As the threat to global ecosystems from runaway emissions and waste grows more acute, companies have found increasingly complex ways to obscure their environmental impact. The discrediting of greenwashing tools like offsets has created demand among major polluters for new accounting tricks to create the illusion of progress in the absence of real, meaningful decarbonisation.
One balance sheet sleight-of-hand rapidly gaining purchase among major greenwashers is mass balance accounting. What exactly does it entail, and why is it so dangerous?
The messy mechanics of mass balance
Mass balance is a materials accounting method used to track and claim how much “low-carbon” or “sustainable” material is in a product. Historically used by plastics producers, mass balance is now gaining traction with consumer-facing brands because it offers them a way to convince customers of their sustainability promises.
At its core, mass balance works by moving numbers around.
To demonstrate how this works, let’s look at the plastics industry. Imagine a hypothetical chemical company with a complex supply chain. The company makes a few types of plastic polymers, each physically containing about 10% so-called “bio-based” content. Now say that one of this company’s customers wants to be able to claim higher bio-based content for a specific product in order to sell to environmentally friendly consumers. To maximize the amount of bio-based content that specific product can advertise, the chemical company can use mass balance accounting to turn the 10% bio-based content from other polymers into ‘credits’ and move them to the target polymer. In turn, that target polymer can now advertise 100% bio-based content, even though bio-based materials make up only 10% of the end polymer.
This is a simplified explanation — there are multiple mass balance models, each with its own rules and principles. Under a non-proportional or “free” allocation approach, for instance, companies can transfer credits freely across products regardless of whether the final low-carbon content claims surpass the amount of physical low-carbon content that went into the production process. Different boundaries can then be applied to each allocation approach, with the more relaxed boundaries allowing companies to transfer credits across batches, production sites, or time periods. In practice, this means that a low-carbon input used in January could generate credits allocated to a product made in March at a different facility. Stricter boundaries limit allocation to the same batch or location. But here’s the critical point: even the strictest form of mass balance allows a product to claim low-carbon content that isn’t physically present in it.
This means brands can increase their green materials claims without increasing their green material inputs at all. They’re simply purchasing more credits. In theory, a company’s low-carbon claims could rise even as its actual use of low-carbon inputs falls.
Alternatives to mass balance accounting
The limitations of mass balance accounting are obvious when compared against higher-integrity alternatives. Under a physical segregation approach, low-carbon and fossil-based materials are kept completely separate from their bio-based substitutes. The result is simple: products either physically contain 100% low-carbon inputs or 0%.
Controlled blending, another approach, allows mixing but keeps claims tied to physical content. For example, if a plastics producer uses 10% bio-based inputs and 90% fossil inputs to make 100 polymers, each polymer will physically contain roughly 10% bio-based material — and companies using those polymers can only claim that 10% in their products.
Both of these models have something in common: if a company wants to increase its low-carbon claims, it must increase the actual amount of low-carbon inputs. In other words, claims are tied to real-world change.
Mass balance breaks that link. Rather than changing what goes into making a product, it changes what companies are allowed to say about it.
Why big polluters are promoting mass balance accounting
Given the growing scrutiny of corporate climate claims, it’s no surprise that chemicals and fossil fuel companies have been among mass balance accounting’s biggest cheerleaders. Mass balance gives companies a way to claim progress through higher low-carbon material content and associated emissions reductions without requiring real, product-level changes to their supply chains.
Supporters argue that mass balance is a bridging mechanism — a way to support early markets for sustainable materials where cost or availability would otherwise limit their adoption. That said, the underlying contradiction is that mass balance also weakens the incentive for a company to go further. Because claims can be increased through accounting allocations rather than physical inputs, companies can meet targets and market progress without increasing their use of low-carbon materials.
As a climate accountability tool, mass balance is complicated enough to allow a company to present technical accounting as climate progress, while making it harder for customers, investors, and regulators to determine whether that company has actually changed anything in its product or supply chain. In other words, mass balance removes a company’s incentive to invest in real transition and measurable decarbonisation.
Put simply, big polluters are promoting mass balance because it allows them to create the illusion of progress while delaying or avoiding the investments needed to deliver it.
Why this matters right now
Mass balance accounting’s sudden rise to prominence isn’t happening in isolation. In fact, companies are turning their attention toward this accounting trick precisely because standard-setters are revising the rules governing corporate emissions accounting.
The Greenhouse Gas Protocol — the dominant global standard for corporate emissions accounting — is currently under revision. And many of the companies that use mass balance to sell “low-carbon” materials to consumer brands are actively lobbying to have it recognised and embedded in those rules. If they succeed, what is currently an accounting loophole becomes an accounting standard. The stakes couldn’t be higher.
How Action Speaks Louder is fighting back
Meaningful corporate climate action matters because it produces measurable change in the real world. The steps companies take to reduce their emissions and transition to low-carbon inputs today mean measurable progress toward climate targets in the long-term. When companies use accounting tricks to create the illusion of progress, all we have left are impressive-sounding paper claims and ever-increasing climate chaos. Progress is harder to measure, easier to overstate, and slower to deliver.
That’s why Action Speaks Louder has launched Greenhouse Gaslighting: a campaign to expose the loopholes and tricks companies are trying to write into the rulebook, and to advocate for standards that require real-world change. If you care about the integrity of climate action, join our movement to scrutinise corporate greenwashing tricks and demand measurable action from the companies currently using these tricks to sell an image of sustainability.
