurement technology. In the discussions among practitioners invited to our workshop, it became apparent that there is a definite incongruence among the three fields in the discursive priority placed on each characteristic (see Table 7.2).

Table 7.2 Discursive priorities of measurement criteria across three carbon accounting fields

Source: Definitions are adapted from IPCC (2006).

Practitioners in the counting carbon field insisted on the importance of measuring CO₂ and other GHGs accurately. Because some of these calculations are more easily attainable than others, an indicator of certainty is necessary to attach to the results of the emission calculations. GHG emission calculations vary highly in uncertainty: whereas the calculation of CO₂ emissions from the burning of a particular fossil fuel is fairly straightforward, methane emissions from cattle can vary by breed, feed and other factors, presenting challenges for the accuracy and certainty of calculations. Within this field, the consistency across calculations is not viewed as such a high priority because it is recognised that emissions cannot be easily compared across GHGs – even by using a common unit such as a CO₂ equivalent (Bruce, Yi, and Haites Reference Bruce, Yi and Haites1996; Shine et al. Reference Shine, Fuglestvedt, Hailemariam and Stuber2005; Smith and Wigley Reference Smith and Wigley2004; Vine et al. Reference Vine, Katsb, Sathayec and Joshid2003). Measurement technologies improve and develop over time so that using the same measurement technique year after year is less important than transparency in describing methods.

The dominant discourse in the field of carbon accounting is based on comparability and commensuration derived from market logic. ‘Comparability’ refers to the extent that emissions are based on agreed methodologies and formats so that equivalent entities and activities will generate equivalent carbon accounts. Comparability is important for external reporting so as to maintain a level playing field between organisations within and between sectors. Underlying comparability is ‘commensuration’, defined as ‘the transformation of different qualities into a common metric’ (Espeland and Stevens Reference Espeland and Stevens1998: 314). Commensuration is a social and political process but it is vital to maintain the ability to quantify and trade (Kolk et al. Reference Kolk, Levy and Pinkse2008). Indeed, practitioners in this field are adept at maintaining distance between ‘traders’ conceptual, largely electronic universe of “abstract”, simplified and fungible carbon credit numbers and the “concrete”, diverse, particular, highly complex, often obscure local projects that produced them’ (Lohmann Reference Lohmann2009: 506). Although this discourse is far removed from the underlying substantive environmental impacts of economic activities, it is this distance that can help maintain consistency and an aura of certainty. The casualty, of course, is accuracy as the discursive focus on agreeing shared reporting methodologies becomes farther removed from measuring the underlying true emissions. For example, it has become common for firms to report improvements in their own Scope 1 emissions relative to output over time but without accurately reporting overall emission increases. Furthermore, even commonly used firm-level indicators, such as a firm’s production output, are not necessarily accurate, thereby casting doubt on the accuracy of relative emissions measures. There is less conversation in this field about transparency and completeness than there is about establishing credibility through an apparently high degree of comparability and competence to self-report carbon emissions.

Similar to the discourse regarding CCS demonstration projects described in Chapter 6, more radical policy options, such as mandating emissions standards, are largely absent from the dominant discourse in the carbon accounting field. The conversation is about increasingly elaborate and coordinated carbon accounting frameworks. Broader solutions to the environmental impacts of economic activity are routinely underplayed within the technicalities of and conversation about designing new environmental disclosure standards.

Finally, discourse in the accountability for carbon field prioritises consistency across carbon inventories through transparent, complete and comparable procedures (IPCC 2006). Only consistency can make it possible for emissions by nations and economies to be compared over time, supporting answerability and enforceability practices around CO₂ emissions. This so-called commensuration project (Kolk et al. Reference Kolk, Levy and Pinkse2008; Levin and Espeland Reference Levin, Espeland, Hoffman and Ventresca2002) is vital in allocating responsibility and accountability. That the recorded emissions are indeed accurate is important to grant legitimacy to the system and to satisfy various stakeholders; however, accuracy is defined in a weaker sense in this field than in the counting carbon field. The IPCC guidelines describe accuracy as ‘relative’ and should reduce uncertainties ‘as far as is practicable’. Lacking the exactness of the counting carbon field, this discourse is less concerned with the ‘true value’ of emissions estimates and with precision as a measurement principle. Moreover, ‘given the current state of scientific knowledge…the inventory uncertainties are high compared with the demands given by the inventory applications, even if they are prepared according to the guidelines and good practice (IPCC 2001)’ (Rypdal and Winiwarter Reference Rypdal and Winiwarter2001: 107). The dominant discourse in this field focuses less on accuracy and more on reducing unknowns to consistent probabilistic scenarios compared with a constructed ‘business as usual’ (Bebbington and Larrinaga-Gonzalez Reference Bebbington and Larrinaga-Gonzalez2008; Lohmann Reference Lohmann2009).

Thus, there is an inherent discrepancy among the three fields in how they give discursive priority to the IPCC’s measurement criteria of accuracy, transparency, completeness, consistency and comparability. Although accuracy is scientifically valuable, it may come at a high cost to both the development of measurement techniques and the reporting efforts of organisations. There also is a risk that accuracy that is too strongly enforced will make company reports difficult to analyse and interpret (Hopwood Reference Hopwood2009). In fact, a market system requires the consistency and commensurability between emissions, both within and across companies, prioritising comparability (MacKensie Reference MacKensie2009). The problem is that ensuring comparability with existing accounting standards can lead to ‘very strange results’ when applied to the new carbon emission instruments (Cook Reference Cook2009). Understanding the different discursive priorities placed on consistency across fields can help us understand the IASB’s unsuccessful support of the International Financial Reporting Interpretations Committee’s interpretation of emissions rights. The very features desired by carbon market designers to improve carbon accountability (i.e., prioritising consistency and comparability) led to ‘public outcry’ in the carbon accounting field because they diminished the overall importance of accuracy and indicators of substantive GHG reductions (Cook Reference Cook2009: 457).

Discussion and implications

In this chapter, I extend Callon’s (Reference Callon2009: 540–541) reminder that ‘calculative equipment, whether it serves to establish equivalences between chemical entities (for example, to measure their effects on global warming), to price goods, to organise encounters between supplies and demands (auctions or other mechanisms), or simply to measure emissions, is…the subject of stormy debates and lies at the heart of structuring carbon markets’. I focus on how three related fields prioritised the dimensions of accuracy, transparency, completeness, consistency and comparability in the development of a set of new environmental measurement technologies designed to measure and disclose firm performance. The three fields can be distinguished by their practices based at the molecular, the organisational and the societal levels, respectively. Practitioners within each field describe different emphases among these principles. Most discursive effort about carbon accounting within corporate environmentalism is about symbolic comparability, methodologies and formats for consistent reporting. The accountability challenge is to find an acceptable way to make carbon accounting work without lowering accuracy so much that the performance measurement system is completely detached from substantive emissions performance.

Practices within the three carbon accounting fields demonstrate the complex nature of measuring, reporting and effectively communicating GHG emissions. The science of how emissions are measured is still evolving, the social practice of accounting for carbon within organisations is still contested, and the effectiveness of a global carbon governance system has not been proven. Some argue that current systems of carbon markets are overly costly and ineffective (Wittneben Reference Wittneben2009); others contend that the sheer notion of setting up a carbon market is inherently flawed (Lohmann Reference Lohmann2010). Both critiques arise from the potential of the symbols around new environmental disclosure standards to become detached from substantive CO₂ emission reductions.

If a carbon accounting system is to have any substantive impact on reducing carbon emissions, accuracy must be taken more seriously within corporate environmentalism. The problem is that in the short run, developing carbon accounting systems ‘accurate’ to several decimal places may be counterproductive. Additional focus should be on understanding tolerances around current best estimates of carbon performance. We need to be explicit in recognising that in current corporate carbon accounting practice, accuracy is low and uncertainty is high. Initial enthusiasm for corporate environmental reporting and high tolerance levels allow companies to begin reporting their carbon performance relatively easily (Bumpus Reference Bumpus2009). However, this uncertainty should be recognised and reported. For example, corporate environmental disclosure could move towards providing indicators of uncertainty or tolerances in carbon reporting, not only point indicators. Bebbington and Larringa-Gonzalez (Reference Bebbington and Larrinaga-Gonzalez2008) provided a useful distinction between the accounting challenges of risks as contrasted with uncertainties arising due to climate change. Firms that have already begun to invest in environmental management and disclosure may be developing risk management competences through established accountancy tools (e.g., sensitivity analysis and hedging); however, the dominant worldview in corporate environmentalism does not give adequate attention to measurement uncertainty. This is a particular problem in a new and emerging measurement technology because neglecting uncertainty measures from the outset can become embedded within the eventual dominant design, creating an artificial and unfounded social confidence in the system that can be difficult to change.

Another implication of this analysis is that we should be wary of locking-in measurement and performance standards too early. Much of the current contestation in the carbon accounting field is about which elements of carbon measurement and disclosure will eventually be retained in the dominant design. Which of the many potential future S-curves will prevail? Standards can develop significant inertia over time, and an initial period of lower accuracy and higher tolerance for the development of different carbon disclosure standards may lead to measurement and reporting innovations, which could place carbon disclosure standards on a preferred social benefit curve in the long run. This dynamic is compounded given the tendency to closely focus on market design in the early stages of market development but then to take market-design decisions as given once the market has begun (Callon Reference Callon2009). Lessons from early experiences in other accounting domains demonstrate that we may not need accurate accounting in the short run but rather that controllable accounting that can evolve over time (Suzuki Reference Suzuki2003). Inevitably, developing more consistent and comparable global accounting standards is a political process, and it may be easier to maintain constructive conversations with ‘losers’ in the carbon market if the standards are not locked-in prematurely (Biondi and Suzuki Reference Biondi and Suzuki2007).

At this early stage of carbon accounting technology development, it is perhaps inevitable that there should be different discursive priorities across the three coexisting fields. The question then becomes: Which, if any, of the measurement criteria are most likely to be entrenched as important as new measurement standards become institutionalised? The answer will depend on the distribution of interests and power within the system. Scientists, who prioritise accuracy, are dependent on funding from government and other sources and are hindered by the constraints of the current scientific climate of ideas. In contrast, practitioners in the accountability field value the desirability of completeness, consistency and transparency but they depend on political will to be able to promote these objectives. In 2009–2012, the enthusiasm for the climate change political agenda deflated with the demise of the Kyoto Protocol and prolonged economic pressure from the financial crisis, limiting political interest in governing carbon emissions.

The actors with the most interest in and power to develop current carbon disclosure standards are those in the carbon accounting arena. Firms may not have the scientific expertise of the counting carbon practitioners or the force of answerability of the accountability field. However, they do have the financial resources, industry networks, relationships and accounting expertise to be able to invest in new carbon disclosure technologies. Accounting associations, management accounting consultancies, firms and industry associations are routinely afforded the legitimacy to develop new measurement standards. As a result, it is hardly surprising that the eventual dominant design will focus on criteria related to comparability rather than accuracy. Members of the other fields may be reassured that there is at least an ongoing conversation about developing carbon disclosure standards: some corporate environmentalism may be better than no environmentalism. But resources will be invested in improving the comparability and consistency of standards as part of audience-seeking for carbon performance rather than the accuracy, transparency or completeness required to drive substantive performance-enhancement. A firm’s voluntary ‘gift’ of carbon accounting information may not match stakeholders’ preferences, leading to a utility loss.

Over time, measurement standards based on comparability rather than accuracy, transparency or completeness become embedded as the normal and legitimate way to report carbon performance. Politicians may eventually reengage with the carbon management agenda, but ‘there is a tension between the incentives for individual minds to spend their time and energy on difficult problems and the temptation to sit back and let founding analogies of the surrounding society take over’ (Douglas Reference Douglas1986: 55). The founding analogies – that is, the early labels adopted to describe who and what is noticed, remembered and recorded – become a vital element of the eventual dominant design. Although all of the actors involved in new carbon measurement technologies may have been driven initially by social concerns, the distribution of practices, practitioners, discourses, interests and power can lead to performance standards that are quite separate from the underlying substantive environmental impacts. Once this happens, ‘all the advantages lie with joining the corporate effort to make founding analogies do the work, and very little advantage lies with the privateer working under his own flag’ (Douglas Reference Douglas1986: 51). Once a symbolic gap has emerged in a measurement and performance standard, significant social energy is required to close it.

Empirical summary

The evolution of new carbon measurement and disclosure standards incorporates a wide range of activities conducted by scientists, accountants and policy makers. Carbon accounting technologies are evolving in three interconnected arenas: (1) the scientific knowledge of how to recognise and count carbon dioxide emissions, (2) the accounting effort to collect and record this information at the organisational level, and (3) the policy arena of devising accountability systems such as national GHG inventories that use and compare these data. All of the actors are drawn together by the stem issue of developing carbon accounting that is transparent, complete, consistent, comparable and accurate (IPCC 2006). However, the relative importance of each measurement criterion varies across the three carbon accounting fields (see Table 7.2).

In this chapter, I ask how we end up with particular measurement standards gaining momentum and becoming the dominant design over time. To answer this question, I argue that organisational fields are held together not only by regulatory processes (as explored in previous chapters) but also by common meaning systems and shared symbolic processes. New institutions such as performance standards must fit within these fields to be accepted as legitimate. Therefore, the eventual performance standard that establishes itself as the dominant design is likely to be consistent with the meaning systems and symbolic processes of a field. In the case of carbon accounting, scientists prefer measurement systems that are accurate and transparent, accountants prefer standards that are comparable, but the governance field prioritises measurement that is internally consistent, transparent and complete.

This helps to answer the second question in this chapter: What determines the extent to which a new environmental disclosure standard is based on symbolic rather than substantive criteria? Even if individual actors are drawn to the carbon accounting domain by an authentic desire to make a substantive difference in the GHG emissions problem, there are inherent dynamics in fields that prioritise the interests and meaning systems of some actors over others. This chapter investigates the distribution of practices (i.e., what people do), practitioners (i.e., who they are), discourses (i.e., what they talk about and consider important), and power (i.e., who has the interest and resources to effect change) across the carbon accounting domain. Performance standards are more likely to be based on symbolic criteria when powerful actors prioritise comparability and reporting formats over other substantive indicators, including accuracy, transparency and completeness of disclosures. These standards become embedded with time as early labels and institutions are understood to be the normal and legitimate way to measure and report environmental impacts.

Environmental disclosure standards and the social energy penalty

Corporate environmentalism requires firms to collect, measure, report and narrate their environmental story so that they can generate positive social evaluations. New measurement systems need to be developed that incorporate green features, classifications and activities that firms have not previously communicated. Standardising these new performance indicators should benefit society as credible indicators of corporate environmentalism and as a way to hold large, high-status organisations accountable. Yet, this chapter shows the influence of interacting discourses, practitioners, practices and power in institutional fields on the shape of the performance standard S-curve. What do these findings reveal about the emergence of new measurement and disclosure standards and the social energy penalty? Or, more specifically, when is there likely to be a higher social energy penalty associated with new measurement standards?

Figure 7.1 shows the now familiar model of the trade-off between the social costs and benefits of corporate environmentalism. In this case, the figure compares the benefits of a given performance standard that is based on substantive as opposed to symbolic criteria. As discussed in this chapter, some discourses about new carbon measurement and disclosure standards prioritised criteria such as accuracy and completeness (i.e., substantive criteria), whereas others emphasised comparability, agreed methods and formats (i.e., symbolic criteria). Figure 7.1 explains why the shape of the S-curve, as well as the resulting social energy penalty, depends on the extent to which the underlying measurement criteria are based on substantive or symbolic indicators.

Figure 7.1 Impact of a standard’s criteria on the social energy penalty.

The social cost curve in Figure 7.1 is upward sloping because – as with other contexts examined in previous chapters – early entrants in developing new measurement standards have status and power. Accountancy firms possess the emblems, credentials and kin to facilitate the development of new carbon accounting rules; firms have the authority to voluntarily decide which set of standards, if any, they will choose to adopt. As discussed in previous chapters, the steepness of the curve depends on the discretionary power of early adopters. In the carbon accounting context, there are more actors, fewer concentrated practitioner networks, and less reliance on government sponsorship of a particular technology standard than in, for example, the CCS demonstration projects case described in Chapter 6. Therefore, the social cost curve is upward sloping but relatively neutral, as shown in Figure 4.8 (see Chapter 4).

However, simply because there is a more diffuse power base for the development of the measurement technology, it does not mean that there will be no social energy penalty. I show in this chapter that in the case of carbon accounting, widely distributed practices, practitioners, discourses and interests lead to prioritising symbolic comparability over substantive completeness or accuracy. Emphasising different measurement criteria leads to different social benefit curves. Figure 7.1 shows two social benefit curves: the upper one reflects a symbolic performance standard based on substantive criteria and the lower one is based on symbolic criteria. Both curves exhibit the same S-curve shape: performance standards can benefit from network externalities and learning effects whether they are based on substantive or symbolic criteria. A new carbon accounting system will become more valuable the more that others adopt it and the more recognised it becomes. Consultancies, professional accountants and industry associations will disseminate learning on the new symbolic performance standard. However, analysis of the discourses surrounding new carbon accounting technologies reminds us that standardised environmental management and disclosure do not necessarily lead to ensuring substantive GHG emission reductions. The extent to which generating and disclosing better carbon management data provides an environmental benefit independent of the number of adopters is reflected in the performance standard’s standalone technology value (TV) – that is, the initial height of the social benefit curve.

Carbon accounting is a way of narrating a carbon performance story aimed at generating positive social evaluations, and such stories do not necessarily correspond with emission reductions. Investing in carbon measurement and disclosure can be merely symbolic rather than a serious attempt to mitigate substantive environmental impacts, particularly for the largest firms. Institutional isomorphism reminds us that ceremonial adoption of carbon accounting can appear highly comparable, but it may not be particularly accurate or yield substantive mitigation impacts. Furthermore, institutional theory suggests that the more that carbon accounting procedures are negotiated and bargained within the organisational field, the higher the likelihood is that new systems will be decoupled from a firm’s technical core. But, as I argue in Chapter 4, even largely ceremonial implementation of a new environmental standard may improve a firm’s information about its own environmental impacts, internal management processes and market. There is positive standalone technology value from a new performance standard, even without considering whether other firms have implemented it (i.e., TV_SYM > 0 in Figure 7.1). The first firm reports its carbon performance to meet its own needs, whether for competitiveness, legitimation or responsibility reasons (Bansal and Roth Reference Bansal and Roth2000).

The problem from society’s point of view is that the primary driver to develop a carbon accounting system is the need to measure and mitigate GHG emission levels. If there were no GHG emission problem, there would be no need to allocate societal resources to developing CO₂ inventories and markets. The standalone technology value of an emerging performance standard is much higher for standards based on the extent to which it encourages substantive CO₂ reductions over time (i.e., TV_SUB > TV_SYM). Measurement standards have the most standalone value when measures are ‘fit-for-purpose’. If society’s goal is to mitigate the actual GHG emissions generated by human activities, then the social benefit of standards based on substantive criteria will be higher than those based on symbolic criteria at all levels of cumulative adoption, as shown in Figure 7.1.

Therefore, the most immediate answer to the question of when there is likely to be a higher social energy penalty associated with new measurement and performance standards is this: when the standard is based more on symbolic than on substantive underlying criteria. Because of the lower standalone technology value of standards based on symbolic criteria, the cumulative standard adoption level in which the social costs outweigh social benefits is reached sooner for standards based on symbolic measurement criteria than for those based on substantive criteria (i.e., X_SYM < X_SUB). In the specific case of carbon accounting, the social energy penalty is likely to be higher if actors within the carbon accounting arena adopt a set of standards that prioritise consistency over accuracy.

The carbon accounting context shows the social energy penalty in action: high-status scientists, politicians and professional accounting firms are expending considerable communicative effort in seeking legitimacy for their preferred measurement system. The discourse within each field prioritises different criteria. The problem is that in the absence of a powerful, connected and concentrated elite (as described for the CCS demonstration project case in Chapter 4), the eventual dominant design for the standard is likely to be the one most acceptable – or least objectionable – to the actors most engaged in the process. Weak standards based on largely symbolic criteria can be much more versatile than specific standards based on substantive criteria. Thus, there may be a natural tendency towards performance standards based on symbolic rather than substantive criteria in diffuse institutional fields. The social energy penalty may be higher where high-status actors from different social sectors – for example, scientists, politicians and business leaders – are trying to use the same environmental practice to achieve different objectives.

It seems likely that carbon accounting will continue to grow in importance as new emission-reduction regimes are set up and existing regimes are linked. Various stakeholders will give increasing attention to an organisation’s carbon budget, which must be measured, reported and conveyed. As we embark on this course of reporting GHG emissions, new systems of measurement, accounting and disclosure will become norms for credible environmental performance. Policy makers and progressive business leaders need to consider how much effort and attention is invested in improving consistency within complex carbon accounting regimes in relation to substantive GHG emission reductions over the course of the regulatory process. Without sufficient attention to substantive criteria, we could end up on a standardisation path that prioritises particular symbols, reporting practices and disclosure norms that may be disconnected from their underlying environmental value. Such symbolic corporate environmentalism can be costly to society because once those norms are established, it can be difficult to change them – regardless of their usefulness in remedying environmental problems. Over time, the social benefits of measurement and disclosure are outweighed by the social costs, which occurs all the more quickly if the standard is based more on symbolic than substantive criteria.

In Chapters 4, 5, and 6, I used a variety of empirical studies from different contexts to explore the contingencies related to when the social energy penalty is likely to be highest. I unpacked the various implications of the model presented in Chapter 4, particularly on what might influence the shapes of the social costs and benefits of corporate environmentalism curves. Analysing different contexts has allowed me to manoeuvre each of these curves one at a time. However, none of the studies attempted to directly measure the social cost or benefit curves. In the next chapter, I address the empirical challenge of how the social costs and benefits of symbolic corporate environmentalism might be measured.