Bridging the Climate Accountability Gap: The Role of Regulatory Accounting Frameworks in the EU Emissions Trading System

this study investigates the impact of regulatory accounting frameworks on corporate climate accountability within the European Union Emissions Trading System (EU ETS). As the largest carbon market globally, the EU ETS plays a crucial role in the EU’s climate policy, yet inconsistencies persist in its alignment with corporate financial reporting due to the lack of standardized accounting rules under International Financial Reporting Standards (IFRS). Using qualitative document analysis and policy review, this research analyzes how companies recognize, measure, and disclose emission allowances, as well as the influence of regulatory instruments such as the Carbon Border Adjustment Mechanism (CBAM) on corporate accountability. The findings reveal variations in accounting practices, their effects on transparency, and the overall efficacy of the EU ETS in driving robust climate governance. Based on these insights, the study proposes policy measures to strengthen regulatory accounting frameworks, ensuring financial reporting better supports climate goals and facilitates the EU’s transition to net-zero emissions.