The Italian Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili, CNDCEC), together with the Italian Foundation of Accountants (Fondazione Nazionale dei Commercialisti, FNC), has recently published an operational document on methodologies for mitigating the risks associated with carbon washing practices.
The current economic landscape is marked by increasing attention to decarbonization strategies, driven by:
- An evolving regulatory framework, which, although still stabilizing, sets a clear direction toward greater transparency;
- The crucial importance of corporate reputation in the eyes of investors, consumers, and other stakeholders;
- The availability of financial incentives tied to low environmental impact projects.
However, the fragmentation and lack of standardization of sustainability reporting and monitoring schemes create an environment in which companies may be incentivized to publish green claims that do not fully reflect their actual environmental performance.
The motivations behind these misleading statements often stem from:
- The attempt to strengthen competitive advantage in a market sensitive to environmental, social, and corporate governance issues;
- The desire to achieve greater profits through a more favorable brand perception;
- The goal of enhancing reputation in the absence of verified and solid environmental performance.
This practice, beyond exposing companies to reputational risks and potential litigation, undermines stakeholder trust and obstructs a genuine and measurable ecological transition.
Origins of the Carbon Washing Phenomenon
The absence of a standardized framework among the main emission reporting systems (such as the Carbon Disclosure Project and the Science Based Targets initiative), combined with a lack of systematic processes for independent verification of environmental, social, and governance (ESG) data, compromises the reliability of ESG information disclosed by companies.
This opaque context fosters a specific form of greenwashing, known as carbon washing. This practice involves the deliberate underestimation or falsification of data regarding greenhouse gas (GHG) emissions, aimed at gaining economic and reputational advantages.
Indicators and Practices Related to Carbon Washing
CNDCEC and FNC have identified a series of bad practices and indicators that may characterize carbon washing:
- Overly ambitious environmental declarations (green claims) not supported by concrete action plans or a real commitment from management to implement sustainability projects;
- Predominant use of speculative GHG offsetting schemes without significant internal emission reduction initiatives;
- Partial and inconsistent environmental data collection and measurement processes, conducted with non-replicable methodologies;
- Use of emission calculation methods lacking scientific grounding, marked by methodological opacity and high discretion in estimation;
- Poorly detailed environmental performance reporting, lacking comparability over time or showing contradictions across different disclosures;
- Selective information disclosure, aimed at highlighting only positive or partial data on emissions;
- Fragmented and unharmonized sustainability information dissemination across various channels (e.g., reports, websites, blogs), with possible inconsistencies;
- Lack of a solid internal governance framework and assurance processes for validating carbon data;
- Absence of independent external verification conducted by qualified and accredited third parties on carbon emission data.
Methodology for Preventing Corporate Carbon Washing
The document outlines a methodological approach to prevent carbon washing, based on a materiality factor analysis and structured in two operational phases:
- Ex-ante phase: assessment of the qualitative and quantitative aspects of environmental declarations issued by corporate management to verify their preliminary consistency and reliability.
- Ex-post phase: implementation of a follow-up control process, including:
- The application of the Life Cycle Assessment (LCA) methodology, aimed at scientifically calculating GHG emissions generated throughout the full life cycle of the organization’s products or services;
- A comparative analysis between forecasted data communicated initially, the actual environmental outcomes achieved and reported ex-post, and the results from the LCA methodology.
In summary, carbon washing can be identified through the emergence of significant discrepancies between the promised GHG emission reduction targets, the officially communicated data at the end of the reporting period, and the actual GHG emissions verified through LCA.
The Life Cycle Assessment Methodology
By March 27, 2026, EU Member States are required to transpose and implement the provisions of Directive 2024/825/EU, whose national measures will apply from September 27, 2026. The directive sets out minimum requirements for the reliability and transparency of voluntary environmental claims and eco-labeling systems in business-to-consumer practices.
In this regulatory context, the LCA methodology is positioned as a tool aligned with European requirements, as it allows for:
- Identifying the main environmental impact factors of a product or service through a structured scientific evaluation;
- Considering the entire life cycle of the product, including the whole value chain (supply chain);
- Providing an objective and verifiable basis for environmental claims, thus helping to mitigate greenwashing phenomena, including unintentional ones.
This methodology, applicable to all types of organizations, is governed at the national level by UNI EN ISO 14044:2021 and consists of the following four phases:
- Definition of objectives and rationale requiring an LCA analysis. This phase includes defining the methodologies, the operational boundaries of the assessment, and the LCA models used;
- Life Cycle Inventory, focused on collecting input data (e.g., raw materials and energy) and output data (e.g., emissions to air, water, and soil, including waste generation) related to the analyzed system;
- Life Cycle Impact Assessment, which evaluates the environmental performance of the product and/or service based on the LCI results through four sub-phases: 3.1 classification of inputs/outputs into relevant impact categories; 3.2 calculation of each input/output's contribution to impact categories and aggregation within categories; 3.3 normalization of results to allow comparability across impact categories; 3.4 application of weighting factors reflecting the perceived importance of each life cycle impact category;
- Interpretation of results, the final phase dedicated to a critical analysis of findings, including completeness, sensitivity, and consistency checks.
Conclusions
The evolving environmental regulatory landscape and the market's growing sensitivity to robust ESG criteria make it essential to adopt a more rigorous approach to greenwashing — particularly carbon washing practices.
In response to this need, CNDCEC and FNC promote a strategic and integrated approach, encouraging companies to adopt the LCA methodology as a scientific standard for quantifying environmental impact, alongside the integration of Carbon Management Accounting (CMA) into accounting systems and the implementation of advanced technological solutions, such as the Internet of Things and Edge Computing.
This approach, which combines methodological rigor, accounting integration, and digital innovation, forms the foundation for building credible environmental claims, mitigating reputational and legal risks, and driving a transparent ecological transition.