What is carbon accounting?
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Carbon accounting is the measurement of the greenhouse gases (GHGs) that an organisation causes in a year. It covers gases that the organisation releases itself and gases released by the energy it buys and by its value chain. The result is a GHG inventory: a list of emission sources with their totals in tonnes of carbon dioxide equivalent (tCO₂e).
Carbon accounting is also called GHG accounting. It works like financial accounting. You set clear boundaries, use consistent methods, keep records, and report the same way each year so that the numbers can be compared.
What you measure
The GHG Protocol covers 7 greenhouse gases. Each gas traps a different amount of heat. To add them together, you convert each gas into CO₂ equivalent with its global warming potential (GWP). The GWP tells you how much one tonne of a gas warms the planet over 100 years compared with one tonne of CO₂.
| Gas | Common sources | GWP (100 years, IPCC AR6) |
|---|---|---|
| Carbon dioxide (CO₂) | Burning fuel, electricity generation | 1 |
| Methane (CH₄) | Gas leaks, landfill, livestock, wastewater | 29.8 (fossil) or 27.0 (non-fossil) |
| Nitrous oxide (N₂O) | Fertiliser, some combustion and industry | 273 |
| Hydrofluorocarbons (HFCs) | Refrigerants in air conditioning and chillers | Varies by gas, for example 1,530 for HFC-134a |
| Perfluorocarbons (PFCs) | Aluminium smelting, electronics | Varies by gas |
| Sulphur hexafluoride (SF₆) | Electrical switchgear | 24,300 |
| Nitrogen trifluoride (NF₃) | Semiconductor and display manufacturing | 17,400 |
For example, 1 tonne of leaked fossil methane counts as 29.8 tCO₂e. IFRS S2 requires the 100-year GWP values from the latest IPCC assessment, which is currently the Sixth Assessment Report (AR6).
The basic calculation
Most emissions are not measured at a chimney. They are calculated from records that you already keep:
Activity data × emission factor = emissions
- Activity data is the amount of an activity, for example litres of diesel, kWh of electricity or kilometres flown.
- An emission factor is the amount of GHG released per unit of that activity, for example kg CO₂e per kWh.
Example with made-up numbers: an office uses 10,000 kWh of grid electricity in a month. If the grid factor is 0.5 kg CO₂e per kWh, the office caused 5,000 kg, or 5 tCO₂e, that month. Real factors depend on the country, the year and the source, so always record which factor you used.
The 3 scopes
The GHG Protocol sorts emissions into 3 scopes so that each tonne is counted once:
- Scope 1 is direct emissions from sources that you own or control, such as company vehicles, generators and refrigerant leaks.
- Scope 2 is indirect emissions from the electricity, steam, heating and cooling that you buy.
- Scope 3 is all other indirect emissions in your value chain, such as purchased goods, business travel and the use of your sold products.
The GHG Protocol and the 3 scopes explains each scope in more detail.
The 5 principles
The GHG Protocol Corporate Standard sets 5 principles for a fair inventory:
| Principle | What it means in practice |
|---|---|
| Relevance | The inventory shows the emissions that matter for the decisions of its users. |
| Completeness | All sources inside the chosen boundary are included, and any exclusion is explained. |
| Consistency | The same methods are used each year, and any change is explained. |
| Transparency | Methods, data sources and assumptions are written down so that others can follow them. |
| Accuracy | The numbers are neither too high nor too low, as far as you can tell. |
Why it matters now
Reporting rules. From 2025, Malaysia phases in IFRS S1 and IFRS S2 for listed companies and large non-listed companies. IFRS S2 asks for Scope 1, Scope 2 and Scope 3 emissions. Climate reporting rules in Malaysia and worldwide gives the dates.
Customers and supply chains. A company that reports Scope 3 needs data from its suppliers. As a result, smaller companies that do not have to report are often asked for their emissions by the customers that do.
Exports. Since January 2026, EU importers of steel, aluminium, cement, fertilisers, electricity and hydrogen must pay for the emissions in those goods under the EU Carbon Border Adjustment Mechanism (CBAM). Exporters with good emissions data can give their buyers real figures instead of default values.
Cost. Most Scope 1 and Scope 2 emissions come from fuel and electricity. When you know where your emissions come from, you also know where you spend money on energy.
Common misunderstandings
- "It is only about CO₂." No. It covers all 7 gases. Refrigerant leaks can be large because some refrigerants have GWPs in the thousands.
- "Only big companies need it." Rules apply first to large companies, but their Scope 3 includes your emissions if you supply them.
- "Buying carbon credits reduces my emissions." No. Under the GHG Protocol and IFRS S2, you report your gross emissions. Credits are reported separately. See Carbon markets and offsets.
Carbon accounting in Carbon GPT
The Carbon GPT Platform guides show how to record your activity data, apply emission factors and produce reports in the app. For a business view, read our blog post Carbon accounting for SMEs.
