Nature-based solutions (NbS) offer the opportunity to make substantial contributions to climate change mitigation, biodiversity conservation and ameliorating environmental degradation. But those contributions are not materialising, because current carbon accounting is deficient for use in evaluating NbS. As a result, the Nbs framework is being used to support interventions and activities that are not necessarily producing meaningful mitigation outcomes, while the actions which do have mitigation efficacy are ignored. The core problem is that data reported under the UNFCCC for net emissions and removals related to human activities are insufficient for the understanding of the carbon dynamics of ecosystems. Hence, NbS mitigation activities cannot be evaluated fully. The inadequacies of current carbon accounting are seen in the perverse outcomes that have occurred as a result of activities that cause degradation, such as: A) converting carbon-dense forests and peatlands into fast-growing plantations, B) preventing forests from reaching maturity because of the false accounting preference for young, fast-growing forests, C) harvesting forests for wood products and bioenergy that results in loss of carbon stocks where replacement of these stocks will only occur decades into the future, thus creating a carbon debt, D) erroneously considering carbon stocks in reservoirs of different longevities and risk of loss as fungible. The system of carbon accounting employed is a critical issue because accounting rules influence the reported emissions reductions, and thus directly impact policy outcomes. If the accounting rules do not fully reflect the mitigation outcomes, then a gap opens up between policy goals and actual mitigation achieved, thus undermining credibility as well as contributing to mitigation failure. The ways in which the characteristics of ecosystems are defined, measured and reported have major implications for how ecosystems are perceived, valued and managed. A more holistic and comprehensive approach to carbon accounting is needed if the potential of NbS actions is to be realised and the most effective options prioritised.