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Steps of GHG Accounting: Setting Organisational Boundary, Identify Sources of Emissions, Setting Operational Boundary, Collection of Activity Data, Choosing Emission Factor, Calculation of Emissions, Data Aggregation, GHG Reporting, Assurance of GHG Inventory

Why is GHG Accounting significant ?

It is well known that to improve in any area, one has to start with measuring and monitoring the cause and effects. The same is true for Greenhouse Gas (GHG) emissions also.  Corporate GHG inventory reporting process enables companies to track and report their emissions, set emission reduction targets, meet statutory emission caps and also participate in various voluntary market mechanisms to trade their GHG emission reductions. The GHG accounting methodology ISO 14064 is widely adopted in various industries for certification purposes. Numerous companies also follow the GHG Protocol Corporate Standard to calculate and report their GHG emissions. GHG reporting requirements in India include disclosure under NGRBC Principle 6 in the BRSR framework. Following are the steps in greenhouse gas accounting for companies:

Steps of GHG Accounting in a company 

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Step 1: Define the Organisational Boundary for GHG Accounting

The organisational boundary defines which operations, facilities, factories, and offices are included in a company’s GHG accounting. Boundaries can be set using either the Equity Approach (based on ownership share) or the Control Approach (based on operational or financial control).

Step 2: Identify All Sources of Greenhouse Gas Emissions

Emission sources are the activities that release greenhouse gases (GHGs). Examples include vehicles using fossil fuels, electricity consumption from non-renewable grids, diesel generators, or industrial processes such as aluminium production. Companies must establish reliable data collection systems to identify and track these emission sources.

Step 3: Set the Operational Boundary – Scope 1, Scope 2, and Scope 3

After identifying sources, emissions must be classified into:

  • Scope 1: Direct emissions from owned or controlled operations.

  • Scope 2: Indirect emissions from purchased electricity, heat, or steam.

  • Scope 3: Other indirect emissions from upstream and downstream activities across the value chain.

Step 4: Collect Activity Data from Identified Emission Sources

Activity data is the measured quantity factor for the emission source. For instance, annual litres of diesel consumed, kWh of electricity used, or tonnes of aluminium produced.Emissions are usually calculated using activity data rather than direct measurement. Sources include utility invoices, fuel purchase records, meter readings, or production data.

Step 5: Select the Appropriate Emission Factors for Each Source

An emission factor translates activity data into emissions. It represents the average amount of GHG released per unit of activity. For example, burning one litre of diesel emits 2.6533 kg of carbon di-oxide into the atmosphere. So the emission factor for diesel is 2.6533 kgCO2e/litre of diesel. Emission factors can be calculated internally in labs or sourced from databases such as IPCC, IEA, DEFRA, US EPA, or country-specific inventories.

Step 6: Calculate Source-Level Greenhouse Gas Emissions

Emissions are calculated by multiplying activity data with emission factor. Companies must ensure unit consistency (e.g., gallons converted to litres before applying a litre-based emission factor). Robust quality control procedures should be in place for both activity data and factors.

Step 7: Aggregate Emissions Across All Facilities and Sources

Collected emissions data should be aggregated at multiple levels:

  • Facility level → Business unit level → Corporate level
    This can be done either by consolidating activity data or emissions data. Care must be taken to avoid double counting, e.g., if two facilities share the same electricity meter.

Step 8: Compile and Report the Company’s GHG Inventory

A GHG Inventory provides a consolidated statement of a company’s total emissions. It separates direct and indirect sources and converts all GHGs into a single unit (kgCO₂e or tCO₂e) using Global Warming Potentials (GWPs). Additional disclosures include:

  • Biogenic CO₂ emissions

  • GHG removals (if any)

  • Sources of emission factors used

Step 9: Obtain Independent Assurance of the GHG Inventory

Companies can enhance the credibility of their GHG inventory through third-party assurance. Two levels exist:

  • Limited Assurance: Confirms no material misstatements.

  • Reasonable Assurance: Provides a stronger opinion that the inventory is accurate, fair, and aligned with reporting standards.

Independent assurance signals to regulators, investors, and stakeholders that the company prioritizes transparency and accountability in GHG reporting.

GHG accounting gives the true and fair account of GHG emissions of the companies. Partner with certified GHG consultants to streamline your reporting process. Start by choosing one of the options below:

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