This article is part of a Synergies series on Next generation trade arrangements for environment and sustainable development. Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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The pressure for greater emissions transparency has moved beyond a peripheral agenda and now directly shapes market rules, access to capital, and international competitiveness. Standards such as the GHG Protocol—which guides corporate emissions measurement—alongside initiatives like the Science Based Targets initiative (SBTi) as well as climate disclosure frameworks such as the ISSB standards (IFRS S1 and S2) and the European Sustainability Reporting Standards (ESRS) / Corporate Sustainability Reporting Directive (CSRD), now define how companies measure, disclose, and are evaluated on their climate performance. 

These instruments enable companies to report emissions across their operations and value chains, promoting transparency for investors, regulators, and consumers. More than accountability mechanisms, they have also become tools for accessing finance and markets—especially those governed by environmental criteria. Carbon has ceased to be merely an environmental indicator and now functions as a strategic economic variable for market access. The adoption of these standards has advanced rapidly, and the push for regulatory harmonization and continuous methodological updates is increasingly central to the global policy agenda. 

These voluntary and mandatory regulatory developments, however, are not unfolding uniformly. While the European Union adopts more prescriptive approaches—such as the EU Deforestation Regulation (EUDR)—which restricts the entry of products associated with deforestation—and the CSRD—which broadens disclosure requirements—other systems, such as the ISSB, seek greater global harmonization. Comparative studies show that this landscape has become increasingly fragmented, with divergences in scope, materiality, and methodology across different systems, generating significant compliance challenges. 

Brazil offers an illustrative case of this tension. The joint decision by the Comissão de Valores Mobiliários (Securities and Exchange Commission) and the Ministry of Finance to make sustainability reporting aligned with IFRS S1 and S2 mandatory—through a phased approach starting in 2026—positions the country among the first emerging markets to incorporate compulsory climate disclosure, including Scope 1, 2, and 3 emissions. The measure is part of a broader regional movement: Chile, Colombia, and Mexico are advancing in the same direction. 

The problem is that adopting the standard is the simplest step. Operationalizing it with credibility in a country whose corporate climate footprint is dominated by land use and agriculture—rather than industry or energy, as in developed economies—requires measurement and verification capacities across production systems that are spatially dispersed, informal, and difficult to trace. That is where the real challenge and opportunity lies for market actors. 

Transparency, in this new landscape, is not neutral. It reorganizes power relations along supply chains. Large buyers and traders increasingly act as transmitters of regulatory requirements, demanding data, traceability, and proof of compliance from their suppliers. Empirical evidence shows that this pressure propagates along the chain—influencing even indirect suppliers—and tends to favour actors with greater technical capacity and access to monitoring systems. 

The critical point is that most of these requirements fall precisely on the hardest emissions to control. In land-use sectors, Scope 3 emissions—those generated outside the direct perimeter of companies, by suppliers, distributors, and consumers along the value chain—can represent more than 80% of an organization's total climate footprint. In January 2026, the GHG Protocol launched the new Land Sector and Removals Standard, aimed at improving reporting guidelines for this sector. In the food sector, this raises a direct question: who can remain in markets under these new rules?

This is not a rhetorical question; concrete answers are already emerging through shifting commercial strategies. There is evidence that companies are adjusting their supply chains to reduce exposure to climate and regulatory risks, replacing suppliers or prioritizing those able to deliver auditable data. In the United States, the mere prospect of Scope 3 disclosure regulation led companies to reduce imports from foreign suppliers by up to 8.4%; before any rule even took effect. 

This development carries significant risks of exclusion. In contexts such as Indonesia, it is estimated that fewer than 1% of smallholder palm oil producers meet the certification requirements compatible with the EUDR, illustrating the scale of the challenge for small producers in global supply chains.

The transformations underway also expose important limits of current regulatory approaches. One of the main risks is carbon leakage—the displacement of emissions to regions with weaker regulation. In simple terms, this occurs when environmental policies reduce emissions in certain territories but lead to the expansion of production— and emissions—in other locations, with no net global gain. 

Evidence shows this risk is real. Trade restrictions linked to deforestation can reduce emissions in exporting countries, but their effectiveness depend on complementary domestic policies in those same countries. Without direct forest protection measures and coordinated governance among producing and importing regions, the displacement of emissions can neutralize expected climate gains.

This phenomenon also occurs within countries. In Latin America, there are documented cases of producers meeting environmental standards in certain regions while expanding operations into less regulated areas. In Argentina, for example, there is evidence of compliance in the Pampas accompanied by productive expansion into the Gran Chaco. In Brazil, restrictions focused on the Amazon risk increasing pressure on the Cerrado—a biome of high ecological relevance that is not fully covered by certain international regulatory criteria.

Beyond environmental effects, there are also significant economic impacts. Modeling indicates that the implementation of mechanisms such as the EU Carbon Border Adjustment Mechanism (CBAM) tend to generate net welfare gains for developed countries and losses for developing nations, reflecting an unequal distribution of transition costs. These costs go beyond regulatory compliance: they include investments in technology, data infrastructure, monitoring systems, and institutional capacities. 

This asymmetry is compounded by the fact that, in many cases, adaptation costs are passed on to producers—often without equivalent compensation in price or market access. Indeed, there is evidence that producers bear traceability and compliance costs with no guarantee of compensatory premiums, deepening inequalities within productive chains.

At the same time, the proliferation of competing standards contributes to system fragmentation, creating an environment in which different methodologies and verification systems function as market-entry barriers.

The evolution of emissions measurement systems—such as the GHG Protocol's Land Sector and Removals Standard— promises greater precision and comparability by requiring detailed spatial data and more rigorous monitoring. However, this greater granularity comes at a cost. The more demanding the requirements, the greater the risk of excluding producers without access to digital infrastructure, technical assistance, or certification systems. 

In response to this scenario, many companies have been shifting from offsetting to insetting strategies, prioritizing emissions reductions within their own supply chains. While promising, this approach still faces important limitations. There are measurement challenges, an absence of universal standards, and biophysical limits to carbon sequestration in certain systems. Without robust governance and clear criteria, these strategies risk failing to produce real reductions—or replicating limitations already observed in offset markets such as non-additionality, lack of permanence, and the reduction of complex ecosystems to just carbon accounting tools.

Moreover, evidence suggests that the adoption of global standards does not always translate into structural improvements in reporting systems, reinforcing the need for critical approaches adapted to different contexts. 

Faced with this scenario, transparency must be understood as part of a broader transformation agenda. For it to produce effective results, progress is needed on four complementary fronts: the development of data infrastructure as a public good; the design of more inclusive supply chains; coordination and interoperability across international standards; and the incorporation of equity mechanisms into trade governance. The delays in implementing regulations such as the EUDR illustrate that even regulators face challenges in operationalizing these systems.

Carbon standardization is reshaping global trade, and that is necessary. But necessary is not sufficient. The accumulated evidence points in the same direction: disclosure requirements are already restructuring global supply chains; regulatory pressures propagate from buyers to producers; unilateral land-use regulations tend to displace emissions across borders without reducing them globally; and transition costs fall disproportionately on developing economies.The system is in motion and evolving—but we still need to direct it towards a coordinated path that is more just from a climate perspective. 

Without international coordination, support for producers, and mechanisms to address these asymmetries, there is a real risk of consolidating a system that measures emissions precisely but fails to reduce them; that expands traceability but concentrates power; and that demands conformity but excludes fundamental actors from productive chains. 

There is a concrete agenda available: mutual recognition of carbon methodologies across jurisdictions, interoperability between reporting systems, data infrastructure as a public good, and redistributive mechanisms that offset asymmetric compliance costs. International cooperation, in this context, is not merely desirable—it is the condition for carbon transparency and the transition to a low-carbon economy to be effective, scalable, and just.

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Emily Dionizio is GHG Protocol Specialist, World Resources Institute (WRI) Brasil.

Virginia Antonioli is Sustainable Food Systems Manager, Food and Land Use Coalition, WRI Brasil.

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Synergies is an online platform featuring expert commentary and opinions curated by TESS. We foster dialogue and incubate ideas on how to shape a global trading system that effectively addresses global environmental crises and advances sustainable development. Synergies draws on perspectives from leading experts and practitioners across policy communities from around the world. We cultivate solutions-oriented policy analysis for a sustainable future.

The Executive Editor is Fabrice Lehmann.

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