From footprints to impact and back again: Calculating corporate climate contributions

What the paper says

Measuring corporate contributions to climate change is often crucial for investors, policymakers and legal frameworks. Current methods use attributional carbon footprint metrics, which quantify emissions linked to a company's activities. Despite its widespread use, this approach faces challenges like ‘brown spinning’ and fails to account for substitution effects. In response, some advocate for consequential metrics, which consider alternative scenarios and counterfactuals to measure the impact of corporate actions on global emissions. This paper critically examines both approaches, arguing that while attributional metrics are flawed, consequential metrics often require infeasible levels of predictive precision and counterfactual analysis. We propose that different contexts and purposes warrant different approaches. For some purposes and contexts, like carbon taxation, a restricted attributional method that focuses exclusively on Scope 1 is suitable. For other purposes, like setting Environmental, Social, and Governance ratings, we suggest an elaborated attributional framework that also accounts for indirect causal contributions not captured by standard Scopes 1–3 emissions. In yet other cases, standard or elaborated forms of consequential metrics may be more suitable.