Scope 3 decarbonization through environmental attribute certificates

Reducing greenhouse gas emissions from economic activity is a growing priority for companies globally in support of corporate net-zero targets. Scope 3 emissions—those occurring throughout a company’s value chain—are not only the largest share of most companies’ carbon liability, but also the most difficult to address. The prescribed approach relies on “supplier engagement,” a catch-all term that includes everything from moral suasion to economic subsidy. However, this often fails to extend beyond first- and second-tier suppliers. This leaves the bulk of upstream emissions—generated by deep-tier, hard-to-abate commodity producers—unaddressed. Environmental Attribute Certificates (EACs) are market-based instruments representing verified environmental attributes (e.g., the quantity of GHG emissions per unit of production) linked to specific upstream commodities. We propose that by enabling downstream firms to purchase these certificates and claim verified decarbonization benefits independent of physical supply chain flows, EACs can support an insetting regime that bridges supply chain distances and provides a scalable pathway to Scope 3 decarbonization. Whether through bilateral deals or inclusive market platforms, EACs can offer demand guarantees and price stability to producers of hard-to-abate commodities, supporting investment in low-carbon technologies. Critical implementation issues such as responsibility accounting, double counting, and frameworks to ensure credibility are also acknowledged.