GHG Accounting, Calculation and Reporting

Understanding Climate Reporting

Measuring and managing greenhouse gas (GHG) emissions is a core part of sustainability work and an important foundation for meeting growing regulatory requirements and climate targets. We help organisations build processes for data collection, emissions calculation, and reporting in line with established standards such as the GHG Protocol and ESRS.

• Scope 1 (Direct emissions): Emissions from sources owned or controlled by the organisation, such as company vehicles or on-site fuel combustion.
• Scope 2 (Indirect emissions): Emissions from the generation of purchased electricity, steam, heating, or cooling used by the organisation.
• Scope 3 (Other indirect emissions): Emissions occurring throughout the value chain, including supplier emissions, business travel, and product use.

Accurate GHG accounting is essential for establishing baselines, tracking progress, and meeting reporting requirements under frameworks such as the GHG Protocol, the Science Based Targets initiative (SBTi), and the Corporate Sustainability Reporting Directive (CSRD). By analysing the entire value chain, organisations can identify meaningful opportunities for emissions reduction and develop a long-term sustainability strategy.

For many companies, climate reporting is now also a central part of CSRD and ESRS work, particularly in areas such as climate targets, transition plans, and monitoring climate-related risks and opportunities. At the same time, demand for climate reporting is increasingly being driven by external stakeholders such as major customers, lenders, financiers, and owners, with larger companies and CSRD reporters in particular increasingly requesting climate data from across their value chains. Although certain requirements under national legislation and EU regulations have been reduced, the overall assessment is that total expectations and demands placed on companies' climate reporting have increased. We recommend that all companies, at a minimum, calculate and track their Scope 1 and Scope 2 emissions. For companies with more than 1,000 employees, we recommend always including all three scopes, as this is increasingly expected by customers, investors, and other key stakeholders.

How does BDO's ESG team work to streamline GHG reporting?

1. Defining clear boundaries 
   We work together with the organisation to establish organisational and operational boundaries and assess which consolidation approach is most appropriate, such as operational control or equity share, based on the organisation's structure and assets.

2. Transparency in methodology calculations
   We establish and document methods for data collection, emission factors, and calculations, which strengthens the quality of the reporting and makes follow-up and external review easier.

3. Working from established standards and methodologies
   We ensure that calculations and reporting are based on established frameworks and standards, such as the GHG Protocol and/or ISO 14064, to create comparability, transparency, and credibility in the reporting.

4. Focus on the most material emission categories
   For extensive Scope 3 emissions, the team often takes a phased approach, initially prioritising the most material emissions categories, such as purchased goods and services or transport within the value chain, before gradually expanding the reporting over time.

5. Internal collaboration and clear allocation of responsibility 
   We work closely with several parts of the organisation, such as procurement, logistics, finance, and HR, to ensure comprehensive data collection and clear accountability in climate reporting.

6. Quality assurance and audit readiness
   Regular quality assurance and review of data and calculations strengthen the reliability of climate reporting and facilitates external verification.
   

Common mistakes in climate reporting

• Ignoring Scope 3 emissions
  While often difficult to measure, Scope 3 emissions typically make up the largest share of an organisation's climate footprint. Excluding them results in an incomplete picture of a company's climate impact.
• Using incorrect or unsuitable emission factors 
  The choice of emission factors has a major impact on the results of climate calculations. Outdated, generic, or non-business-specific emission factors can lead to misleading results and make comparisons over time more difficult.
• Inadequate data collection and quality assurance
  Inconsistent methods, unclear allocation of responsibility, or varying data sources can lead to unreliable results. Clear processes for data collection, quality assurance, and documentation are essential for robust climate reporting.
• Failing to integrate climate reporting into business strategy 
  When climate reporting is treated purely as a compliance matter rather than a strategic tool, its impact is diminished. Use the insights it generates to drive emissions reductions and align them with the organisation's business goals.