Mass Balance Explained: Understanding a New Approach to Supply Chain Decarbonisation
As organisations face increasing pressure to reduce emissions across complex global supply chains, new approaches to carbon accounting are becoming essential. Mechanisms such as mass balance, book and claim, carbon insetting and carbon offsetting all have a role to play, but they serve different purposes and should not be used interchangeably. Underpinning them all is the need for robust standards and transparent verification, giving businesses confidence that sustainability claims are credible, measurable and independently validated.
This first article, in a series of 4, explores why these approaches have emerged, explains what mass balance is and how it differs from other carbon accounting mechanisms, and examines why it is becoming an increasingly important tool in the transition towards lower carbon supply chains.
Why supply chains are moving beyond carbon offsetting
For much of the past decade, corporate climate strategies followed a relatively straightforward approach. Businesses reduced emissions where they could, then purchased carbon offsets to compensate for those they could not eliminate. This model helped direct investment into renewable energy, forestry and carbon removal projects around the world, while providing organisations with a way to address emissions that were otherwise difficult to avoid.
Across logistics, manufacturing, retail and global supply chains, businesses are under growing pressure to demonstrate that sustainability claims are rooted in operational change rather than external compensation. Investors are demanding greater transparency, regulators are introducing stricter rules around environmental claims, and customers increasingly want evidence that emissions reductions are taking place within the supply chains that support the products and services they buy.
The conversation is no longer centred on how businesses compensate for emissions after they occur. Instead, the focus is shifting towards how organisations redesign supply chains to reduce emissions at source and support the transition to lower carbon operations.
The Scope 3 challenge
For multinational organisations, Scope 3 emissions often account for more than 70 per cent of their total carbon footprint. These emissions sit outside a company’s direct operations and arise from suppliers, manufacturers, transport providers, distributors and customers.
This creates a significant challenge. A retailer may want to reduce emissions associated with imported goods but does not own the ships transporting them. A manufacturer may seek lower carbon logistics solutions but relies on third-party carriers. An airline customer may wish to reduce emissions from air freight even though sustainable aviation fuel is only available at a limited number of airports.
For years, this made carbon offsetting an attractive solution. If emissions could not be reduced within operations or the wider supply chain, businesses could finance emissions reductions elsewhere. While offsetting continues to have an important role, particularly for residual emissions that cannot yet be eliminated, organisations are increasingly recognising that long-term decarbonisation requires a greater focus on reducing emissions within the value chain itself.
What is mass balance?
As businesses look for practical ways to support lower carbon supply chains, one concept is becoming increasingly important: mass balance.
At its simplest, mass balance is a chain of custody accounting approach. Rather than tracking the physical movement of sustainable materials or fuels through every stage of a supply chain, it tracks the environmental attributes associated with those materials.
Imagine adding one litre of renewable fuel into a storage tank containing nine litres of conventional fuel. Once mixed together, the fuels cannot realistically be separated. However, through a verified accounting system, the environmental benefit associated with that one litre of renewable fuel can still be allocated to a customer who has chosen to support its use.
The key principle is straightforward. The environmental benefit claimed can never exceed the amount of sustainable material introduced into the system.
This allows businesses to invest in lower carbon fuels and materials without requiring entirely separate supply chains or dedicated infrastructure. Rather than waiting for fully segregated green supply chains to become commercially viable, organisations can begin supporting the transition today while infrastructure continues to develop.
Importantly, mass balance is not about claiming that a specific shipment or vehicle physically used a particular sustainable fuel. It is about ensuring that verified investment in lower carbon alternatives is accurately tracked, transparently allocated and independently certified.
Understanding the different approaches
One of the reasons this topic often causes confusion is that several related terms are frequently used interchangeably. While they are connected, they each perform a different role in supply chain decarbonisation.
Carbon offsetting enables organisations to compensate for emissions by funding projects outside their own value chain, such as renewable energy generation, reforestation or carbon removal initiatives. It remains an important mechanism for addressing residual emissions but does not directly reduce emissions within the supply chain itself.
Carbon insetting, by contrast, focuses on reducing emissions within an organisation’s own value chain. This could involve supporting lower carbon shipping, investing in sustainable aviation fuel, or working with suppliers to adopt more sustainable production methods. The environmental benefits remain connected to the business’s own operations and supply chain.
Book and claim is a transaction mechanism that allows verified sustainability attributes to be separated from the physical product and transferred through a certificate. This enables organisations to support lower carbon fuels or materials even if they are not physically available within their own logistics network.
Mass balance underpins many of these systems. It provides the accounting framework that ensures the environmental attributes associated with sustainable materials are tracked accurately and allocated fairly across mixed supply chains.
Understanding these distinctions is becoming increasingly important as organisations seek more transparent and credible ways to report emissions reductions.
A practical bridge to lower carbon supply chains
The technologies needed to fully decarbonise freight and logistics already exist in many cases, but they are not yet available at the scale required to transform global supply chains overnight.
Production of sustainable aviation fuel remains limited, alternative marine fuels are still developing, and charging infrastructure for battery electric heavy goods vehicles continues to expand. Waiting until these technologies are universally available would delay meaningful progress for years.
Mass balance offers a practical alternative. By allowing organisations to support lower carbon fuels and materials through verified accounting, it helps create the commercial demand needed to encourage further investment, increase production and accelerate the development of supporting infrastructure.
It is not a replacement for direct emissions reductions, nor is it intended to become a permanent substitute for fully decarbonised supply chains. Instead, it provides a bridge between today’s industrial reality and tomorrow’s lower carbon economy.
As more organisations move beyond carbon offsetting and begin embedding sustainability into supply chain design, understanding how these mechanisms work is becoming essential.
In Part 2 of this series, we’ll explore the standards, certification schemes and governance frameworks that make mass balance credible, and why trust is fundamental to its long-term success.