An article outlining a new approach to measuring and reporting companies’ greenhouse gas (GHG) emissions has won the 2021 HBR McKinsey Award, which honors the best Harvard Business Review article of the year.

In “Accounting for Climate Change,” Harvard Business School professor Robert S. Kaplan and University of Oxford Blavatnik School of Government professor Karthik Ramanna 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’sdirect and supply-chainemissions 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.”

Robert S. Kaplan is a senior fellow and the Marvin Bower Professor of Leadership Development, Emeritus, at Harvard Business School. Karthik Ramanna is professor of business and public policy at Oxford University’s Blavatnik School of Government.

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.

The annual HBR McKinsey Awards, judged by an independent panel of business and academic leaders with input from members of HBR’s Advisory Board, commend outstanding articles published each year in Harvard Business Review. This year’s announcement appears in the May-June issue of the magazine.

This year’s HBR McKinsey Awards also recognizes three finalists:

• “The Circular Business Model” by Atalay Atasu, Céline Dumas, and Luk N. Van Wassenhove
• “Unconscious Bias Training That Works”by Francesca Gino and Katherine Coffman
• “Net Promoter 3.0”by Fred Reichheld, Darci Darnell, and Maureen Burns

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The 2021 HBR McKinsey judges were: Kathleen Eisenhardt, Professor, Stanford School of Engineering; Trevor Fetter, Senior Lecturer, Harvard Business School; Claudio Fernández-Aráoz, Former Partner, Egon Zehnder; Sunil Gupta, Professor, Harvard Business School; Samantha Hammock, Executive Vice President and Chief Human Resources Officer, Verizon; Linda Hill, Professor, Harvard Business School; and Herminia Ibarra, Professor, London Business School

Source: Business Wire