authors
Feyisayo Michael Ogunyemi

abstract
As global decarbonization efforts accelerate, corporations in energy-intensive sectors face mounting pressure to quantify and disclose Scope 3 emissions the indirect greenhouse gas outputs occurring across their upstream and downstream value chains. However, the absence of standardized accounting models, inconsistent data granularity, and overlapping reporting frameworks continue to undermine the reliability of current disclosures. This paper develops a robust accounting model for accurately quantifying Scope 3 emissions and climate-related liabilities, offering an integrated approach that aligns financial materiality with environmental accountability in corporate reporting systems. The study begins by contextualizing Scope 3 emissions within the broader Greenhouse Gas (GHG) Protocol framework, emphasizing the categories most material to heavy industries procurement, logistics, product use, and end-of-life processes. It then introduces a hybrid quantification model combining activity-based carbon factor modeling, input-output lifecycle analysis, and Monte Carlo simulations to capture uncertainty and variability across supplier datasets. The proposed model integrates emissions valuation with climate liability estimation, enabling companies to reflect environmental risks in financial statements through scenario-based asset revaluation and contingent liability mapping. Empirical validation using case scenarios from manufacturing and energy sectors demonstrates up to 25% improvement in estimation accuracy and significantly enhanced audit readiness. The model also supports compliance with emerging disclosure standards such as IFRS S2 and the Task Force on Climate-Related Financial Disclosures (TCFD). By unifying carbon accounting with financial risk analytics, the paper concludes that transparent Scope 3 quantification serves not only as a compliance requirement but as a strategic instrument for capital efficiency, stakeholder trust, and long-term climate resilience.