Leveraging existing climate metrics

Today, I am pleased to share a new article I have co-authored with Professor Jürgen Ernstberger and Professor Gunther Friedl, both from Technical University of Munich, titled "How Carbon Accounting Supports Corporate Decarbonization." Our work, now published in Foundations and Trends in Accounting's special issue on Perspectives on Carbon Accounting and Reporting, explores how transactional carbon accounting can power more effective corporate decarbonization. As businesses face mounting pressure to reduce their carbon footprint, we propose leveraging traditional financial management systems as a robust foundation, not only to track emissions across Scopes 1, 2, and 3, but to allocate them precisely to products and services via product carbon footprints (PCFs). This level of granularity is critical to support decision-useful insights and transparent reporting across value chains. By integrating PCFs into ERP systems like SAP S/4HANA, companies can assess and manage emissions at the transaction and product level, linking environmental data with financial metrics. This enables the path to a Green Ledger, where carbon is treated with the same rigor as money in corporate decision-making. At SAP, this approach reflects our commitment to embed PCFs into core enterprise systems and elevate them as a strategic lever for both compliance and transformation. This method not only enhances internal steering and external accountability, but it also aligns with emerging regulatory frameworks such as the EU CSRD and SEC climate-related disclosures. Many thanks to my esteemed co-authors for their collaboration. I invite you to explore our findings in depth via the link below: https://lnkd.in/eKWHjgV9 Sophia Leonora Mendelsohn Dr. Christopher Sessar   TUM School of Management #CarbonAccounting #ProductCarbonFootprint #CorporateDecarbonization #Sustainability

Climate Change Risk Assessments 🌎 Climate-related financial disclosure requirements are expanding across jurisdictions, increasing expectations for companies to assess and report on climate-related risks and opportunities. A structured climate change risk assessment (CCRA) is central to meeting these evolving regulatory demands. CCRAs evaluate both physical risks—such as extreme weather events, water stress, and sea level rise—and transition risks, including policy changes, carbon pricing, and shifts in market or technology landscapes. They also help identify potential opportunities linked to decarbonization, energy efficiency, and new revenue models. Scenario analysis is a core component. It enables companies to test strategic resilience under divergent climate pathways, including high-emissions futures and low-emissions transitions aligned with the Paris Agreement. Most regulatory frameworks now require both perspectives. Benefits of a robust CCRA include improved risk management, reduced exposure to disruptions, and strengthened alignment with investor expectations. Insights from these assessments can be embedded into enterprise risk systems, capital planning, and strategic roadmaps. Key challenges include short-term thinking in risk registers, limited access to forward-looking climate data, and misalignment between climate risk analysis and existing sustainability goals. These gaps can reduce the effectiveness of disclosures and slow organizational response. Recommended approaches include leveraging established scenarios (e.g. IPCC, IEA), integrating outputs into ERM systems, using frameworks like ISSB and TCFD for structure, and applying competitive benchmarking to validate assumptions. Cross-functional engagement improves practical relevance. As regulatory standards converge, CCRAs are becoming a baseline expectation. Those who develop structured, forward-looking assessments will be better positioned to adapt business models, manage uncertainty, and align with capital markets under increasing climate scrutiny. Source: Ramboll #sustainability #sustainable #business #esg #climatechange #risk