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Incorporating Carbon Emissions into Decision‐making—The Case of Transactional Connectivity

Author

Listed:
  • Bastian Distler
  • Jürgen Ernstberger
  • Mario Keiling
  • Felix Müller
  • Mike Szabo

Abstract

This paper proposes transactional connectivity as a new dimension of connectivity between financial and non‐financial information. To incorporate non‐financial information into decision‐making, it must be available at the same level of granularity as financial information. A specific use case is transactional carbon accounting, which adds carbon emissions information to transactions recorded in a firm's general ledger. Consequently, general ledger accounts and, thus, the balance sheet and income statement show monetary values and carbon emissions. This strong connectivity between financial and carbon information (i) enables integrated thinking by considering carbon and financial information equally in decision‐making, (ii) provides more decision‐useful information for investors, and (iii) increases the reliability of carbon information as auditors can apply the same procedures as for financial information. Our paper adds to the ongoing debate on connectivity by proposing transactional connectivity as a new dimension of connectivity and by showing a use case for carbon emissions.

Suggested Citation

  • Bastian Distler & Jürgen Ernstberger & Mario Keiling & Felix Müller & Mike Szabo, 2025. "Incorporating Carbon Emissions into Decision‐making—The Case of Transactional Connectivity," Abacus, Accounting Foundation, University of Sydney, vol. 61(4), pages 1023-1051, December.
    • Handle: RePEc:bla:abacus:v:61:y:2025:i:4:p:1023-1051
    DOI: 10.1111/abac.70012
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    References listed on IDEAS

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    1. Stefan Reichelstein, 2024. "Corporate carbon accounting: balance sheets and flow statements," Review of Accounting Studies, Springer, vol. 29(3), pages 2125-2156, September.
    2. Alfred Wagenhofer, 2024. "Sustainability Reporting: A Financial Reporting Perspective," Accounting in Europe, Taylor & Francis Journals, vol. 21(1), pages 1-13, January.
    3. Bastien David & Sophie Giordano-Spring, 2022. "Connectivité entre le reporting financier et extra-financier : une exploration à travers la comptabilité « climat »," ACCRA, Association francophone de comptabilité, vol. 28(4), pages 21-50.
    4. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
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    Cited by:

    1. Stewart Jones & Baljit Sidhu, 2025. "Accounting at a Crossroads: Intangibles, Sustainability, and the Future of International Financial Reporting Standards," Abacus, Accounting Foundation, University of Sydney, vol. 61(4), pages 819-832, December.

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