GHG Accounting
What is a GHG Accounting
Greenhouse Gas (GHG) accounting is the process of measuring, recording, and reporting the emissions of greenhouse gases produced by a company’s operations. It includes tracking emissions across three scopes:
Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, manufacturing facilities). Scope 2: Indirect emissions from the consumption of purchased electricity, steam, heating, and cooling.
Scope 3: Indirect emissions from the value chain, such as business travel, transportation, and product supply chains.
GHG accounting involves measuring and tracking a company’s greenhouse gas emissions to understand its environmental impact. The process begins with identifying the organizational boundaries—defining which operations, subsidiaries, and joint ventures will be included. Next, the company assesses its emissions across three "scopes": Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased electricity, steam, or heating), and Scope 3 (indirect emissions from the value chain).
Data is then collected for each emission source, including energy consumption, fuel use, and other relevant activities. Emission factors are applied to calculate the total GHG emissions in terms of CO2 equivalents. The company may use software or external tools to automate and streamline this process.
Once the data is collected and calculations are made, GHG emissions are reported, often in line with international standards such as the GHG Protocol or ISO 14064. The results help the company identify key areas for emission reduction and support sustainability reporting, regulatory compliance, and climate strategy development.
Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, manufacturing facilities). Scope 2: Indirect emissions from the consumption of purchased electricity, steam, heating, and cooling.
Scope 3: Indirect emissions from the value chain, such as business travel, transportation, and product supply chains.
GHG accounting involves measuring and tracking a company’s greenhouse gas emissions to understand its environmental impact. The process begins with identifying the organizational boundaries—defining which operations, subsidiaries, and joint ventures will be included. Next, the company assesses its emissions across three "scopes": Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased electricity, steam, or heating), and Scope 3 (indirect emissions from the value chain).
Data is then collected for each emission source, including energy consumption, fuel use, and other relevant activities. Emission factors are applied to calculate the total GHG emissions in terms of CO2 equivalents. The company may use software or external tools to automate and streamline this process.
Once the data is collected and calculations are made, GHG emissions are reported, often in line with international standards such as the GHG Protocol or ISO 14064. The results help the company identify key areas for emission reduction and support sustainability reporting, regulatory compliance, and climate strategy development.
Why is GHG Accounting Done?
- Compliance with Regulations: Many jurisdictions require companies to report GHG emissions for regulatory compliance and reporting purposes.
- Climate Risk Management: Helps companies assess and mitigate risks related to climate change, such as carbon pricing, supply chain disruptions, or regulatory changes.
- Setting Reduction Targets: Provides the data necessary to set science-based emission reduction goals and track progress toward achieving them.
- Transparency and Accountability: Ensures transparency in sustainability efforts, building trust with investors, customers, and other stakeholders.
- Sustainability Strategy: Serves as the foundation for developing effective sustainability strategies, such as reducing energy consumption, improving efficiency, and adopting renewable energy sources.
- Attracting Investment: Investors increasingly seek companies with robust GHG accounting practices, seeing them as lower-risk and forward-thinking in terms of sustainability.
Other Services
ESG Due Diligence
ESG due diligence is a process that evaluates a company's sustainability and ethical practices.
ESG Assurance
The process can identify gaps in reporting, limitations of current controls and areas for improvement.
How to conduct
Define the Purpose and Scope
Identify ESG Issues
Engage Stakeholders
Assess Business Impact
Prioritize Issues
Validate Findings
Report and Integrate
Review and Update Regularly
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