Key frameworks and standards include:
- ISO 14064 for GHG inventory reporting.
- ISO 14067 for product carbon footprints.
- Life Cycle Assessment (LCA) for full lifecycle emissions.
- Environmental Product Declarations (EPDs) to disclose environmental impacts in sectors like construction and manufacturing.
- Carbon labelling, while still emerging, provides transparency to consumers and procurement managers.
Lifecycle Impact and Product Emissions
A complete carbon footprint accounts for both operational emissions and embodied emissions.
- Operational emissions result from the direct use of a product, such as fuel burned during a vehicle's lifetime.
- Embodied emissions include the emissions generated during the extraction of raw materials, manufacturing, transportation, and eventual disposal or recycling of the product.
For example, an internal combustion vehicle typically emits around 28 tons of carbon dioxide from fuel consumption over a 200,000 kilometer lifespan. In addition, approximately 7 tons of CO2 are generated from the vehicle's production and disposal.
These embodied emissions represent about 20 percent of the total lifecycle footprint, bringing the vehicle's complete carbon impact to around 35 tons.
Lifecycle assessment tools help quantify these impacts across each stage.
The four primary stages include:
- Defining the goal and scope
- Inventory analysis of inputs and outputs
- Impact assessment across environmental categories
- Interpretation of the results
Product-level lifecycle assessments allow companies to identify emissions hotspots, compare alternatives, and prioritize design or supply chain improvements.
Understanding full product emissions is essential for accurate reporting, especially under frameworks that encourage Scope 3 disclosure. It also supports claims about low-carbon or climate-friendly products by ensuring these claims are grounded in verified emissions data. Lifecycle carbon data is becoming a critical factor in procurement decisions, regulatory compliance, and competitive positioning.
Regulatory Trends and Market Evolution
Carbon disclosure is becoming a standard business expectation across capital markets. According to analyses from the Center for Audit Quality and BDO, more than 99 percent of companies in the S&P 500 reported ESG data in their 2023 filings. Disclosure practices have expanded to include not only historical emissions data but also forward-looking targets, risk assessments, and climate resilience planning.
Most companies align with globally recognized standards such as the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures. These frameworks promote consistency in the measurement and communication of climate risks and opportunities, guiding companies in integrating sustainability into strategic and financial decision-making.
Carbon and ESG reporting are increasingly scrutinized by investors, regulators, and credit rating agencies. Firms are evaluated not just on whether they disclose, but on the robustness of their targets and the credibility of their transition strategies. This shift reflects a growing expectation that companies demonstrate alignment with national climate policies and international agreements such as the Paris Accord.
Disclosure is evolving from a communication exercise to a compliance obligation. Financial institutions and insurers are using carbon performance data in underwriting, investment analysis, and lending decisions. Governments are moving toward mandatory disclosure regimes, especially in jurisdictions with net-zero commitments. As a result, carbon accounting has moved from the margins of sustainability reporting to the center of corporate strategy.