How it works, why it matters, and how corporate buyers can help shape the next generation of GHG accounting.

What impact accounting is and how it works

The GHG Protocol’s (GHGP) Actions and Market Instruments (AMI) initiative is developing a framework that could dramatically improve incentives for voluntary corporate energy buyers to pursue impactful decarbonization actions. Crucially, this framework would include consequential (or impact) accounting. 

What it aims to accomplish 

The key idea is simple: alongside traditional emissions inventories, energy buyers can report the real-world climate impact of their voluntary actions. The framework gives energy buyers the option to go beyond answering “what are the emissions associated with my operations?” to also discuss “how did my decisions change emissions in the atmosphere?”

How it fits within the GHGP 

Under the GHGP’s existing Corporate Standard, companies report emissions using inventory accounting (also known as attributional accounting). Inventory accounting assigns emissions within defined organizational and operational boundaries across Scopes 1, 2, and 3. Building on today’s Corporate Standard and Scope 2 guidance, the AMI Technical Working Group is developing a framework that uses a multi-statement approach. 

Companies would continue to report their physical inventory (“Statement 1”), the market-based inventory would be a separate “Statement 2” and expanded to include all three scopes, and there would be the option to report the broader emissions effects of actions in an impact statement — “Statement 3.” This approach is highly relevant to electricity interventions, such as buying clean energy or investing in battery storage or transmission infrastructure. This is important because many of the highest-impact actions — especially those that influence what gets built on the grid — are either invisible or only partially visible in a conventional inventory.

How impact accounting works 

To be most useful in target-setting and recognition frameworks in electricity markets, impact accounting has two components:

1. Induced emissions: An estimate of the emissions associated with serving a company’s electricity demand
2. Avoided emissions: An estimate of the emissions prevented because a company’s procurement decision helps add or dispatch clean energy that displaces higher-emitting generation

The difference between those two values illustrates the net GHG reduction of a company’s electricity choices.

To calculate that difference, impact accounting uses marginal emissions factors. These factors estimate which power plants actually reacted to electricity demand changes or when new clean energy came online. Two components matter most:

• The operating margin captures short-run changes in emissions from existing plants that ramp up or down in response to changes in demand or generation. 
• The build margin captures long-run structural effects — what kinds of power plants are likely to be built, or not built, because of sustained changes in demand and procurement. 

These two margins can be blended into a combined marginal emissions rate by weighting the two. Companies can apply this combined rate to their energy consumption to estimate induced emissions, apply it to their clean energy procurement to estimate avoided emissions, and then compare the two to understand their overall impact.

Why impact accounting is useful for companies

Impact accounting creates enhanced incentives for energy buyers because it rewards actions that reduce atmospheric emissions most, even if those actions fall outside a company’s traditional reporting boundaries. In clean energy, for example, impact accounting can show how adding new solar in an already saturated region might have limited incremental value, compared to a project built in a fossil-heavy grid that has much higher impact. It can also highlight when storage and load flexibility yield larger emissions benefits than another megawatt-hour of wind or solar. In short, impact accounting helps buyers optimize for decarbonization.

For corporate buyers, the value of impact accounting is highly practical. It broadens strategic options, optimizes capital allocation, and helps companies show how their procurement decisions support real-world, systemic decarbonization. Below are four practical use cases for the clean energy sector:

Companies operating in cleaner grids. A buyer with sizable load in California, for example, may find that signing another solar contract in CAISO has limited incremental impact, as the region already curtails excess solar generation. Under an impact accounting framework, the same buyer could achieve greater emissions reductions by supporting a project in a more carbon-intensive grid such as PJM because that procurement is more likely to displace fossil generation. Impact accounting makes this visible and allows buyers to get credit for these interventions.

Companies operating in supply-constrained regions. Some companies have large load in places where clean energy supply is scarce or structurally unavailable. A company with load in Singapore, for example, may face very limited in-market procurement options. Impact accounting can provide a credible pathway to take near-term, systemic climate action by recognizing procurement in nearby markets.

Companies with distributed load or mid-sized demand. Many buyers have substantial total electricity use but not enough load in any one deliverability region to support a utility-scale power purchase agreement on their own. Telecom networks, retailers, and other companies with disaggregated load often fall into this category. Impact accounting can facilitate aggregation across regions, empowering buyers to participate in larger, more impactful transactions rather than defaulting to smaller or less catalytic purchases. This can be especially important for mid-sized customers that are committed to climate action but otherwise shut out of the most effective procurement pathways.

Companies considering storage and flexible load. Energy storage can both consume electricity when charging and supply electricity when discharging. Traditional attributional approaches struggle to reflect that dual role. Impact accounting can evaluate storage on its net emissions by accounting for emissions induced during charging and emissions avoided when discharging at times of higher emissions. That gives companies a credible basis for investing in storage, flexible operations, and other emerging solutions that can cut emissions even if they do not fit neatly into conventional Scope 2 inventories.

Together, these examples show why impact accounting is useful for companies: it supports better procurement decisions, allows for options that don’t fit within attributional inventories, and helps each dollar go further. It also offers a stronger narrative for internal decision-makers by linking procurement strategy to system-level impacts.

How you can engage now

Corporate buyers have a direct stake in how carbon accounting rules evolve. If carbon accounting standards (e.g., GHGP, ISO), target-setting programs (e.g., Science Based Targets initiative), and leadership initiatives (e.g., RE100) recognize impact accounting alongside conventional inventory accounting, buyers will have a credible way to report the real-world results of their climate actions. 

If they do not, current accounting frameworks may narrow procurement choices while missing a chance to incentivize some of the highest-impact investments.

Buyers have a chance to shape the development of impact accounting by engaging with the GHGP’s workstreams.

• The most immediate opportunity is to participate in the GHGP AMI’s ongoing Request for Information (RFI) survey, open until June 15, 2026. 
• A second opportunity will arise when the AMI launches a public consultation of a full draft standard, currently planned for early 2027.

In parallel, the Task Force for Corporate Action Accounting (TCAT) is developing third-party assurable guidance in close collaboration with stakeholders and the GHGP. Its aim is to help companies report mitigation actions and targets. TCAT is currently piloting its standard and plans a public consultation.