This transcript has been edited for brevity and clarity. Alexia Kelly: Good morning, good afternoon, good evening. Welcome to another episode of Navigating Net Zero, the podcast where we dig into what’s working, what’s not, and what’s next on our global journey to net zero. This is part of our special series on greenhouse gas accounting standards and the rapidly evolving landscape of alphabet soup that we find ourselves swimming through on a regular basis. I’m delighted to be joined today by my friend and colleague Chris Davis. Chris has joined us before and has spent nearly two decades at the forefront of climate policy, corporate sustainability, and carbon markets. Before joining my team at the High Tide Foundation as a senior fellow, he led Amazon’s international sustainability policy work, helped shape global greenhouse gas accounting standards, and served for many years as Governor Jay Inslee’s climate and energy policy advisor in Washington state. There, he worked to advance landmark clean energy and carbon pricing legislation. Today, he helps lead the Task Force on Corporate Action Transparency—or, as we affectionately call it, TCAT—working to strengthen transparency and accountability in corporate climate action. Chris, thanks so much for joining me. Chris Davis: It’s great to be here again, Alexia. Thank you for the invitation. Alexia Kelly: Let’s jump right in. We want to help our listeners understand the roles that the various standard-setting bodies play. TCAT is obviously one of the new kids on the block when it comes to greenhouse gas accounting. And, in the interest of full disclosure, I should say that I serve as board chair and have been one of the key proponents of TCAT’s work. TCAT was really intended to fill some specific gaps that we were seeing from our vantage point as former corporate practitioners and sustainability executives trying to implement greenhouse gas policy and use these standards in the real world. So, Chris, tell us a little about what TCAT is, what problem it’s trying to solve, and why it matters for corporate sustainability professionals. Chris Davis: TCAT really began as an informal dialogue among corporate sustainability practitioners—you, me, and a cohort of colleagues at companies that were trying to play a leadership role on climate. We were all grappling with a fundamental challenge: How do we encourage companies to take more climate action, and build the internal case for doing so, when the accounting guidance companies use to quantify and report those actions—and count them toward targets—has significant gaps? Many of us experienced the state of that guidance as a real impediment to building the case internally for new actions and goals. The standards have come a long way since those early conversations, and I’m sure we’ll talk about that. But at the time, companies were dealing with real holes in the guidance around how to report certain activities. Much of the guidance we relied on was 15 or 20 years old. Meanwhile, one of the bright spots in our field over the past several years has been the proliferation of new instruments, pathways, and strategies that allow companies to take action in ways they weren’t contemplating five or ten years ago. The standards simply hadn’t kept pace. There was also uncertainty about how companies could credibly communicate what they were doing—how to substantiate what was real and distinguish it from something more dubious. All of that created risk for companies and impeded progress. Those informal conversations eventually became an initiative. As several of us moved into different roles, we continued working with corporate groups and expanded the conversation to include NGOs and other climate-leading companies. We started by putting our heads together and asking: What guidance would actually fill these gaps? That eventually became a formal guidance framework, which we released last September. Today, TCAT includes a cross-section of leading companies and NGOs, a senior advisory board composed of greenhouse gas accounting experts from around the world, and a group of NGO endorsers helping to support and guide the work. Alexia Kelly: I want to double-click on the risk point, because I think it’s really important. It was certainly something I grappled with in my last corporate role. We were doing all kinds of things to reduce emissions—deploying electric vehicles on Netflix productions, decarbonizing electricity, investing in innovative technologies to help bring them to market. But when we tried to report those activities, the lawyers and auditors would ask: “What third-party guidance are you relying on?” I couldn’t point them to credible external guidance explaining how those mitigation actions should be reported in an ESG report. You could get your corporate inventory assured using the Greenhouse Gas Protocol, which is what most companies do. But there was a big white space around third-party assurance of mitigation actions. The assurance providers essentially said, “There’s nothing for us to assure these numbers against.” That was a concern then. In the United States today, it’s an even bigger concern. Companies are under pressure from people who don’t want them taking climate action at all and, at the other end of the spectrum, from people with very specific views about what credible climate action should look like. It has created a pressure cooker in which companies increasingly don’t want to talk about this work at all. One of our core goals in putting TCAT together was therefore to build that basic transparency infrastructure—to provide third-party-assurable guidance that could help companies remain engaged, keep moving forward, and talk publicly about what they’re doing. Chris Davis: I think that’s exactly right. Assurability has been crucial from the beginning. TCAT’s focus has always been on clarifying the quantification and reporting of mitigation actions. Of course, we need clear guidance on how companies report their emissions and how those emissions change over time. But if you don’t also have a credible way to tell the story of what companies are actually doing to lower emissions—to report those actions consistently and transparently—there’s a disconnect. That’s the gap TCAT set out to fill. The guidance is really designed to do three things. First, help companies credibly, transparently, and consistently quantify and report their mitigation actions in a way that ultimately allows them to receive appropriate credit for those actions. Second, do that in a way that is auditable and assurable. We hear this again and again from companies: If you can’t take the guidance to an independent third party to validate and substantiate the reporting, you still have a major barrier. And third, help companies meet a growing number of public disclosure requirements. Companies operating across multiple jurisdictions increasingly face different reporting regulations. TCAT can help them tell a consistent story about what they’re doing to address their emissions across those different frameworks. Alexia Kelly: You spent a lot of time navigating that alphabet soup of disclosure regulations in your last role. Say a little more about how consistent guidance can make life easier for companies staring at this patchwork of requirements across different markets. Chris Davis: It has become a much bigger challenge over the last five to eight years as disclosure programs have grown. That growth is a good thing. We want companies to disclose the risks their operations face from climate change, as well as the risks their activities may contribute to. And increasingly, companies are also being asked to report what they’re doing to mitigate those risks. That creates an opportunity for companies to differentiate themselves based on what they’re doing through their products and services. But large companies operate in many countries, through subsidiaries and global supply chains. They need ways to aggregate data, simplify the process of pulling it together, and tell a consistent story from place to place. That consistency helps companies communicate what they’re doing without exposing themselves unnecessarily to accusations of deception, fraud, or greenwashing—the kinds of risks companies weigh when deciding whether to be more or less transparent. A consistent framework for quantifying and reporting actions is therefore a critical part of enabling companies to disclose more. Alexia Kelly: TCAT has published two guidance documents, one of which was recently updated. Can you explain what each one does? Chris Davis: Last September, during Climate Week, we released two documents: the Mitigation Action Reporting Guidance, or MARG, and the Targeted Action Reporting Guidance, or TARG. They’re complementary tools designed to help companies quantify and report mitigation consistently. The MARG is a rules-based framework that can be applied to essentially any mitigation action. That’s one of its strengths: it’s agnostic about the type of action. It simply says, “If you’re doing this, here’s how you quantify it and here’s how you report it.” The TARG provides standardized reporting templates. It allows companies to take the information generated through the MARG and translate it into reports that can ultimately be used for financial reporting, sustainability reporting, or regulatory disclosure. At the heart of the MARG is what we call a multi-statement framework. Companies apply a series of tests to a mitigation action. The results tell them where that action belongs within the reporting framework. We’re now seeing versions of this multi-statement approach emerge in a number of places—in revisions to the Greenhouse Gas Protocol, in ISO, and in the AIM Platform’s work. When we began this process, there weren’t many frameworks like this. There has since been a real convergence around the value of separating different kinds of mitigation activities. And the reason is fairly straightforward: It allows companies to distinguish between mitigation that occurs within their inventory and mitigation that occurs outside it, and to separate actions that require different accounting techniques. That creates consistency. It builds trust. And, importantly, it allows companies to show their work. Alexia Kelly: I think that last point is especially important. There’s sometimes an oversimplification that says: If something shows up in your inventory, it’s a “real” reduction; if it doesn’t show up in your inventory, maybe we trust it and maybe we don’t. The deeper I get into accounting for mitigation actions—whether within inventories, across supply chains, or elsewhere in the economy—the clearer it becomes that there is no single perfect accounting system. You can have bad accounting inside inventories. You can have bad accounting outside inventories. What matters is having strong rules, governance, and oversight underpinned by transparency. That’s fundamental if we want this system to become a credible engine for capital allocation and, ultimately, scaled climate action. The inspiration for the multi-statement approach, for me, partly came from the architecture negotiated around the Paris Agreement. You have a national inventory, but you also have separate accounting and adjustment mechanisms that allow countries to reflect international emissions trading and market-based actions. Companies face a similar challenge, particularly when trying to decarbonize Scope 3 value chains that may include hundreds or thousands of suppliers. Tracking the impacts of all those actions turns out to be far less straightforward than people sometimes make it sound. The work TCAT is doing is intended to align the reporting and transparency infrastructure underpinning those activities—in a policy-neutral way—with some of the international architecture that has been painstakingly developed over the last 15 years. And, hopefully, that gives companies greater confidence to act regardless of where a particular mitigation opportunity sits. Market-based accounting is obviously an important part of this conversation. It’s controversial, it’s complicated, and it’s also quite necessary. How does that fit into TCAT’s work and the broader corporate decarbonization effort? Chris Davis: One of the most consistent pieces of feedback we’ve received from companies through our pilots has been the value of teasing out exactly that distinction. The greenhouse gas accounting systems we inherited put enormous emphasis on measuring and estimating the emissions in a company’s inventory—its carbon footprint. That sounds like it should tell us everything we need to know: Here’s your footprint, here are the emissions associated with your business, now tell us what you’re doing to lower them. But counting an action only when it immediately affects the inventory leaves a lot of important mitigation on the table. Some of the biggest opportunities companies have are investments that transform the sectors in which they operate, even when those investments don’t occur within the exact companies they buy from or sell to. If we build a system that overwhelmingly incentivizes companies to act only on their inventories, two things happen. First, we close off important mitigation opportunities. Second, we create pressure to squeeze more and more activities into the inventory—to find ways for every market instrument or intervention to count toward an inventory-based goal. That creates confusion and, potentially, risky accounting rules. It can become opaque whether a company really caused something to happen, whether it was responsible for the outcome, or whether someone else might also be claiming it. Good accounting can manage those risks. But historically, a lot of these things were simply lumped together because everyone was trying to drive everything into the inventory. One of TCAT’s contributions is to tease those things apart. That means companies may need different measures of progress. Some may focus on reducing the inventory. Others may measure progress toward decarbonizing a sector. A company might also have a goal associated with contributing to broader global decarbonization. If the only thing we give companies credit for is movement against one particular target, we aren’t creating all the incentives we need. There’s a useful analogy to financial accounting. We’re perfectly comfortable with a company having a balance sheet, a cash flow statement, and an income statement. They tell different but complementary stories about the company’s financial health. We also use multiple metrics—return on equity, net profit margin, earnings before taxes—to understand different dimensions of performance. We don’t have a problem with that complexity because we understand that those measures tell us different things. We need to get to a similar place with carbon management. Some companies would understandably love to synthesize all their climate progress into one number. But doing that forces an enormous amount of complex activity into a single reporting framework. The alternative is to allow companies to tell that story through several distinct but complementary measures. That’s what TCAT’s multi-statement framework is designed to enable. Alexia Kelly: I think that alignment with financial accounting is really important. If this space is going to mature and move toward increasingly consolidated—and hopefully harmonized—global rules, we need to be able to speak the language of finance and capital markets. I’m sure you experienced this briefing senior executives at Amazon. When I was at Netflix, trying to explain the governance of voluntary climate action to a CEO or CFO who wasn’t a climate expert was incredibly challenging. The more we can make these systems walk and talk like the systems they’re accustomed to dealing with—financial statements, income statements, cash flow statements, and the ways those are reconciled—the better off we’ll be. I don’t think that’s simply something that would be nice to do someday. It’s an imperative for our field. I want to clarify one thing about TCAT, though. Is TCAT telling companies what they’re allowed to count, or is it telling them how to account for the different things they’re doing? What’s the distinction? Chris Davis: TCAT tells companies how to quantify and report their mitigation actions, full stop. That creates a critical foundation, but TCAT doesn’t say, “These kinds of actions can or should count toward these kinds of goals.” Nor does it say that particular actions need to meet a particular set of quality criteria or have certain attributes. It simply says: If you choose to undertake these actions, here’s how they should be quantified and where they should be reported so that people can understand what you did. That leaves room for other standards bodies and organizations to say, “Once you’ve established that reporting framework, which of these things should count toward this goal? Which should be eligible under this target? What additionality or other quality criteria should apply?” Other organizations can layer those requirements on top. But without the foundation of how activities should be quantified and reported, we immediately get pulled into what are essentially policy decisions. TCAT tries to remain as policy-agnostic as possible and create that foundational layer on which other standards can build. Alexia Kelly: So could I use TCAT’s templates and guidance, for example, to report progress toward my science-based target? Chris Davis: You could. But you would also need the rules from your science-based target standard telling you which actions count and which don’t. There might be temporal boundaries: Does an emissions reduction need to be linked to the particular time when you intervened? There might be geographic boundaries: Can an activity in location A be related to an emission in location B? Those are eligibility and quality criteria that TCAT doesn’t establish. TCAT allows you to establish the range of things you’ve done in a consistent way. You can then work with the relevant target standard to determine how those actions relate to your target under that standard’s rules. Alexia Kelly: There’s another thing TCAT does that I think is quite different from the way inventories are currently calculated and mitigation actions are allocated in most systems today: It differentiates between mitigation actions and outcomes, on the one hand, and what we call inventory adjustments on the other. Can you talk about that distinction? Chris Davis: This is another area where we’ve heard a lot from companies. As we’ve discussed, the system we inherited is heavily focused on a company’s footprint and its inventory. That naturally drives companies toward actions that change that inventory. But a lot of things can change an inventory, and they may or may not be the result of anything the company actually did. Unfortunately, we’re in a wartime moment in the Middle East right now. Global airlines operating under the current aviation framework may see a significant dip in emissions because flights are rerouted or canceled as a result of war. Recessions can have a similar effect. Economic activity declines, companies scale back, and emissions fall. Many companies also estimate their Scope 3 emissions using models. Rather than measuring every indirect emission from every supplier, they may use spend-based estimates—how much they spent multiplied by an emissions factor. All of these things mean that there are forces that can change the numbers in your inventory without being the result of something you did as a company. That can cut both ways. It can make you look better or worse. But either way, it creates a challenge for companies that want to differentiate themselves from competitors based on their actual carbon performance. TCAT therefore created rules that help distinguish between changes in an inventory—or impacts in the world—that resulted from something a company directly caused or invested in, versus changes that happened because of things outside the company’s control. That helps companies call out instances when an inventory changes because of broader economic conditions. But it also allows them to shine a light on the specific contributions they are responsible for. That distinction hasn’t really been made before, and it addresses one of the shortcomings of treating inventory change as the only number that matters. TCAT isn’t arguing that inventories aren’t important. Of course we should track them. It’s simply saying that judging whether a company is doing enough based solely on changes in that number isn’t sufficient. Alexia Kelly: I completely agree. One of the challenging pieces of prevailing wisdom is the idea that the inventory is an infallible reflection of action. It isn’t. It’s quite fallible. As sectors decarbonize, we will hopefully see companies’ inventory numbers fall substantially over time. But those companies may or may not have done anything to make that happen. The numbers may be falling because more renewable energy has been deployed across the sector, for example. If we want to incentivize action and give credit where credit is actually due, we need to distinguish between those broader changes and the mitigation outcomes a company itself drove because it made an investment, paid a green premium, or helped finance a renewable energy project. To give companies credit for those actions, you need a way to separate them from everything else happening in an inventory—which, as you pointed out, is itself often based on estimated and modeled numbers. That was a lot of the impetus for this work. We want to understand what’s happening to corporate inventories, but we also need to understand how the things companies are doing—or not doing—are affecting those inventories. The series of tests and the admittedly very large flow chart we’ve developed are essentially a sorting exercise designed to provide that additional transparency: What did I do, where does it belong, and how well did it work? So, what has TCAT been up to since its launch last September? Chris Davis: We’ve been very busy. As you mentioned, we launched the two guidance documents during Climate Week in September. Very quickly afterward, we initiated the first of two pilot phases. In the first pilot, which ran through the autumn and into the holiday season, we worked with roughly 15 companies to take the guidance out for a drive and see how it performed. We ran real-world mitigation actions through the tests. We worked with companies on the reporting statements. We explored the TARG reporting templates. And companies ran some of their historical data through the system so we could understand what they learned and what we needed to improve. We wrapped that work around the end of the year and used the feedback to design a second pilot, which is underway now. We also used feedback from the first pilot to update the original guidance. We released version 1.1 last spring and currently have a public consultation underway. We’re inviting NGOs, companies, and others with relevant expertise to review those changes and provide feedback. The guidance is designed to be both scope- and sector-agnostic. The best practices for quantifying and reporting mitigation should apply whether you’re addressing Scope 1 or Scope 3 emissions and across different sectors. There were a few exceptions. In the first version, we noted that we weren’t yet able to fully account for the financial sector, which has some unique considerations. And during the first pilot, we heard that a handful of other sectors would benefit from a deeper dive. Two in particular were the land sector—including agriculture and forestry—and electricity. Within electricity, there was particular interest from companies in exploring additional approaches beyond traditional attributional accounting and understanding how impact accounting might be used. Our second pilot therefore does a deeper dive into those two sectors. Across the two pilots, we’re delighted to now have about 30 companies participating, along with roughly a dozen major NGOs bringing a civil-society perspective to the challenges. We’re taking input from those work streams now and will use it to develop supplemental work or potentially another version of the guidance later this winter. Alexia Kelly: And, as you mentioned, we’re also doing a public consultation. Chris Davis: Yes. After releasing version 1.1 in the spring, we opened it for public consultation. It’s available now, and we’re inviting companies, NGOs, and anyone else with expertise in this area to give us feedback. Alexia Kelly: What comes next for TCAT as we continue engaging with the broader corporate ecosystem and the standard-setting community? Chris Davis: First, we’re digesting what we’ve learned from the pilots and asking where we can make the most useful contribution, particularly in these sector-specific areas. We’ve heard several positive things. Simplicity and clarity have paid off. This is often an extraordinarily jargon-filled world, and we’ve helped bring some clarity to it. We’ve helped establish the multi-statement framework, and now there’s work to do to support companies in actually applying it. I also think we’ve helped create a clearer distinction between things that should be accounted for attributionally and things that should be accounted for consequentially, and how those approaches can be managed cleanly alongside one another. We’ve also received important critical feedback. The TARG reporting statements are very detailed. They ask for a lot of information about companies’ use of environmental attribute certificates so those actions can be well substantiated. We’ve heard ways that those templates can be streamlined, and we’re working on that. We also hear a lot from companies about the need for claims guidance—greater certainty about what they can actually say publicly once something has been reported in a particular place. We want to be careful about TCAT’s role there versus the role of other standards. But there is work we can do to clarify what it means when an action appears in a particular reporting statement. And we’re considering sector-specific supplementary guidance for both land and electricity. Alexia Kelly: Since you’ve raised consequential and attributional accounting, I think it’s worth spending a couple of minutes on that distinction. I get asked regularly—even by other experts—“Wait, what is this again, and what’s the difference?” So why don’t you give your version, and then I’ll give mine: What are attributional and consequential accounting, and why are they both so confusing and so important? Chris Davis: The way I explain it to people who don’t live in this world is that attributional accounting is essentially what we use to track the emissions in our carbon footprint or inventory. We evaluate the carbon associated with different products, services, or activities in a company’s value chain and add those things together. That gives us an accounting of the greenhouse gas emissions associated with what a company does—what it buys, what it makes, what it purchases from suppliers, how customers use its products, and how those products are disposed of at the end. It gives you a comprehensive view of the emissions associated with a company’s activities. That’s important, and it is sensitive to some things companies do. If you switch from buying steel from a carbon-intensive producer to a less carbon-intensive producer, for example, that should show up as a lower number in your inventory. It demonstrates that you’ve reduced the emissions attributed to your company. But did the atmosphere actually experience a reduction? We don’t necessarily know. If the high-emitting steel producer simply sells that same steel to somebody else, perhaps not. If the loss of your business reduces its market share and ultimately its production, perhaps it did. To track and quantify the atmospheric effects of actions more directly, we have a different technique: impact accounting, or consequential accounting. Rather than asking how emissions are attributed to a company’s activities, consequential accounting asks: How did an action you took reduce or remove emissions in the atmosphere relative to what otherwise would have happened? That could result from changing suppliers. It could come from investing in nature restoration. It could involve fuel switching or any number of other interventions that reduce or remove emissions. Do those actions necessarily change your inventory? No. Could they? Yes. But if we spend all our time trying to force the effects of those activities into an inventory, we end up in strange accounting territory because the techniques and metrics used to answer these two questions are different. TCAT’s view is that both are legitimate and useful. We want companies undertaking these mitigation activities. But if we want to incentivize those activities, we need a separate way to report and aggregate their impacts alongside, rather than forcing them into, the corporate inventory. That’s the fundamental distinction between attributional and consequential accounting. Alexia Kelly: I think that’s well explained. My shorthand is that attributional accounting measures the emissions associated with a good, product, service, or activity over a particular period of time. It asks: What emissions are associated with this particular thing that I do? Consequential accounting asks a different question: What change in emissions did my action actually cause? In the MARG, we talk about mitigation actions and mitigation outcomes. To qualify as a mitigation action, you have to pass what we call the mitigation action test: Am I doing something differently than I otherwise would have done in order to reduce emissions? The impact of that action can show up in your inventory. Maybe I switch from a steel producer with an emissions factor of ten to one with an emissions factor of five. That reduction can be reflected in my inventory. A consequential approach would ask something different. Maybe I implement a control technology at a steel factory, and that technology reduces emissions from ten tons to five. The consequential accounting asks us to quantify the five tons of emissions that were avoided because of that intervention. The two systems are complementary, but they result in different units of measure. I think that’s one place people get tripped up. Attributional accounting is typically expressed through emissions factors—an emissions intensity associated with a unit of a good, product, or service. Consequential accounting is generally expressed in absolute tons of outcome: emissions reduced or removed relative to a baseline. That consequential approach has been most famously and formally codified through carbon markets over many years. But as more companies seek to take action—and particularly as we try to incentivize deep decarbonization across supply chains—we’re running into a translation problem. Not everything in the consequential world shows up neatly in an inventory accounting system. Another way of saying that is: Not everything we do to reduce emissions in the real world will naturally appear in the corporate inventories we use today. A lot of the work TCAT, the Actions and Market Instruments work, and the AIM Platform are doing is therefore a translation exercise: How do we make these systems talk to one another? What’s the conversion mechanism between two highly related and adjacent accounting approaches that nevertheless tell us somewhat different things? I think that’s where a lot of the confusion has come from. And it’s also where much of the work over the next 12 to 18 months sits for the entire field. We need to make that translation credible and transparent, without inadvertently privileging one accounting approach over another in ways that create new opportunities for greenwashing, poor accounting, or weak governance. I want to turn now to the environmental attribute certificate and commodity space—the instruments that can show up in corporate supply chains—and the more traditional carbon-credit world. These are different instruments and different expressions that help us do different things. But ultimately, they’re all intended to help channel finance toward deep decarbonization of supply chains and reductions in atmospheric emissions. Because, at the end of the day, that’s the ledger that matters most. So let’s return to multi-ledger reporting. Why is it so important to have multiple reporting statements, and particularly statements beyond simply “inside the inventory” and “outside the inventory”? Chris Davis: We’ve talked about how these different accounting techniques are designed to answer different questions. They’re appropriate for different types of activities and reflect different things a company might be doing. Allowing companies to use both approaches broadens the opportunity space for action. The key to making that work—and reducing the risk companies have historically associated with actions that might not “count” toward an inventory-based target—is a clear reporting framework. Companies need to be able to distinguish one type of activity from another and do so consistently from year to year and from company to company. If companies in different sectors are making similar real-world investments, ideally those activities should show up in comparable ways in their reporting statements. That’s the purpose of the rules and tests we’ve developed. Once you move beyond looking only at the corporate footprint, the logic of multiple statements becomes fairly intuitive—particularly when you compare it with financial reporting. It allows us to distinguish between changes a company actively caused in its own footprint and changes that simply happened around it. That helps companies differentiate themselves. It reduces greenwashing risk by requiring companies to be clear about what they’re actually responsible for. And it allows them to show their work. One criticism of market-based instruments historically has been uncertainty about double counting or whether systems are robust enough to demonstrate that the reported outcome genuinely reflects what a company did. TCAT helps address that by bringing transparency to those activities. And ultimately, that creates new incentives. If companies can take action with less risk that they’ll be attacked simply because an activity doesn’t fit neatly into the inventory, you open up opportunities for more investment. That’s really the value of a multiple-reporting-statement framework. Alexia Kelly: I think that’s great. And, just for the record, SBTi is the only standard-setting body I’m aware of that has tried to measure progress toward climate commitments or targets using only an inventory. The UN has never done it. Emissions trading systems don’t do it. There really isn’t another target-accounting system that tries to accomplish everything through the inventory alone. And for all the reasons we’ve been discussing today, that’s really hard to do well. So when I think about the future of this space, I think we need to get much more comfortable with multiple ledgers and multiple reporting statements that tell us different things—while making sure that they’re transparent, governed by strong rules, and can ultimately be reconciled with one another. How do you see TCAT fitting into this broader ecosystem as the Greenhouse Gas Protocol, SBTi, AIM, ISO, and others continue to evolve? Chris Davis: I think that’s exactly the right question, because TCAT was never intended to replace all of those other systems. Different organizations are answering different questions. The Greenhouse Gas Protocol plays a foundational role in corporate greenhouse gas inventories. SBTi establishes target-setting requirements. Other initiatives are developing more detailed rules for particular mitigation activities, sectors, or market instruments. TCAT’s role is to provide a consistent framework for quantifying and reporting mitigation actions across that landscape. Ideally, that creates interoperability. If another standard determines that a particular activity is eligible toward a target, TCAT can provide a standardized way to quantify and report that activity. If a company undertakes an action that doesn’t count toward a particular target but nevertheless produces a legitimate mitigation outcome, TCAT can provide a transparent place to report that too. That’s where I think the multi-statement framework becomes especially useful. We don’t have to pretend that every action is the same or that every action serves the same purpose. We can report them distinctly, apply the appropriate accounting techniques, and then allow different standards to determine what is eligible for their particular purposes. Alexia Kelly: And that feels increasingly important as this landscape becomes more complicated. We’ve spent a lot of time in the climate community trying to find the single perfect metric or the single perfect accounting system. But the real world is messier than that. Companies are making operational changes. They’re changing procurement. They’re investing in suppliers. They’re buying environmental attribute certificates. They’re financing technologies that may not yet be available in their own supply chains. They’re purchasing carbon credits. They’re making investments that could have significant sector-wide impacts. Those things are not all the same. We shouldn’t pretend they are. But we also shouldn’t create a system where the only action that receives recognition is the action that happens to fit neatly into one particular accounting framework. Chris Davis: Exactly. And I think that gets back to incentives. Accounting systems are not neutral in the sense that people respond to them. If you tell companies that only one particular category of action matters, companies will naturally direct resources toward that category. Sometimes that may be exactly what we want. But sometimes it may prevent investment in other activities that could have significant climate benefits. So the question is: How do we maintain rigor without unnecessarily narrowing the range of actions companies can take? Transparency is a big part of the answer. If companies clearly disclose what they did, how they quantified the outcome, what accounting approach they used, where that action occurred, and how it relates—or doesn't relate—to their inventory and targets, then stakeholders can evaluate those activities for themselves. That is much better than trying to solve every question by forcing everything into a single number. Alexia Kelly: I think that’s exactly right. And one of the things I find encouraging about where we are right now—despite all of the fragmentation and all of the alphabet soup—is that there does seem to be some convergence around these fundamental ideas. We’re seeing more recognition that inventories and mitigation-action accounting serve different but complementary purposes. We’re seeing more interest in multi-ledger or multi-statement reporting. And we’re seeing greater recognition of the need to connect accounting to real-world action and capital allocation. So when you look ahead a few years, what would success look like to you? What would you hope this ecosystem looks like? Chris Davis: Success would be a world in which companies have much greater clarity. They understand how to quantify their emissions. They understand how to quantify the mitigation actions they’re taking. They understand where to report those things. And they understand which actions are eligible under the different targets or standards they’ve adopted. Ideally, those systems are interoperable enough that companies aren’t doing the same exercise five different ways for five different reporting regimes. We should have consistency around the foundational accounting and reporting rules, while still allowing different standards and policymakers to make different choices about ambition, eligibility, and quality. That would substantially reduce the transaction costs companies face today. And, most importantly, it would allow people inside companies to spend less time debating accounting and more time actually figuring out how to reduce emissions. Alexia Kelly: Amen to that. Because that’s ultimately the point, right? Greenhouse gas accounting is not the goal. Decarbonization is the goal. Accounting is incredibly important. We need credible measurement. We need transparency. We need accountability. We need systems that prevent double counting and bad actors from taking credit for things they didn’t do. But if we build a theoretically perfect accounting system that makes companies afraid to act—or consumes all of their time and resources trying to comply with increasingly complicated rules—then we haven’t succeeded. The accounting has to enable action. Chris Davis: Absolutely. And that’s probably the thing I’m most optimistic about right now. There’s a lot of debate in this space, and sometimes it can feel like we’re getting further apart rather than closer together. But underneath that debate, there’s actually a lot of convergence happening. People increasingly recognize the shortcomings in the systems we inherited. They recognize the need to modernize them. They recognize that companies need clearer rules for mitigation actions. And there’s increasing alignment around some of these basic architectural concepts. The details still matter enormously. There’s a lot of work left to do. But compared with where we were several years ago, we’re having a much more sophisticated conversation about what these systems actually need to accomplish. Alexia Kelly: Yeah. I completely agree. And I always like to end these conversations on a hopeful note. You’ve been working on climate policy and corporate sustainability for a long time, through plenty of ups and downs. What’s keeping you motivated right now? What makes you optimistic about where we’re headed? Chris Davis: For me, it’s the continued commitment I see from the people doing this work. There are obviously significant political headwinds right now, particularly in the United States. But when you talk to the people inside companies who are actually responsible for sustainability, procurement, operations, finance, and strategy, the work hasn’t stopped. The reasons companies need to decarbonize haven’t gone away. Climate risks haven’t gone away. Regulatory requirements in many parts of the world haven’t gone away. Customer expectations haven’t gone away. And many of the economic opportunities associated with the transition are only getting larger. What I find encouraging is that the conversation is becoming more practical. We’re moving beyond simply asking companies to make commitments and toward the harder questions: What exactly are you going to do? How are you going to finance it? How will you measure whether it worked? How will you report it credibly? Those are difficult questions, but they’re the questions you ask when you’re actually trying to implement something. So I remain optimistic that we’re moving from an era focused heavily on commitments into an era focused much more on implementation. Alexia Kelly: I love that. And I think that’s a perfect place to end: moving from commitments to implementation and making sure our accounting systems actually help us get there. Chris, thank you for joining me. Thank you for all of the work you’re doing with TCAT and for helping us navigate what is, admittedly, an extraordinarily complicated landscape. Chris Davis: Thank you, Alexia. It’s always a pleasure. Alexia Kelly: And thanks to everyone for listening. We’ll see you next time on Navigating Net Zero.