Product-Level Carbon Accounting Is Coming. Most Companies Aren’t Ready.
For most companies, carbon accounting has historically been conducted at the organizational level. Emissions are calculated across Scope 1, 2, and 3. Results are aggregated. A company-level footprint is produced and disclosed.
That approach is still foundational, but it is no longer sufficient.
A recent initiative between ISO and the Greenhouse Gas Protocol to develop a product-level greenhouse gas accounting standard signals where reporting is headed next.
From Company-Level to Product-Level
Company-level reporting answers an important question: what is the total footprint of the organization. Product-level accounting addresses a different one, focusing instead on the footprint of what the company actually sells. The distinction between the two becomes increasingly important as sustainability moves closer to core business decisions.
As sustainability is more directly integrated into procurement, product design, and customer expectations, there is growing demand for emissions data that reflects individual products, materials, and formulations. This shift is less about expanding reporting for its own sake and more about making that reporting usable in real-world decisions.
Stakeholders are no longer relying solely on company-level disclosures to assess performance. They are looking for information that helps them understand the impact of specific products and inputs, particularly in cases where those differences may influence purchasing decisions or supply chain strategy.
Why This Is More Complex Than It Sounds
Moving from company-level to product-level accounting introduces a different level of complexity.
Emissions must be allocated across products. Assumptions must be made about boundaries, inputs, and lifecycle stages. Data must be consistent across similar products and comparable across different companies.
In many cases, this requires a level of data granularity that existing systems were not designed to support.
It also requires decisions.
How should emissions be allocated across co-products?
How should differences in sourcing or manufacturing be reflected?
How should uncertainty be communicated?
These are not questions that can be fully standardized.
They require interpretation.
Why This Matters for Upstream Companies
For labs, material suppliers, and ingredient manufacturers, product-level accounting is particularly relevant.
Their outputs are not just part of a company’s overall footprint. They are inputs into other companies’ products.
As a result, their emissions data becomes embedded in downstream product footprints.
This creates both a challenge and an opportunity.
The challenge is that expectations for transparency will increase. Customers will want to understand the footprint of specific materials or ingredients, not just the supplier as a whole.
The opportunity is that differentiation becomes more tangible.
If two products serve a similar function but have different environmental impacts, that difference can be measured, communicated, and potentially valued.
The Connection to Scope 3
Product-level accounting does not replace Scope 3. It extends it.
Scope 3 focuses on emissions across the value chain. Product-level accounting provides the detail needed to understand how those emissions are distributed across specific outputs.
Together, they point toward a more integrated system:
Scope 3 defines the boundaries
Product-level accounting defines the detail
For companies, this means that improvements in one area increasingly depend on capabilities in the other.
The System Behind the Numbers
As with Scope 3, the shift to product-level accounting is less about the final number and more about the system used to generate it.
Producing consistent product-level emissions data requires:
Defined methodologies
Consistent data inputs
Alignment across business units
The ability to update calculations as inputs change
In many cases, this will require changes to how data is collected and managed internally.
It may also require closer coordination between sustainability, operations, and product teams.
What This Means in Practice
The development of a product-level standard does not mean that companies will be immediately required to disclose emissions at the product level. However, it does signal a clear direction of travel.
Over time, expectations are likely to move toward greater transparency at the product level, particularly in industries where environmental impact plays a role in differentiation and procurement decisions. As that shift takes hold, the level of detail required in sustainability reporting will move beyond company-wide disclosures and into the underlying products and materials that drive those results.
For companies upstream in the value chain, the implication is similar to what is already emerging with Scope 3, but more specific in its application. It is not simply that customers will request emissions data in aggregate; they will increasingly expect that data to be tied to specific products, formulations, or inputs. Responding to those requests will require a level of consistency and granularity that many organizations are still in the process of developing.
The Financial Case Is Often Overlooked
Much of the discussion around emissions accounting focuses on compliance, transparency, and stakeholder expectations. While those are important drivers, they are not the only ones—and in many cases, they are not the most immediate.
As companies move toward more granular data, whether through improved Scope 3 reporting or product-level accounting, they gain a clearer understanding of how materials are sourced, used, and ultimately wasted across their operations. That visibility has direct financial implications.
In lab environments in particular, where consumables, reagents, and single-use materials represent a meaningful portion of operating costs, even small inefficiencies can accumulate quickly. When companies begin to track material flows more closely, they often identify areas where procurement can be optimized, usage can be reduced, or waste can be minimized.
The same principle applies more broadly across upstream manufacturing and supply chains. Better data does not just support reporting. It supports decisions.
Companies that understand the emissions associated with specific materials are also better positioned to evaluate alternatives, negotiate with suppliers, and align purchasing decisions with both cost and performance objectives. In some cases, lower-emissions options may also be more resource-efficient, creating a direct link between sustainability and cost savings.
This is where the shift toward more detailed accounting becomes practical.
The value is not limited to disclosure. It comes from using the underlying data to improve how the business operates.
The Bigger Picture
Taken together, the proposed changes to Scope 3 and the development of product-level accounting standards point toward a more detailed and interconnected reporting landscape.
Emissions are no longer being understood solely at the company level. Instead, they are being traced across value chains and, increasingly, into individual products, creating a more complete picture of how environmental impacts are generated and distributed.
For companies, this shifts the challenge. The question is not simply how to report emissions, but how to build the systems that make that level of reporting possible—and useful in how the business operates.