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

Bastian Distler, Jürgen Ernstberger, Mario Keiling, Felix Müller and Mike Szabo

Abacus, 2025, vol. 61, issue 4, 1023-1051

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.

Date: 2025
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