GHG Inventory Scoping for Verification: Boundaries & Scopes

Why Scoping Matters for GHG Verification

Scoping is the foundational step in any GHG inventory. It defines what is measured, how it is measured, and what is excluded—and these decisions have direct implications for the integrity and verifiability of the final inventory. A well-scoped inventory enables efficient verification; a poorly scoped one leads to verification delays, additional costs, and potential adverse findings.

From a verifier's perspective, the first thing examined is whether the scope is clearly defined, appropriately comprehensive, and well-documented. The verifier will assess whether the organisational and operational boundaries are appropriate for the organisation's structure and whether any exclusions are justified and immaterial.

Scoping errors are among the most common findings in GHG verification. These include missing emission sources, inconsistent boundary application across entities, unjustified exclusions of material Scope 3 categories, and inappropriate consolidation approaches. Getting the scope right from the beginning saves significant time and cost in the verification process.

Organisational Boundaries

The organisational boundary defines which legal entities, business units, operations, and facilities are included in the GHG inventory. ISO 14064-1 and the GHG Protocol Corporate Standard both require organisations to select a consolidation approach and apply it consistently.

Equity Share Approach

Under the equity share approach, an organisation accounts for GHG emissions from operations according to its share of equity in the operation. If you own 60% of a joint venture, you report 60% of that joint venture's emissions.

When to use equity share:

• Your organisation has significant joint ventures or partially owned operations
• You want to align GHG reporting with financial consolidation (equity method)
• Your investors or lenders require emissions data aligned with your economic interest
• Industry practice in your sector favours equity share (common in oil and gas, mining)

Operational Control Approach

Under the operational control approach, an organisation accounts for 100% of GHG emissions from operations over which it has operational control—meaning the authority to introduce and implement operating policies. Operations where the organisation does not have operational control are excluded entirely.

When to use operational control:

• Your organisation directly operates most of its facilities and has clear operational authority
• You want a simpler approach that avoids pro-rating emissions across ownership percentages
• Your organisation has few or no joint ventures or partially owned operations
• The regulatory scheme you report under requires operational control (e.g., EU ETS)

Financial Control Approach

A third option recognised by the GHG Protocol—financial control—accounts for 100% of emissions from operations where the organisation has the ability to direct the financial and operating policies of the operation. This approach is similar to operational control but based on financial governance rather than operational authority.

Operational Boundaries: Scope 1, 2, and 3

Once the organisational boundary is set, the operational boundary determines which emission sources within each entity are quantified and reported. This is where the familiar Scope 1, 2, and 3 framework applies.

Scope 1: Direct Emissions

Emissions from sources owned or controlled by the organisation. These must always be reported and typically include stationary combustion (boilers, furnaces, generators), mobile combustion (fleet vehicles, company aircraft), process emissions (industrial processes), and fugitive emissions (refrigerant leaks, natural gas leaks).

Scope 2: Energy Indirect Emissions

Emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the organisation. ISO 14064-1:2018 and the GHG Protocol Scope 2 Guidance require dual reporting using both location-based and market-based methods where applicable. Both methods must be reported to provide a complete picture of energy-related emissions.

Scope 3: Other Indirect Emissions

All other indirect emissions that occur in the organisation's value chain. The GHG Protocol identifies 15 Scope 3 categories (8 upstream, 7 downstream). ISO 14064-1:2018 uses six categories but the concept is equivalent. Scope 3 typically represents the largest share of total emissions for most organisations, particularly in service industries.

Scope 3 Categories: What to Include

Deciding which Scope 3 categories to include is one of the most important scoping decisions. ISO 14064-1:2018 requires a documented assessment of significance for all indirect emission categories. The GHG Protocol provides guidance on significance screening.

The 15 GHG Protocol Scope 3 Categories

Significance Screening Criteria

Use these criteria to assess which categories to include:

• Size: Is the category expected to contribute more than 1-5% of total emissions?
• Influence: Can the organisation influence emissions in this category through procurement, design, or policy?
• Risk: Does the category represent climate-related risks (regulatory, physical, transition)?
• Stakeholder expectations: Do investors, customers, or regulators expect this category to be reported?
• Data availability: Is data reasonably obtainable (this alone should not justify exclusion of a material category)?

GHG Protocol Alignment

Many organisations use the GHG Protocol Corporate Standard as their primary reporting framework while seeking verification against ISO 14064-1. The two frameworks are broadly compatible, but there are alignment points to consider during scoping.

ISO 14064-1:2018 uses six emission categories while the GHG Protocol uses three scopes. The mapping is straightforward and well-understood by verifiers. Category 1 = Scope 1, Category 2 = Scope 2, and Categories 3-6 collectively map to the 15 Scope 3 categories. Most organisations report using both terminologies in parallel.

Key alignment considerations include ensuring dual reporting for Scope 2 (location-based and market-based), documenting significance assessments for all Scope 3 categories as required by ISO 14064-1:2018, and applying the selected consolidation approach consistently across both frameworks.

Base Year Selection

The base year is the reference point against which future GHG performance is measured. Proper base year selection and management is essential for meaningful trend analysis and for meeting the requirements of schemes like SBTi.

Base Year Selection Criteria

• Representativeness: The base year should represent a typical year of operations, not an anomalous one
• Data quality: Sufficient data quality and documentation to support verification
• Recency: Recent enough to be relevant; SBTi requires a base year no earlier than 2015 for most targets
• Stability: Preferably a year without major structural changes (mergers, acquisitions, divestments)

Base Year Recalculation Policy

Organisations must establish a documented base year recalculation policy that specifies when the base year inventory will be recalculated. Common triggers include:

• Structural changes (acquisitions, divestments, mergers) that change the boundary
• Methodology changes (new quantification approaches, updated emission factors)
• Discovery of significant errors in the base year inventory
• Changes in the categories or gases included in the inventory

The recalculation policy should define a significance threshold—typically a threshold above which a change triggers recalculation. This threshold is separate from (but related to) the verification materiality threshold.

Exclusion Criteria

Not every emission source needs to be included in the inventory, but every exclusion must be justified. ISO 14064-1:2018 requires organisations to document exclusions and demonstrate that they do not materially affect the total inventory.

Acceptable Grounds for Exclusion

• Immateriality: The source is estimated to contribute less than a defined threshold (e.g., less than 1% of total emissions) and the cumulative total of all exclusions remains below materiality
• Data unavailability: Data cannot reasonably be obtained despite best efforts (must be genuinely unavailable, not just inconvenient)
• Not applicable: The emission source genuinely does not apply to the organisation (e.g., no franchises, no downstream processing)

Documentation Requirements

For each exclusion, document: the emission source or category excluded, the rationale for exclusion, an estimate of the magnitude of excluded emissions (to demonstrate immateriality), and confirmation that the cumulative total of all exclusions remains below the materiality threshold.

Quantification Approaches

ISO 14064-1 recognises several approaches for quantifying GHG emissions. The choice of approach depends on the emission source, available data, regulatory requirements, and desired accuracy.

Calculation-Based Approach

The most common approach, using the formula: Emissions = Activity Data x Emission Factor x Global Warming Potential. Activity data includes fuel consumption, electricity usage, distance travelled, material quantities, and similar operational metrics. This approach requires reliable activity data and appropriate emission factors.

Direct Measurement

Continuous Emissions Monitoring Systems (CEMS) or periodic stack testing directly measure GHG concentrations and flow rates from point sources. Used primarily for large stationary sources under regulatory programmes (e.g., EU ETS installations, power plants). Provides the most accurate data but is expensive to install and maintain.

Mass Balance

Calculates emissions based on the carbon content of inputs minus the carbon content of outputs. Commonly used in chemical processes, petroleum refining, and cement manufacturing. Requires detailed knowledge of input/output material flows and their carbon content.

Estimation and Modelling

Uses models, proxies, or benchmarks to estimate emissions where direct data is unavailable. Common for fugitive emissions (leakage models), Scope 3 categories (spend-based methods), and small or dispersed sources. The highest uncertainty but may be the only practical approach for certain sources.

Emission Factors

Emission factors convert activity data into GHG emissions. Selecting appropriate emission factors is critical for accuracy and is a common focus area for verifiers.

Emission Factor Hierarchy

In order of preference (highest to lowest quality):

1. Supplier-specific factors: Provided by the fuel or energy supplier for the specific product delivered
2. Country-specific published factors: Government-published factors (e.g., UK DEFRA/BEIS, US EPA, India CEA)
3. Regional or grid-specific factors: IEA or national grid operator factors for electricity
4. International default factors: IPCC default factors where country-specific data is unavailable
5. Industry or proxy factors: Sector averages or proxy estimates (lowest preference)

Common Emission Factor Sources

• DEFRA/BEIS (UK): Comprehensive annual conversion factors for UK reporting
• EPA (US): Emission factors for US-specific sources and grid electricity
• IEA: Country-specific electricity emission factors
• IPCC: Default emission factors across all sectors and gases
• ecoinvent: Life cycle emission factor database for products and processes

Data Quality

Data quality is a central concern for verifiers. The quality of the GHG inventory is ultimately limited by the quality of the underlying data. ISO 14064-1 requires organisations to assess and report on data quality.

Data Quality Dimensions

Improving Data Quality

• Establish documented data collection procedures with clear responsibilities
• Use primary (metered/invoiced) data wherever possible instead of estimates
• Implement internal quality checks and reconciliation procedures
• Maintain an audit trail from source data through to reported figures
• Use GHG accounting software to reduce manual errors and improve consistency
• Engage with suppliers to obtain higher-quality emission factor data

Scoping for Verification Readiness

The scoping decisions described above directly affect how smoothly verification will proceed. Organisations that consider verification requirements during the scoping phase—rather than as an afterthought—experience faster, cheaper, and more successful verification engagements.

Verification Readiness Checklist for Scoping

• Organisational boundary is clearly defined and documented with the selected consolidation approach
• All entities and sites within the boundary are listed with their emission relevance
• Operational boundary covers Scope 1 and Scope 2 at minimum, with all exclusions justified
• Scope 3 significance assessment is documented with inclusion/exclusion rationale for each category
• Base year is selected with a documented recalculation policy
• Quantification methodologies are documented for each emission source
• Emission factors are sourced from recognised databases and are current
• Data collection procedures are documented with clear roles and responsibilities
• An audit trail exists from source documents to reported figures
• Internal review or quality assurance has been performed before submission to the verifier

A GHG inventory that is well-scoped, well-documented, and internally reviewed before verification typically requires 30-40% less verifier effort than one compiled without consideration of verification requirements. The investment in scoping quality pays for itself in reduced verification costs and fewer corrective action requests.

Frequently Asked Questions

Should I use equity share or operational control for my GHG boundary?

The choice depends on your organisational structure and reporting objectives. Operational control is simpler and is the most common choice for most organisations—it accounts for 100% of emissions from operations where you have operational control. Equity share is appropriate for organisations with significant joint ventures or partial ownership interests where you want to reflect your economic interest. Both GHG Protocol and ISO 14064-1 allow either approach, but the choice must be consistent year-on-year.

Which Scope 3 categories should I include in my GHG inventory?

ISO 14064-1:2018 requires you to assess the significance of all indirect emission categories and justify any exclusions. At minimum, most organisations should include purchased goods and services, fuel- and energy-related activities, business travel, employee commuting, and waste generated in operations. Categories representing more than 1-5% of your total footprint or that are relevant to your business model should generally be included.

What is a base year and why does it matter for verification?

A base year is a reference year against which future GHG performance is compared. It provides the benchmark for tracking emission reduction progress. For verification, the base year inventory must be robust, well-documented, and subject to a clear recalculation policy that specifies when and how the base year is adjusted for structural changes or methodology changes.

How do I select appropriate emission factors for GHG quantification?

Select emission factors that are geographically relevant (country or grid-specific), temporally current (matching or close to your reporting year), and appropriate for the activity data unit. Preferred sources include national government databases (e.g., DEFRA, EPA), the IEA, IPCC emission factor databases, and industry-specific databases.

Can I exclude minor emission sources from my GHG inventory?

Yes, but exclusions must be justified and documented. ISO 14064-1 requires that the cumulative impact of all exclusions should not materially affect the total inventory. A common rule of thumb is that total exclusions should not exceed 5% of total emissions. Each exclusion must be documented with a rationale explaining why the source is immaterial.