Essentials of GHG Accounting and Reporting for Your Organisation

Understanding and addressing greenhouse gas (GHG) emissions is a critical component of modern corporate strategies focusing on climate action.

From compliance with regulations to fulfilling stakeholder expectations, accurate measurement and reporting of emissions is pivotal for a company’s long-term success.

This blog will guide you through the fundamentals of GHG accounting, providing actionable insights to help you ensure your organisation meets reporting requirements with transparency and precision.

What Are Greenhouse Gases (GHGs)?

Greenhouse gases trap heat in the Earth’s atmosphere, contributing to global warming. The seven major GHGs identified by the GHG Protocol include:

• Carbon Dioxide (CO₂) – The most common GHG resulting from fossil fuel combustion.

• Methane (CH₄) – Released during agricultural practices, waste management, and energy production.

• Nitrous Oxide (N₂O) – Linked to agricultural soil management and industrial activities.

• Hydrofluorocarbons (HFCs) and Perfluorocarbons (PFCs) – Frequently used as refrigerants or in manufacturing.

• Sulphur Hexafluoride (SF₆) and Nitrogen Trifluoride (NF₃) – Predominantly associated with electronics and industrial processes.

Each gas has a different ability to trap heat and a varied atmospheric lifespan. For uniformity, their impact is measured in carbon dioxide equivalents (CO₂e), standardising how emissions are reported.

Why is reporting CO₂e important?

Reporting consolidated CO₂e provides a complete picture of an organisation’s climate impact. For example, Nitrogen Trifluoride (NF₃), commonly used in the production of electronics, has a staggering Global Warming Potential (GWP) of 17,200 over 100 years.

Practical Tips to Improve Reporting Accuracy

Achieving precision in GHG emission accounting and reporting can be challenging due to variations in organisational structures and data availability. To overcome these challenges, focus on the following areas:

1. Defining Organisational Boundaries

First, establish whether to apply an equity share or control approach to allocate GHG emissions.

Equity Share: Allocate emissions based on ownership stakes. Ideal for joint ventures or investment firms.

Control (Operational or Financial): Account for 100% of emissions from operations under an organisation’s control. This is common for manufacturers or operating companies.

Clearly defined boundaries prevent double counting of emissions across companies. The importance of this is especially apparent when we look at it nationally, as a country’s GHG inventory is the aggregate of the Scope 1 emissions of all reporting entities.

2. Data Quality

The accuracy of reporting hinges on data quality. Aim to prioritise primary data (e.g., facility-specific fuel usage, meter readings, bills and invoices). Tips to enhance data collection:

• Assign responsibility to specific individuals or departments.

• Maintain clear records, such as sub-metering data or detailed logs for fuel and refrigerant usage.
• Keep in mind that Scope 1 and 2 emissions should be based on actual consumption data instead of purchased amount.

Use pro-rating techniques only where gaps arise, e.g., with incomplete billing cycles.

3. Minimising Misreporting

• Electric Vehicles (EVs): Ensure EV charging emissions are included as Scope 2, especially remember to account for charging conducted outside company premises.

• Fuel Cards for Employee Vehicles: Develop clear policies distinguishing personal and business use emissions, accounting for all potential usage scenarios.

• Refrigerant Leakage: For refrigerant emissions, track stock levels over a reporting period for accuracy, otherwise the use default leakage rates is also acceptable.

4. Scope 2 Specifics

Avoid confusion around location-based and market-based Scope 2 emissions:

• Location-Based: Reflects the grid’s average emission factor (e.g., regional data).

• Market-Based: Reflects supplier-specific emissions, including any renewable energy purchases via Renewable Energy Certificates (RECs) or Power Purchase Agreements (PPAs).

When using RECs, ensure they are verified, retired immediately upon purchase, and represent renewable energy generated within the same market.

5. Land Use Change Emissions

Factor in land use emissions, especially through Scope 3 reporting, for industries like agriculture or forestry, food and beverage, mining and extractives, and textile and apparel.

Moving Towards a Low-Carbon Future

GHG accounting is not merely a compliance exercise. It is a roadmap for companies to identify opportunities to innovate, decarbonise, and differentiate in an increasingly climate-conscious marketplace.

Accurate reporting starts with foundational principles like accuracy, relevance, transparency, and completeness, ensuring emissions measurement reflects real-world impacts. Businesses that adopt these best practices position themselves as leaders in climate action, fostering trust among investors, customers, partners, and regulators.

If your organisation is ready to demystify GHG accounting and take the next step, explore the comprehensive resources available through ISO 14064-1 and the GHG Protocol.

If you need practical guidance to enhance your GHG accounting and reporting practices, get in touch with our experts to steer your success.