How climate standards are slowing down corporate decarbonization

The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.

Under the second Trump adminisration, the U.S. government has effective abandoned its traditional federal role of safeguarding the environment and pushing businesses to respond to the growing threats of climate change. As a result, a major share of corporate climate action rulemaking has been relegated to standards bodies and industry initiatives led by environmental NGOs.

That work is important. Without it, companies would have even less clarity about how to measure emissions, set targets or make credible claims. But the corporate climate community is now facing a tough question: What happens when those systems become bottlenecks rather than enablers?

A bottleneck of standards

Some key aspects of the existing climate governance architecture simply aren’t equipped for the scale and speed required by the climate crisis. They move too slowly through often opaque processes with governance that doesn’t match their real-world influence. When these processes become the effective arbiter of whether a company’s approach to accounting, target-setting or claims-making is legitimate, their design flaws and delays become market barriers.

That matters for reasons Trellis readers understand well. These rules now affect capital allocation, procurement decisions, target-setting confidence, internal auditability, the overall credibility of corporate reporting and, increasingly, legal exposure. If the rulebook is incomplete, inconsistent or unworkable, companies slow down. Some defer investment or direct it to less contested areas. Others narrow their ambition to whatever can most easily be defended. In the worst cases valuable climate action initiatives can get stranded because the governance system surrounding them cannot process complexity at the speed the market now demands.

This problem is made worse by a paradox: In some parts of the rulemaking system, companies face a thicket of overlapping frameworks and proliferating definitions. In others, one body still dominates a critical lane of legitimacy. For sustainability teams, the result is often the worst of both worlds: too many standards overall, but too few practical options when one key process stalls.

Ripple effects

The land sector offers a useful example. The recent failure to settle on a universal forest carbon accounting method exposes a form of process risk that concerns not only forestry specialists. When technical processes drag on, when late-stage concepts are introduced without sufficient buy-in and against majority consensus, and when the final result creates confusion rather than clarity, the consequences ripple far beyond a process failure, affecting finance and implementation.

For land-use and forestry investment, the stakes are significant. If removals and land-sector performance cannot be reflected credibly in portfolio carbon metrics, large allocators lose one of the clearest ways to justify investment at scale. Take weighted average carbon intensity, a common portfolio metric, for example. In plain language, it’s meant to help investors understand the emissions profile of what they own by demonstrating the net GHG emissions associated with each dollar of value. But if accounting rules make it difficult or impossible to recognize the climate value of land-based mitigation and removals in a coherent way, then those activities can disappear from the metrics many institutions use to make decisions.

That isn’t a theoretical concern. Natural climate solutions face an array of barriers: long time horizons, relatively modest financial returns, biological complexity and persistent skepticism from some corners of the market. Add unworkable accounting treatment, and desperately needed mainstream capital has one more reason to stay on the sidelines.

Similar dynamics are playing out across harder-to-abate supply chains, including agriculture, utilities and materials, where companies are trying to decarbonize through imperfect, but important, tools. If definitions, scopes and accounting rules don’t map onto commercial or scientific reality, procurement incentives weaken. If mass-balance systems and mixed-attribute sourcing are treated as suspect rather than managed pragmatically, companies have fewer pathways to drive transition in their supply chains. If definitions keep proliferating with little interoperability or real-world foundations, businesses will continue to spend more time reconciling frameworks than reducing emissions.

Evolving rulemaking 

None of this means the answer is to lower integrity. It means integrity has to be operationalized. It also means that rulemaking processes must operate with the same integrity, transparency and accountability as they demand from the market. 

There are signs of change. Stakeholder participation is rising. Consultations are drawing more participation and scrutiny than they did five or six years ago, which is raising awareness and improving accountability and transparency. Corporate users, auditors, investors and civil society are all paying closer attention to governance quality, not just technical outputs. Some organizations — such as the Science Based Targets initiative — are showing signs they understand the need to become more responsive and more attentive to the consequences, intended and otherwise, of their decisions.

The core issue is that NGO-led processes were never meant to serve indefinitely as the primary rule-makers for a rapidly scaling sustainable economy. These processes are an artifact of a time when reporting on a company’s environmental impacts was voluntary. In the absence of government-led processes, NGO rules have had  fill the gap. But we need to be clearer about when and where environmental NGOs lack the expertise, experience or capacity to credibly manage regulated market infrastructure. 

What’s needed now is true modernization: clearer governance rules, better transparency in decision-making, more disciplined handling of dissent, guidance that can be audited and faster mechanisms for updating rules without years of drift. And companies must find the courage to support complementary and emerging approaches where legacy systems prove unable to adapt.