The GHG Protocol, often regarded as the cornerstone of greenhouse gas accounting, is managed by the World Resources Institute (WRI, USA) and the World Business Council for Sustainable Development (WBCSD, Switzerland). It offers various guidelines, with the primary standard for calculating a company’s carbon footprint being the GHG Protocol: A Corporate Accounting and Reporting Standard.
One of the questions you might have is how to get started and approach this project efficiently. My recommendation: break it into manageable pieces. The bulk of carbon accounting for companies comes from Scope 3, which includes purchased goods and services, leased assets, upstream and downstream transportation, financed emissions, franchises, and other potentially complex categories. Therefore, I recommend starting with Scope 1 and Scope 2 emissions. Collecting this data is much simpler, and in many cases, it is already available within your organization.
Here is some more information about direct (Scope 1) and indirect (Scope 2) emissions:
Scope 1* – direct emissions
These GHG emissions occur from sources that are owned or controlled by the company, For example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment. Emissions from the combustion of biomass shall not be included in scope 1 but reported separately..
Scope 1 emissions are principally the result of the following activities:
| Generation of electricity, heat, or steam |
| These emissions result from combustion of fuels in stationary sources, e.g., boilers, furnaces, turbines |
| Physical or chemical processing |
| Most of these emissions result from manufacture or processing of chemicalsand materials, e.g., cement, aluminum, adipic acid, ammonia manufacture, and waste processing |
| Transportation of materials, products, waste, employees |
| These emissions result from the combustion of fuels in company owned/controlled mobile combustion sources (e.g., trucks, trains, ships, airplanes, buses, and cars). |
| Fugitive emissions |
| These emissions result from intentional or unintentional releases, e.g., equipment leaks from joints, seals, packing, and gastest; methane emissions from coal mines and venting; hydrofluorocarbon (HFC) emissions during the use of refrigeration and air conditioning equipment; and methane leakages from gas transport. |
Scope 2* – indirect emissions
Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated. These emissions are emitted during the production of energy, not its use. That means they are not directly caused by the undertaking.
Why indirect?
The energy is produced off-site; the emissions are generated (outside the undertaking that will use the energy).
Is there emission-free energy/electricity?
Electricity related activities not included in Scope 2 such as extraction, production, and transportation of fuels consumed in the generation of electricity needs to be reported under Scope 3. That leads into the result that no electricity is emission-free (probably no emissions in Scope 2, but all electrcity will create emissions in Scope 3).
What‘s about Scope 3?
If you’ve established control over your Scope 1 and 2 emissions, it may be time to launch a new project and start addressing Scope 3 emissions. Scope 3 includes 15 categories, but depending on the size and nature of your organization, not all of them will be relevant for your carbon accounting. For example, categories like “Franchises” or “Leased Assets” may not apply to every business.
According to the GHG Protocol, “Scope 3 emissions are a consequence of the company’s activities but occur from sources not owned or controlled by the company.” This definition highlights the challenge of collecting data for Scope 3 emissions—you’ll need cooperation from your value chain. Unfortunately, many stakeholders, such as customer managers or salespeople, may not fully understand what you’re asking for.
To overcome this, it’s essential to set up a well-structured project and plan from the beginning, involving all relevant data sources early on. While it’s unlikely you’ll be able to collect only primary (high-quality) data initially, you can work with data owners to create a plan for improving data accuracy over time. This iterative approach will help you gradually enhance the reliability of your Scope 3 accounting.
But that is a separate content. Start Small with Scope 1 and Scope 2 emissions this is a first step and help you to understand the concept of carbon accounting.
CSRD relation
An additional information regarding CSRD compliance. Within the topical standard E1 „Climate Change“ you are obliged to report your emissions (Disclosure requirement E1-6 „GHG emissions“ and in relation E1-5 „Energy mix and consumption„). If your company has less than 750 employees, you are free to treat Scope 3 voluntary in the first reporting year (phase-in). But in any way, you need to report the Scope 1 and Scope 2 emissions. If we are looking at the new VSME you are also requested to report your carbon footprint. It makes sense in anyway to account for Scope 1 and 2. Please take into account that you have to report biogenic emissions and you need to provide an energy mix split in your non-financial reporting.