Action Guide

Build a Greenhouse Gas Inventory

Environmental Defense Fund

Developing a GHG inventory that is aligned with recognized standards such as the GHG Protocol or ISO 14064 is essential for understanding and managing your company's emissions. Accurate and credible GHG inventories serve as the foundation of effective emissions management, reporting, and climate action.

operator recording operation of oil and gas process

Overview of the Greenhouse Gas Inventory Development Process

Planning

The first step in developing a greenhouse gas (GHG) inventory is planning. You should develop a plan that includes identifying data sources, determining the inventory boundary, and selecting the appropriate calculation methodology. The inventory boundary defines the organizational and operational boundaries (Scope 1, Scope 2, Scope 3) of the inventory, which is critical to determining what emissions sources to include.  

Data Collection and Calculation of Emissions

Once the inventory boundary is defined, you can begin gathering emissions data on your company’s operations, as well as upstream and downstream emissions. Ideally, companies should use primary data (e.g., direct records of energy or fuel use) and the data should cover the full year (calendar or fiscal). If you cannot obtain complete primary data, use estimation methodologies to fill gaps, document assumptions clearly and remain transparent and conservative, and establish systems to improve data quality over time. Three pieces of data are necessary to calculate emissions: 

    • Activity data: quantifies the business activity that generates emissions (e.g., gallons of gasoline, kWh electricity) 
    • Emission factors: Convert activity data into emissions of specific greenhouse gases (e.g., tons of CO2) 
    • Global warming potential (GWP): Indicate how much heat a GHG traps relative to CO2 over a specified time horizon, expressed as carbon dioxide equivalent (CO2e)  

    After data is collected, you can use available calculation methods to determine the company’s GHG emissions. The listed resources provide detailed guidance on how to use these methods to calculate emissions.

    Verification

    Once emissions are calculated, your company should verify the inventory to ensure its accuracy and credibility. Verification involves hiring a third party to complete an independent review of the inventory. The verification process provides assurance that the inventory is accurate and complies with relevant standards. 

    Reporting

    After verification, you can report the inventory to stakeholders, including customers, investors, and regulatory agencies. You can also use the GHG inventory to track progress over time and set goals for reducing emissions. Reviewing your GHG inventory can help your company identify opportunities for emissions reductions and improvements in sustainability. 

    GHG Protocol Corporate Standard Revision

    The Greenhouse Gas Protocol (GHGP) is considering updates that may refine how companies define organizational and operational boundaries, strengthen alignment with financial accounting frameworks, and improve clarity and consistency in Scope 3 reporting. The existing Scope 2 Guidance is also being updated to a full standard. Scope 2 is the only area for which consultation materials have been released publicly to date. Early discussions indicate a move toward clearer and more consistent rules for accounting for electricity-related emissions and improved transparency in both market-based and location-based approaches. 

    Many companies also influence emissions within and beyond their value chain through actions such as supporting reduction or removal projects or using market instruments (e.g., RECs, PPAs, carbon credits), but their impacts may not be reflected in the corporate GHG inventory. To address this, the GHGP Actions and Market Instruments (AMI) Workstream is developing a reporting structure to account for these impacts. Because this work is ongoing and proposals are still evolving, companies should closely monitor developments, including the outputs of the AMI Working Group, and plan to revisit their approaches once full public consultation drafts are released. 

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