Frequently Asked Questions

Carbon accounting is the process of measuring, quantifying, and tracking greenhouse gas (GHG) emissions produced by an organisation, product, or activity. It provides the data foundation for climate strategy, regulatory compliance, and emissions reduction targets. Most organisations follow the GHG Protocol to ensure consistency and comparability. See our Glossary for related terms.

Scope 1 covers direct emissions from owned or controlled sources — company vehicles, on-site fuel combustion, and industrial processes.

Scope 2 covers indirect emissions from purchased electricity, heat, steam, or cooling.

Scope 3 includes all other indirect emissions across your value chain: purchased goods and services, business travel, employee commuting, waste, and product use by customers. For many companies, Scope 3 represents 70-90% of total emissions. Learn more in our Scope 1, Scope 2, and Scope 3 guides.

The GHG Protocol is the world's most widely used standard for greenhouse gas accounting. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides frameworks for corporate accounting (Corporate Standard), value chain accounting (Scope 3 Standard), and product-level accounting (Product Standard). It is the foundation for most corporate carbon reporting, including CDP, SBTi, and CSRD. See our Implementation Guides for practical application.

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation requiring large companies and listed SMEs to report detailed sustainability information under European Sustainability Reporting Standards (ESRS). It applies to approximately 50,000 companies, including EU subsidiaries of non-EU parent companies meeting certain thresholds. CSRD requires double materiality assessment, climate transition plans, and third-party assurance. Read our CSRD Omnibus Guide for full details.

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy that places a carbon price on imports of certain goods from non-EU countries. Covered goods include cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen. CBAM aims to prevent carbon leakage — where production shifts to countries with weaker climate policies — and ensure imported goods face equivalent carbon costs to EU-produced goods. Importers must report embedded emissions and purchase CBAM certificates.

European Sustainability Reporting Standards (ESRS) are the detailed reporting rules under CSRD. They cover 12 standards across four categories: cross-cutting (general requirements and disclosures), environment (climate, pollution, water, biodiversity, resource use), social (workforce, workers in the value chain, affected communities, consumers), and governance (business conduct). ESRS E1 (Climate Change) requires Scope 1, 2, and 3 emissions disclosure, climate risk assessment, and transition planning. See the Glossary for definitions of key terms.

The Science Based Targets initiative (SBTi) is a partnership between CDP, UN Global Compact, WRI, and WWF that helps companies set emissions reduction targets aligned with climate science. To set a target: (1) commit publicly, (2) develop your target within 24 months using SBTi criteria, (3) submit for validation, and (4) disclose progress annually. SBTi requires Scope 1 and 2 targets, and most companies must also set Scope 3 targets if Scope 3 exceeds 40% of total emissions. See our Setting Science-Based Targets guide for a step-by-step methodology.

A Product Carbon Footprint measures the total GHG emissions generated across a product's entire lifecycle — from raw material extraction through manufacturing, distribution, use, and end-of-life disposal. PCFs are typically calculated using ISO 14067 or the GHG Protocol Product Standard. They are increasingly required by B2B customers, regulatory schemes like the EU Green Claims Directive, and voluntary sustainability programmes. See our Product Carbon Footprint Guide for practical steps.

Scope 1 emissions are calculated by multiplying activity data by emission factors. For stationary combustion (boilers, furnaces), collect fuel consumption data (litres, kWh, tonnes) and multiply by the relevant DEFRA, EPA, or national emission factor. For mobile combustion (fleet vehicles), use fuel receipts or mileage data with vehicle-specific emission factors. For fugitive emissions (refrigerants), track refrigerant purchases and leaks using GWP values from the IPCC. Use our Carbon Footprint Calculator to get started, or read the Glossary for definitions of key terms.

Scope 2 emissions come from purchased electricity, heat, steam, and cooling. The GHG Protocol offers two methods: Location-based uses average grid emission factors for your geographic region, while Market-based uses emission factors from specific energy contracts or instruments like Renewable Energy Certificates (RECs). Most major reporting frameworks now require both. Collect utility bills for kWh consumption, then apply the appropriate emission factor from your national grid or energy supplier.

Scope 3 covers 15 categories across your entire value chain — upstream (purchased goods, capital goods, transport, waste) and downstream (product use, end-of-life, investments). The challenges include: limited supplier data availability, complex supply chains with multiple tiers, varying data quality, lack of standardised supplier reporting, and the need to balance spend-based estimates with activity-based calculations. Start with a screening assessment using spend data, then prioritise high-impact categories for deeper analysis.

The best emission factors depend on your location and data availability. Common sources include: DEFRA/DESNZ (UK), EPA (US), IEA (international energy), IPCC (global warming potentials), Exiobase (spend-based), and Ecoinvent (lifecycle). For electricity, use your national grid factor or supplier-specific factors. For purchased goods, supplier-specific data is ideal; otherwise use industry-average factors. Always document your factor sources and vintages.

Carbon neutral means balancing emissions by offsetting them — typically through purchasing carbon credits — without necessarily reducing underlying emissions. Net zero means reducing emissions as close to zero as possible (usually 90-95% reduction) and only using high-quality removals for residual emissions. SBTi's Net-Zero Standard requires deep decarbonisation across all scopes, with neutralisation of residual emissions through permanent carbon removal, not avoidance offsets. See the Glossary for detailed definitions.

It depends on jurisdiction and customer requirements. Under CSRD, listed SMEs must report from 2027. In the UK, SECR applies to quoted companies, large unquoted companies, and LLPs. Even if not legally required, small companies increasingly face emissions reporting requests from large customers (Scope 3 upstream), banks (green lending), and investors. Starting with Scope 1 and 2 is practical and demonstrates climate commitment.

Double materiality is the CSRD requirement to assess sustainability matters from two perspectives: financial materiality (how sustainability issues affect the company's financial performance) and impact materiality (how the company's activities affect people and the environment). A topic is material if it is significant from either perspective. This differs from single materiality (financial only) used in many voluntary frameworks. See our Double Materiality Assessment guide for a practical methodology.

Best practice is annually, aligned with your financial reporting year. This enables year-on-year comparison and tracks progress against reduction targets. For CSRD and CDP, annual reporting is mandatory. Some organisations calculate quarterly for operational management, particularly for energy-intensive operations. The key is consistency — use the same boundaries, methodologies, and factors each year, document any changes, and restate prior years if methodologies change significantly.

A climate transition plan is a time-bound action plan that outlines how an organisation will adapt its strategy and operations to align with a 1.5°C warming pathway. Under CSRD and the UK Transition Plan Taskforce, it must include: governance arrangements, emissions reduction targets, decarbonisation levers and actions, climate risk and opportunity assessment, financing and capital allocation, and engagement with value chain partners. The plan should be updated regularly as technology, policy, and science evolve. See our Climate Transition Planning guide for a full framework.

Key criteria include: GHG Protocol compliance, Scope 3 coverage depth, emission factor libraries (DEFRA, EPA, IEA, Exiobase), supplier engagement tools, audit trails, reporting outputs (CSRD, CDP, GRI), integrations (ERP, utility data), and cost. For SMEs, spreadsheet-based tools may suffice initially. For larger organisations or complex supply chains, dedicated platforms like Terrnix provide automated data collection, calculation engines, and regulatory-ready reporting. Assess your current data maturity before selecting a tool.

The EU Taxonomy is a classification system defining which economic activities are environmentally sustainable. It sets technical screening criteria for six environmental objectives, including climate change mitigation. Companies subject to CSRD must disclose the proportion of their turnover, CapEx, and OpEx aligned with the Taxonomy. Carbon accounting supports this by quantifying emissions intensity of activities, demonstrating substantial contribution to climate mitigation, and proving do-no-significant-harm compliance for other objectives.

Offsets alone do not constitute net zero. SBTi's Net-Zero Standard requires reducing Scope 1, 2, and 3 emissions by 90-95% by 2050 (or sooner) before neutralising residual emissions. For the small residual (5-10%), only permanent carbon removals (e.g., direct air capture with geological storage, enhanced mineralisation) are acceptable — not avoidance offsets like renewable energy credits or forest conservation. Offsets can play a role in compensating for emissions during transition, but they must not replace decarbonisation efforts.