The Complete Guide to Organisational GHG Accounting

Climate change is no longer only an environmental issue, it has become a business issue. Investors, customers, governments, and supply chain partners increasingly expect organisations to understand and manage their greenhouse gas (GHG) emissions.

Whether your organisation wants to reduce costs, prepare for future regulations, meet customer requirements, improve sustainability performance, or develop a science based climate strategy, the first step is always the same: measure your emissions. This process is known as organisational greenhouse gas accounting, sometimes referred to as corporate carbon accounting or climate accounting.

This guide explains what organisational GHG accounting is, how it is performed, the major international standards, and how organisations of every size, including SMEs and MSMEs, can begin their climate journey.

What is Organisational GHG Accounting?

Organisational GHG accounting is the process of identifying, quantifying, and reporting the greenhouse gases emitted by an organisation over a defined reporting period. Rather than looking at individual products, organisational accounting measures emissions associated with the entire business, including operations, purchased electricity, transportation, suppliers, employee travel, waste, and many other activities.

The final result is commonly called a carbon inventory, GHG inventory, organisational carbon footprint, or corporate carbon footprint. The inventory serves as the baseline for emission reduction programmes, ESG reporting, climate risk management, customer reporting, supplier assessments, the Science Based Targets initiative (SBTi), and Net Zero roadmaps.

Climate Accounting vs Product Carbon Footprints

Many organisations confuse organisational carbon accounting with product carbon footprints. Organisational GHG accounting measures emissions from the entire organisation, examples include electricity used in offices, company vehicles, purchased goods, employee commuting, business travel, waste, and logistics. A Product Carbon Footprint (PCF) instead measures emissions associated with one product across its life cycle, from raw materials and manufacturing through transportation, customer use, and end of life disposal.

Organisational accounting answers “how much does our company emit?”, while product footprinting answers “how much does this product emit?” Both are complementary but serve different business objectives.

Reporting Period and Organisational Boundaries

Before collecting data, organisations define their reporting period, either a calendar year (January–December, common for multinational and voluntary reporting) or a financial year (for example April–March in India, or July–June in Australia). The most important principle is consistency: using the same reporting period every year allows meaningful comparison and trend analysis.

Before calculating emissions, organisations also determine which operations belong in the inventory. International standards recognise three approaches: equity share (emissions reported according to ownership percentage), financial control (operations under financial control are included), and operational control (operations where the company has authority to implement operating policies). Operational control is the most commonly used approach, since it aligns well with management responsibility.

Scope 1, 2 & 3: The GHG Protocol Categories

The GHG Protocol classifies organisational emissions into three categories.

Scope 1 — Direct Emissions

These originate from sources owned or controlled by the organisation: company owned vehicles, diesel generators, natural gas boilers, manufacturing furnaces, process emissions, and refrigerant leakage. These emissions occur directly because of company operations.

Scope 2 — Indirect Energy Emissions

Scope 2 includes emissions from purchased electricity, steam, heating, or cooling. Although emissions occur at the power plant, they are attributed to the organisation consuming the energy. Electricity is often one of the easiest categories to calculate, since utility bills are usually available.

Scope 3 — Value Chain Emissions

Scope 3 includes emissions that occur outside the organisation but arise because of its activities: purchased goods, purchased services, upstream transportation, employee commuting, business travel, waste disposal, leased assets, investments, downstream transportation, product use, and product end of life. For many organisations, Scope 3 represents 70–95% of total emissions. Although it is the most challenging category to estimate, it is often where the greatest reduction opportunities exist.

Which Standard Should You Use?

Two internationally recognised frameworks dominate organisational carbon accounting.

ISO 14064

The ISO 14064 family provides internationally recognised requirements for greenhouse gas accounting. The series consists of ISO 14064-1 (requirements for organisational GHG inventories and reporting), ISO 14064-2 (project level emission reductions and removals), and ISO 14064-3 (verification and validation of greenhouse gas statements). ISO 14064 is particularly useful when organisations require independent verification, wish to demonstrate credibility to customers, or need assurance for procurement and contractual requirements. Many organisations preparing verified carbon footprints choose ISO 14064 because of its structured framework and compatibility with accredited verification bodies.

GHG Protocol Corporate Standard

The GHG Protocol is the world’s most widely used framework for corporate greenhouse gas accounting. It forms the basis for reporting under many sustainability initiatives and is referenced by CDP, SBTi, and many ESG reporting frameworks, corporate sustainability programmes, and multinational supply chains. Unlike ISO 14064, the GHG Protocol does not require external verification, organisations can publish inventories without third party assurance, although independent verification is often recommended to improve credibility.

For many SMEs and MSMEs, the GHG Protocol is a practical and cost effective starting point. As reporting expectations grow, organisations may later transition to ISO 14064 with third party verification.

Mapping ISO 14064-1’s Six Categories to the GHG Protocol

ISO 14064-1 organises emissions into six categories. The first two map directly onto Scope 1 and Scope 2; the remaining four cover indirect emissions that the GHG Protocol splits further into its 15 Scope 3 categories.

Why Does Your Industry Matter?

Not every company emits greenhouse gases in the same way. An IT consultancy has a very different emissions profile compared with steel manufacturing, food processing, agriculture, logistics, textiles, or pharmaceuticals. Similarly, the products and services offered by a business determine which Scope 3 categories are material. A software company may have emissions dominated by purchased electricity, cloud computing, employee commuting, and business travel, while a manufacturer may find that raw materials, process emissions, purchased electricity, and transportation account for most of its footprint. This is why every GHG inventory begins with understanding the organisation’s activities, value chain, products, and operational boundaries.

How is a GHG Inventory Developed?

Although every organisation is different, most inventories follow a structured, eight step process:

• Define organisational boundaries — determine which legal entities and facilities are included.
• Select the reporting period — choose the reporting year and establish a baseline.
• Identify emission sources — map Scope 1, Scope 2, and relevant Scope 3 activities.
• Collect activity data — electricity consumption, diesel purchases, fuel receipts, refrigerant records, procurement data, logistics information, employee travel, waste quantities.
• Select emission factors — convert activity data into emissions using recognised sources such as national government databases, IPCC, IEA, DEFRA, EPA, ecoinvent, or supplier specific factors.
• Calculate emissions — expressed as carbon dioxide equivalent (CO₂e), allowing different greenhouse gases to be reported together.
• Review data quality — document missing data, assumptions, estimation methods, and uncertainties.
• Prepare the inventory report — documenting methodology, assumptions, boundaries, emission sources, calculations, results, limitations, and recommendations.

What is the Cheapest Way for an MSME to Build a GHG Inventory?

Many small businesses assume carbon accounting is expensive. It doesn’t have to be. For an MSME with straightforward operations, the most affordable approach is to use the GHG Protocol Corporate Standard, define organisational and operational boundaries, collect existing utility bills, fuel records, travel expenses, and procurement data, use publicly available emission factors such as national databases or DEFRA, estimate material Scope 3 categories where primary data is unavailable, and document assumptions transparently.

This approach provides a robust baseline without the cost of third party verification. As customer requirements mature or procurement contracts demand higher assurance, the inventory can later be aligned with ISO 14064 and independently verified.

Why is Organisational GHG Accounting Important?

A well developed inventory helps organisations understand where emissions occur, identify cost saving opportunities through energy efficiency, comply with customer and supply chain requests, prepare for future regulations, improve ESG performance, strengthen investor confidence, support green financing opportunities, monitor progress over time, and develop credible decarbonisation plans. Most importantly, you cannot reduce what you have not measured.

From Measurement to Action: Science Based Targets (SBTi)

Measuring emissions is only the beginning. Organisations that want to align with global climate goals can set targets through the Science Based Targets initiative (SBTi). The typical journey includes developing a complete organisational GHG inventory, establishing a baseline year, assessing material Scope 3 emissions, committing to SBTi, setting near term emissions reduction targets consistent with climate science (generally aligned with limiting warming to 1.5°C where applicable), submitting targets for validation, implementing reduction initiatives such as energy efficiency, renewable electricity, fleet electrification, supplier engagement, and low carbon product design, then measuring progress annually and disclosing performance.

For many MSMEs, a formal SBTi target may not be immediately necessary, but using the same principles helps create a practical and credible decarbonisation roadmap.

How ecorune Can Help

At ecorune, we help organisations move from uncertainty to informed climate action through practical, proportionate, and internationally recognised GHG accounting services. Our support includes:

• Organisational GHG inventories covering Scope 1, Scope 2, and relevant Scope 3 emissions.
• Boundary definition and materiality assessment tailored to your business model, sector, and value chain.
• Data collection and emissions calculations using recognised methodologies and transparent assumptions.
• GHG Protocol and ISO 14064 alignment, depending on your reporting needs and assurance requirements.
• Decarbonisation roadmaps with prioritised actions to reduce emissions while supporting business objectives.
• Science Based Target (SBTi) readiness, including baseline development, hotspot analysis, and target setting support.
• Training and ongoing support to help internal teams build capability and improve reporting over time.

Whether you are an MSME taking your first steps or an established organisation preparing for customer, investor, or regulatory expectations, ecorune provides practical solutions that are proportionate to your size, resources, and sustainability goals.