An article outlining a new approach to measuring and reporting companies’ greenhouse gas (GHG) emissions has won the 2021 HBR McKinsey Award, which honours the best Harvard Business Review article of the year.
In "Accounting for Climate Change", Karthik Ramanna (Blavatnik School of Government) and Robert S. Kaplan (Harvard Business School) argue that the methodology most companies use to estimate their GHG emissions for environmental, social, and governance (ESG) reporting is inaccurate and unreliable. They propose tackling the measurement and reporting of GHG emissions in a more integrated, comprehensive, and auditable way through the E-liability accounting system. The system integrates advances in chemistry and engineering with financial and cost accounting principles to assign a company’s direct and supply-chain emissions to its outputs of products and services.
"'Accounting for Climate Change' could not be more timely given the urgency of the climate crisis and the imperative for companies to reduce greenhouse gas emissions", said Adi Ignatius, Editor in Chief of Harvard Business Review. "The judges praised the article’s rigorous and practical approach to improving ESG reporting."
Read more about the article and the research behind it at McKinsey Blog. Additionally, Kaplan and Ramanna published a follow-up article, "We Need Better Carbon Accounting. Here’s How to Get There", on HBR.org today.
Since 1959, the HBR McKinsey Awards, judged by an independent panel of business and academic leaders with input from members of HBR’s Advisory Board, have recognised practical and groundbreaking management thinking by determining the best articles published each year in Harvard Business Review. This year’s announcement appears in the May-June issue of the magazine.