Greenhouse Gas Inventory: How to Build One for Your Organisation
A greenhouse gas (GHG) inventory is a list of your emission sources and the emissions each one produces, calculated using standardised methods. Countries compile them too, such as the UK’s national inventory, but this guide is about the organisation-level version: the one a company, council or charity builds to understand its footprint, meet reporting duties and decide where to cut first.
Below you will find the steps, the scopes, the data you need, the UK rules that make an inventory mandatory for some businesses, and how to check the result before anyone outside sees it.
Key takeaways
An organisational inventory quantifies emissions and removals within boundaries you define, for a set period, using a recognised method. The GHG Protocol Corporate Standard is the usual foundation.
Start with boundaries and a base year. Most errors in later years trace back to a vague boundary set at the start.
In the UK, large companies must disclose energy use and emissions under SECR. Even a business below the lowest energy threshold has a statement to make.
Default emission factors get you started, but they are averages. Replace them with your own data where you can, and document every choice.
Verification is easier when your inventory is traceable: every number should lead back to an invoice, meter reading or supplier record.
What a greenhouse gas inventory actually covers
An inventory has three ingredients: a boundary (what is in), activity data (litres of diesel, kWh of electricity, kilometres flown) and emission factors that convert that activity into tonnes of carbon dioxide equivalent (tCO2e).
Most inventories cover the seven gases under the Kyoto framework: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride and nitrogen trifluoride. Each is converted to CO2e using its global warming potential, so a tonne of methane and a tonne of CO2 can be added into one figure.
The purpose is practical. An inventory shows where your emissions sit, which gives you a baseline for targets, evidence for customers and lenders who ask for it, and the data for regulatory disclosure.
National inventories versus organisational ones
Search results for this topic are dominated by national reports: the UK’s inventory, the EU’s annual submission and the US EPA’s report. Governments produce these under the UN climate framework, and they follow national and IPCC methods. Your organisation’s inventory is separate. It follows corporate standards, covers only your activities and value chain, and is not submitted to those national processes. Do not mix up the two, and do not use national totals to size your own footprint.
The GHG Protocol standard and why it matters
The GHG Protocol Corporate Standard sets out requirements and guidance for companies and other organisations preparing a corporate-level inventory. It is the most widely used accounting framework in the world. If you want the background on how it developed, our piece on the evolution of the GHG Protocol standards is a good companion.
One point trips up first-timers. The standard is a method, not a reporting portal. The Protocol is designed to sit alongside existing programmes, whether voluntary ones such as CDP or mandatory ones such as SECR. Following it does not mean you have submitted anything to anyone. You apply the method, then report the output where it is required.
The five accounting principles
KPMG’s 2024 handbook on GHG reporting lists the five principles that underpin the standard: relevance, completeness, consistency, transparency and accuracy. They borrow from financial accounting, and they work as a checklist when you review your own draft:
Principle | Question to ask your draft |
Relevance | Does the boundary reflect how the business really operates? |
Completeness | Are all sources inside the boundary counted, and exclusions explained? |
Consistency | Can this year be compared with last year’s, using the same method? |
Transparency | Could an outsider follow your assumptions and sources? |
Accuracy | Is the data as precise as you can reasonably make it? |
Building the inventory step by step
The US EPA describes four broad stages: set boundaries and a base year, collect activity data and quantify emissions, formalise procedures in a management plan, then set reduction targets and report progress. Here is how that looks in practice.
1. Set the organisational boundary
Decide how you consolidate emissions from entities you own or partly own. The Protocol allows an equity share approach or a control approach (financial or operational). Pick one, write down why, and keep it. A group with joint ventures will get very different totals depending on this choice.
2. Set the operational boundary and scopes
Classify emissions by source, then sort them into scopes:
Scope 1: direct emissions from sources you own or control, such as gas boilers, company vehicles and refrigerant leaks.
Scope 2: indirect emissions from purchased electricity, steam, heat or cooling.
Scope 3: all other indirect emissions in your value chain, from purchased goods and business travel to waste and the use of what you sell.
Most organisations begin with scopes 1 and 2, which are easier to measure and where you have direct control. Scope 3 is often the largest share but the hardest to measure. Add it in stages, starting with the categories that are likely to matter most: purchased goods, travel and commuting, or waste.
3. Choose a base year
Pick a recent year with reliable data. Later years are compared against it, and you will need a policy for recalculating the base year if you acquire a business, sell one or discover a significant error.
4. Collect activity data
This is where most of the work lies. Typical sources:
Gas, electricity and heat bills or half-hourly meter data.
Fuel card records and mileage claims for vehicles.
Refrigerant top-up logs from maintenance contractors.
Travel booking records for flights, rail and hotels.
Waste and water contractor statements.
Assign one person to own each data stream. Record where each number came from, so you can retrace it a year later.
5. Apply emission factors
Multiply activity data by the right factor. For UK operations, the usual source is the government’s annual conversion factor set. The 2025 methodology paper describes factors for fuels, electricity, vehicles and business travel, water, waste and refrigerants, and notes that methane and nitrous oxide factors are now aligned with AR5 global warming potentials. Use the release that matches your reporting year, and check for a newer one before you finalise.
A simple worked example: if a site used 100,000 kWh of grid electricity, you multiply by the published location-based factor for that year. The result is your Scope 2 figure in kg or tonnes CO2e. Do the same for each source and sum them.
6. Calculate, review and document
Total each scope separately, and never net one against another. Record the gases covered, the factor set and version, any exclusions and why, and the estimation methods you used where data was missing. This documentation is what a verifier will ask for first.
Default factors and their limits
Default factors are a sensible starting point, especially for a first inventory. They are national or global averages, though, and may not match your fuel mix or process. The GHG Protocol’s calculation tools are Excel spreadsheets with step-by-step guidance covering particular sectors and processes, and they are worth a look if your operations are industrial. Where you have supplier-specific or site-specific data, use it, note the source, and keep it consistent year on year.
UK reporting rules: when an inventory is a legal duty
For some UK businesses, a GHG inventory is not optional. Under Streamlined Energy and Carbon Reporting (SECR), quoted companies and large unquoted companies or LLPs that meet at least two of three criteria must report energy use and emissions in the annual Directors’ Report. The criteria quoted in that guidance are more than 250 employees, turnover above £36 million, or balance sheet assets above £18 million. Thresholds under company law can be revised, so check the current figures with your finance team or auditor before relying on these.
Three practical points:
Minimum content. Large unquoted companies report annual UK energy use and associated emissions for gas, purchased electricity and transport fuel, plus an intensity ratio and an efficiency narrative. Quoted companies report a wider range.
The de minimis trap. An entity using less than 40 MWh of energy a year is exempt from the full disclosure, but the same guidance says it must still state that its consumption is below the threshold. Exempt does not mean silent.
Filing. A digital SECR taxonomy lets businesses report energy and carbon data when they file digital accounts with Companies House.
The government’s own evaluation of the SECR framework describes its purpose as encouraging companies to collect and report energy, carbon and efficiency information so they can improve. A good inventory built to the GHG Protocol will normally give you everything SECR needs and more.
If you also operate in the EU, the rules differ. Our explainer on the EU’s new FAQs on CSRD compliance is a useful starting point, and our article on GRI climate disclosures covers another common framework.
A simple inventory template structure
You do not need specialist software to begin. A spreadsheet with the following tabs will carry a small or mid-sized organisation through its first year:
Boundary and methodology: consolidation approach, scopes included, base year, gases, exclusions with reasons.
Activity data: one row per source and period, with units, source document and data owner.
Emission factors: factor name, value, unit, publisher, version and year.
Calculations: activity multiplied by factor, by source, by gas where relevant.
Summary: totals by scope, intensity ratios (for example tCO2e per £ million turnover, per employee or per square metre) and year-on-year change.
Change log: boundary changes, recalculations, data corrections.
Lock the factor tab once a year’s figures are final, so nobody quietly changes a value later. When data volumes grow, multiple sites or scope 3 categories make spreadsheets fragile, and that is the point to consider dedicated reporting software.
Checking and verifying your inventory
Verification means an independent party reviews your inventory against a standard and tests whether it is reliable. Not every organisation needs it. SECR does not require independent assurance of the figures, but lenders, customers or your own board may ask for it, and voluntary programmes may favour it.
Whether or not you pay for assurance, prepare the same way:
Trace a sample of figures from the summary back to invoices or meter reads.
Check units: kWh versus MWh and litres versus cubic metres are classic slips.
Confirm the right factor year was applied to the right activity year.
Make sure no source is double counted, such as transport fuel in both Scope 1 and Scope 3.
Explain every exclusion in writing.
Compare with last year and explain movements of more than a few per cent.
A verifier will test your documentation as much as your arithmetic. If the audit trail is clear, the process is quicker and cheaper.
Common mistakes to avoid
Shifting boundaries. Changing what is in scope each year makes trends meaningless. Recalculate the base year when you must, and say so.
Relying only on defaults. Averages hide real differences between sites and suppliers. Improve the data where the emissions are largest.
Mixing methods. Report location-based and market-based electricity emissions separately, and be explicit about which you are quoting.
Ignoring Scope 3 completely. You may start without it, but screen it and say what you plan to add.
Treating the inventory as a one-off. A single year tells you where you stand. Repeating it tells you whether actions work.
From inventory to action
Once the baseline is set, rank sources by size and by how much control you have. Heating, fleet and electricity usually give the fastest cuts. Set targets against the base year, assign owners and report progress annually using the same method. Some organisations link pay to these goals, which we looked at in what happens when bonuses are tied to emissions reduction.
Build the skills in-house with Exereco
If your team is taking on its first inventory, we run training that covers the method from boundaries to calculation. See our emissions and greenhouse gas accounting course and the GHG emissions course overview. For wider support, including ESG reporting software, advisory and training for organisations in Europe and Africa, visit Exereco.
FAQ
What is a greenhouse gas inventory?
It is a quantified list of an entity’s emission sources and the emissions from each, calculated with standardised methods. The entity can be a country, a city or an organisation. Organisations use it to manage climate risk, find reductions and meet reporting requirements.
How do you calculate a GHG inventory?
Define your boundaries and base year, gather activity data such as fuel and electricity use, then multiply each by an emission factor to get tCO2e. Sum the results by scope and document your method and sources. Most organisations follow the GHG Protocol Corporate Standard.
Is SECR reporting mandatory in the UK?
Yes, for quoted companies and for large unquoted companies and LLPs that meet at least two of the three size criteria set out in government guidance. Smaller businesses are outside the full requirement, though an entity below the 40 MWh de minimis level must still state that in its Directors’ Report. Check current thresholds with your adviser or auditor.
Does a GHG inventory need to be verified?
Not by default. SECR does not require independent assurance, but customers, lenders or voluntary programmes may ask for it. Preparing a clear audit trail from the start makes any later verification faster.
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