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Carbon offsets in agriculture: linking soil organic carbon and measurement, reporting and verification framework with financial reporting
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DOI：10.1108/jfra-03-2025-0214.png)
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Abstract
En 中文
<jats:sec>
<jats:title>Purpose</jats:title>
<jats:p>This study aims to examine the potential of soil organic carbon (SOC) sequestration as a carbon offset mechanism and its integration within financial reporting frameworks under International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Design/methodology/approach</jats:title>
<jats:p>The research uses a qualitative approach, combining an extensive review of academic literature, policy documents and carbon market frameworks with a critical analysis of current Measurement Reporting and Verification practices. The study further develops a conceptual measurement, reporting and verification framework tailored for SOC sequestration that aligns environmental measurement with financial accounting standards.</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Findings</jats:title>
<jats:p>Findings show that verified SOC credits can be treated as inventory or intangible assets, depending on control and valuation principles. Verification and disclosure of SOC data strengthen audit assurance and support the integration of climate-related information into mainstream accounting.</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Research limitations/implications</jats:title>
<jats:p>The proposed framework may face implementation challenges due to cost intensity, technical expertise requirements and the need for region-specific adaptations. Further empirical research is required to assess its scalability and effectiveness across diverse agricultural contexts.</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Practical implications</jats:title>
<jats:p>By linking measurement, reporting and verification outcomes with accounting recognition, the framework enables reliable financial reporting of SOC credits, improves participation in carbon markets and supports sustainable land management practices. The study also highlights policy measures and financial incentives necessary to increase farmer engagement.</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Social implications</jats:title>
<jats:p>The integration of SOC offsets into financial reporting can generate economic benefits for farmers, particularly smallholders and promote equitable participation in carbon markets, while contributing to global climate change mitigation.</jats:p>
</jats:sec>
<jats:sec>
<jats:title>Originality/value</jats:title>
<jats:p>To the best of the authors’ knowledge, this paper is the first to operationalize measurement, reporting and verification framework that directly connects agronomic SOC measurement with financial accounting recognition under IFRS and GAAP. It thus bridges a long-standing disciplinary gap between environmental measurement and financial disclosure, advancing both the credibility and transparency of sustainability reporting.</jats:p>
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