Investors, lenders, clients and parent companies increasingly ask organizations about their greenhouse gas emissions. Before any reduction plan or disclosure can be credible, an organization needs a reliable inventory of where its emissions come from. This article outlines the first steps, based on the GHG Protocol Corporate Accounting and Reporting Standard, a widely used framework for corporate inventories.
Set the organizational boundary
The first decision is which parts of the organization the inventory covers. The GHG Protocol describes two main approaches:
- Control approach. The organization reports all emissions from operations it controls, either financially or operationally.
- Equity share approach. The organization reports emissions in proportion to its ownership share in each operation.
Groups with subsidiaries, joint ventures or leased facilities should agree the approach early and apply it consistently, because it determines which sites and entities are included.
Set the operational boundary: scopes 1, 2 and 3
Within the organizational boundary, emissions are grouped into three scopes:
- Scope 1: direct emissions from sources the organization owns or controls, such as fuel burned in generators, boilers and vehicles, process emissions and refrigerant leaks from cooling equipment.
- Scope 2: indirect emissions from purchased energy, mainly electricity, and also any purchased steam, heat or cooling.
- Scope 3: other indirect emissions in the value chain, such as purchased goods and services, transport, business travel, employee commuting, waste and the use of sold products.
Many organizations start by building a complete inventory of scopes 1 and 2, then screen scope 3 categories to find those that are most relevant to their business.
Choose the reporting period and base year
Most inventories cover a calendar or financial year. The organization should also choose a base year against which future performance will be compared, and decide in advance when the base year would be recalculated, for example after a major acquisition or a change in calculation method.
Collect activity data
Activity data describes how much of each emitting activity took place. Typical sources include:
- Fuel purchase records and tank or meter readings
- Electricity bills and sub-meter readings
- Refrigerant purchase and top-up records
- Vehicle logs and fuel cards
- Travel and procurement records for scope 3 screening
Each data set should have a named owner, and the original records should be kept so that figures can be traced back to their source.
Apply emission factors
Emissions are estimated by multiplying activity data by an emission factor. Factors should come from recognized sources, and the source and version of each factor should be recorded. Electricity factors in particular depend on the grid supplying the site. Results are usually expressed in carbon dioxide equivalent, which combines different gases using their global warming potentials.
Document and check the inventory
A short inventory management document should record the boundaries, data sources, emission factors, assumptions and any exclusions. Basic quality checks, such as comparing results with the previous period and reviewing unusual values, help catch errors before results are shared. Organizations that plan to disclose their inventory publicly may later consider independent verification.
From inventory to action
A first inventory is rarely perfect, and that is acceptable. Its value lies in showing where emissions are concentrated, which supports realistic reduction opportunities, targets and reporting. Data quality can be improved year by year.
How Lothan can help
Lothan International Environmental Consultancy helps organizations in Kuwait set their inventory boundaries, organize data collection and document their first greenhouse gas inventory in line with the GHG Protocol. Contact our team to discuss where to begin.
