Business Remedies | Charu Bhatia | June 15,2025 | As the global business environment inches closer to climate-conscious capitalism, one thing is becoming clear, carbon is no longer just an environmental issue; it’s an economic one. From ESG ratings affecting investment decisions to global supply chains demanding emissions transparency, Indian companies are being nudged, if not pushed, towards the next big frontier in compliance and competitiveness: carbon accounting.
What is Carbon Accounting?
Also known as greenhouse gas (GHG) accounting, carbon accounting is the process of measuring and reporting an organisation’s carbon emissions across its operations. Emissions are typically classified into three scopes:
8 Scope 1: Direct emissions from owned assets (like fuel combustion).
8 Scope 2: Indirect emissions from purchased energy.
8 Scope 3: All other indirect emissions, from supply chain, business travel, product lifecycle, etc.
With frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) and Science-Based Targets initiative (SBTi) gaining traction, carbon accounting is fast becoming a non-negotiable metric, especially for export-oriented and listed companies.
What’s Driving the Shift in India?
Several converging forces are pushing Indian businesses to embrace carbon transparency:
8 Investor Pressure: ESG funds and global investors are seeking low-carbon portfolios. Companies lacking credible sustainability data are being excluded from major investment pipelines.
8 Global Trade Regulations: The European Union’s Carbon Border Adjustment Mechanism (CBAM) will impose tariffs on high-emission imports starting 2026. Indian exporters in sectors like steel, aluminum, and cement will need carbon disclosures or risk losing competitiveness.
8 Corporate Sustainability Goals: Several Indian conglomerates (Tata Group, Mahindra, Infosys) have announced net-zero targets. Accurate carbon accounting is the first step towards any credible decarbonisation strategy.
8 Regulatory Developments: SEBI’s BRSR (Business Responsibility and Sustainability Reporting) is now mandatory for the top 1000 listed companies. While not yet requiring full carbon accounting, it’s laying the groundwork.
Are Indian Companies Ready?
Not entirely, but the shift has begun.
A 2024 study by CDP (Carbon Disclosure Project) found that only 26% of Indian companies disclose their full Scope 1 and 2 emissions, and less than 10% account for Scope 3, the most complex and opaque category. For many MSMEs, carbon accounting remains a blind spot due to:
8 Lack of in-house expertise
8 High cost of audits and software
8 Absence of regulatory mandates for smaller firms
However, startups like Climes, SustLabs, and Carbon Masters are emerging to democratize climate data and emissions tracking for Indian businesses. These new-age players offer plug-and-play carbon calculators, IoT integrations for real-time monitoring, and AI-backed audit systems.
The Opportunity Ahead
The next five years could see carbon accounting evolve from a niche compliance task to a strategic differentiator. Early movers will not just attract ESG funding but also win the trust of climate-conscious consumers and buyers. Companies that digitize their emissions data now will be better positioned for:
8 Green financing and climate-linked loans
8 Low-carbon product certification
8 Global sustainability indices
More importantly, carbon accounting could help businesses identify inefficiencies, optimize resource use, and save costs in the long run.
From Compliance to Competitive Edge
As the saying goes, “what gets measured gets managed.” For Indian companies navigating the next wave of globalisation, measuring carbon might just be the most valuable metric of all. The question is no longer if they should embrace carbon accounting, but how soon, before carbon becomes the costliest liability on the balance sheet.
Written & Edited By:
Charu Bhatia
