Good practice in carbon accounting

A good GHG inventory gives the same answer when someone else checks it, and it can be compared from one year to the next. The habits below come from the GHG Protocol and IFRS S2. They also prepare you for reasonable assurance, which starts in Malaysia in 2028 for the largest listed companies.

1. Use the 5 principles as your test

Relevance, completeness, consistency, transparency and accuracy are the GHG Protocol's tests for a fair inventory. When you must make a choice, for example whether to include a small source, choose the option that best meets these principles and write down why. What is carbon accounting? explains each principle.

2. Set your boundaries once and write them down

Choose one organisational boundary approach (equity share, financial control or operational control) and apply it to every part of the group. Then list the sources in each scope. Record the decision and the reason. If your boundary changes, say so in the report. Build your GHG inventory takes you through these steps.

3. Choose a base year and a recalculation policy

A base year is the year that you compare later years against, for example to track a reduction target. The GHG Protocol asks you to recalculate the base year when a change would make the comparison misleading:

• A structural change, such as a merger, an acquisition or a sale of part of the business
• A change in calculation method or emission factors that has a large effect
• The discovery of a significant error

Set a threshold for "significant" in advance. Do not recalculate for organic growth or decline, for example when a factory simply produces more.

4. Use the best data that you can get

Primary data comes from your own operations or your suppliers, such as meter readings, fuel invoices and supplier emissions figures. Secondary data comes from averages, such as industry emission factors or spend-based estimates.

Use primary data for your largest sources first. For the rest, secondary data is acceptable, but record it as such. Each year, replace estimates with better data where the effect is largest. The Scope 3 Standard rates data quality on how well it fits your technology, time period and location, and on how complete and reliable it is.

5. Choose emission factors with care

For each factor, record its source, its year and the place it applies to. Use the factor that best represents your activity: a Malaysian grid factor for electricity used in Malaysia, not a global average. IFRS S2 requires 100-year global warming potentials from the latest IPCC assessment, currently the Sixth Assessment Report (AR6). From 2027, an amendment lets you use other values where a local rule requires them.

6. Keep an audit trail

An assurance provider must be able to follow each number back to its source. Keep:

• The raw records, such as invoices, meter readings and travel bookings
• The calculation, with the factor and the GWP values used
• A record of who entered or changed each figure, and when
• Notes on assumptions and estimates

The GHG Protocol calls this an inventory quality management system. It does not need to be complicated, but it must be written down and followed each year.

7. Check before you report

Before you publish, compare each source with the previous year. Investigate large changes. Check units, because a mix-up between kWh and MWh changes a result by a factor of 1,000. Ask someone who did not prepare the numbers to review them.

8. Report gross emissions and show credits separately

Report your gross Scope 1, Scope 2 and Scope 3 emissions. Do not subtract carbon credits or renewable energy certificates from them. Show credits, and Scope 2 contracts, as separate information. Carbon markets and offsets explains why.

9. Work with your suppliers

For most companies, Scope 3 is where the data is weakest. Start with your largest suppliers and the categories that matter most. Ask for activity data or their own emissions figures, and tell them how you will use it. In Carbon GPT, Requests lets you send data requests and collect the answers in one place.

10. Review and improve each year

Treat the inventory as a process, not a one-off project. After each reporting cycle, list what was estimated, what was missing and what took the longest. Then fix the largest gaps first.

Sources

• GHG Protocol Corporate Standard, chapters 1, 3–5, 7 and 9
• GHG Protocol Corporate Value Chain (Scope 3) Standard, chapter 7
• IFRS S2 Climate-related Disclosures, paragraphs 29 and B21–B22
• Securities Commission Malaysia: Mandatory sustainability assurance requirement to take effect in 2028 (17 September 2026)