Firms prefer in-house carbon reporting tools – even if they aren’t as accurate

Companies that voluntarily report carbon emissions prefer to use in-house carbon accounting models, even if they are falsely reporting their true emissions, according to new research by Emlyon Business School.

The researchers say that managers prefer to use these in-house tools as they tend to focus on avoided emissions rather than the more challenging absolute emissions.

The study was conducted by François-Régis Puyou, Professor of accounting and corporate finance at Emlyon Business School, alongside Professors Richard Jabot and Simon Alcouffe, from TBS Business School.

The researchers conducted a detailed case study based on interviews and 28 days of observation at one company voluntarily reporting carbon data. They found that firms may strategically use these internal tools to maintain a favourable sustainability narrative – supporting growth rather than demanding real carbon reductions.

This displacement of attention from absolute emissions undermines meaningful environmental progress and preserves the status quo. In fact, even some employees expressed unease but rarely voiced concerns publicly, meaning no real cuts in emissions were made.

The findings highlight a broader challenge for climate action: when sustainability reporting prioritises appearance over impact, it can mislead investors, regulators, and the public, slowing the transition to a low carbon economy.

‘This research highlights a crucial gap between knowing about emissions and acting to reduce them,’ said François-Régis Puyou. ‘Managers may use carbon accounting to reframe impact rather than confront realities, risking that sustainability reporting legitimises business as usual, and no real efforts to act on cutting emissions.’

The researchers warn that ‘growth friendly’ carbon models focusing on avoided emissions risk distracting from urgent reductions in absolute emissions and may justify increased carbon footprints.

They recommend regulators strengthen laws requiring companies to report absolute emissions and mitigation plans transparently, preventing selective accounting from enabling greenwashing.

The researchers also urge further study on helping managers engage with uncomfortable knowledge productively to drive real sustainability.