Carbon accounting · the method under every UK carbon report
Carbon accounting:
a UK guide
Carbon accounting — also called GHG accounting — is the measurement of an organisation’s greenhouse gas emissions to the GHG Protocol Corporate Standard: a boundary, activity data, emission factors and a result in tonnes of CO2e by scope.
It is the same work whichever regime asks for the result, and it is judged on five principles the standard sets out.
Below: the principles, the boundary, the build, the base year, and what “assurance-grade” means under SECR and the FCA’s UK SRS rules.
Definition
Carbon accounting is the measurement; reporting is the publication
Carbon accounting is the measurement of greenhouse gas emissions to a standard method.
Read the provisions and qualifications
It draws an organisational boundary, collects activity data — kWh, litres, kilometres, tonnes, pounds spent — applies emission factors and produces figures in tonnes of carbon dioxide equivalent, sorted into Scope 1, 2 and 3.
The method almost every UK reporter uses is the GHG Protocol Corporate Standard, convened by the World Resources Institute and the World Business Council for Sustainable Development, with the Scope 3 Standard for the value chain.
The WRI’s explainer sets the standard in the context of corporate climate disclosure.
Carbon reporting is what the law or a standard then asks you to publish, where and in what form, and the UK has four regimes for that, set side by side on the carbon reporting hub.
The distinction matters in practice: a tool can do the arithmetic perfectly and still leave you unsure what you must disclose.
The Corporate Standard is written from a business perspective but says it applies equally to other organisations — non-profits, government agencies and universities — which is why public bodies measure to it too.
Measure and report
Measurement
Measure and report
Inventory boundary
Measure and report
Accounting standard
Measure and report
Source context
Tables and tools
SECR in the directors’ report.
UK SRS S2 in a listed company’s annual financial report.
A Carbon Reduction Plan on a supplier’s website.
A customer’s questionnaire.
The measurement underneath is the same; the boundary and the place differ.
The five principles
Relevance, completeness, consistency, transparency, accuracy
| Principle | What the Corporate Standard asks | What it rules out |
|---|---|---|
| Relevance | The inventory reflects the company’s emissions and serves users’ decisions | A boundary chosen for convenience rather than for what the business is |
| Completeness | All sources and activities inside the chosen boundary; exclusions disclosed and justified | A minimum threshold below which sources are silently dropped |
| Consistency | Consistent methods over time; changes to data, boundary or methods documented | An unexplained break in the time series |
| Transparency | A clear audit trail; assumptions, methods and data sources disclosed | Figures nobody else could re-derive from the same data |
| Accuracy | Systematically neither over nor under actual emissions; uncertainty reduced as far as practicable | Rounding up or down to tell a story |
One sentence in the completeness discussion settles a question that comes up constantly.
The standard says it is tempting to set a materiality threshold below which a source can be omitted, and that such a threshold “is not compatible with the completeness principle”.
There is no 5% rule in the GHG Protocol.
The 5% figures people quote are the SBTi’s: its near-term criteria cap exclusions from a target boundary at 5% of Scope 1 and 2 and ask companies to apply a significance threshold of 5% or less when recalculating targets.
That is a rule for targets, set by a voluntary initiative, not a rule for inventories.
Inventory principles
Completeness
Inventory principles
Materiality trap
Inventory principles
No five-percent rule
Inventory principles
Separate target rules
The boundary
Equity share or control — decide it before the data
Chapter 3 of the Corporate Standard says companies “shall account for and report their consolidated GHG data according to either the equity share or control approach”.
Read the provisions and qualifications
A company choosing control then picks operational or financial control, and the inventory report states which approach was used.
For a company that wholly owns everything, the approaches agree; joint ventures, associates and leased assets are where they part.
A boundary decided after the data arrives tends to move again next year, which breaks consistency.
The checker on this panel applies Chapter 3 to one operation at a time and shows where it lands under each approach, including when it falls out of Scope 1 and 2 and into Scope 3 categories 8, 13 or 15.
UK SRS S2 adds one layer: ¶29(a)(iv) asks for Scope 1 and 2 split between the consolidated accounting group and other investees, which works best when the inventory boundary mirrors the accounts.
Reporting boundary
Consolidation
Reporting boundary
Control approaches
Reporting boundary
Joint ventures
Reporting boundary
Consistency
Tables and tools
Boundary checker · Chapter 3 and ¶29(a)(iv)
The build
Building the inventory, step by step
| Step | What it involves | Where the rule is |
|---|---|---|
| 1. Organisational boundary | Equity share, financial control or operational control; list the entities | Corporate Standard Ch 3 |
| 2. Operational boundary | Which sources fall in Scope 1, 2 and 3; screen all fifteen Scope 3 categories | Ch 4; Scope 3 Standard §6.2 |
| 3. Activity data | Meter readings and bills, fuel cards, mileage claims, travel bookings, waste notes, purchase ledgers | Ch 6 |
| 4. Emission factors | The DESNZ set for the activity year; overseas grid factors; supplier data | DESNZ Methodology Paper ¶1.10; UK SRS S2 ¶B29 |
| 5. Calculation | Activity × factor, by gas and in CO2e, by scope and category | Ch 6 |
| 6. Base year | A year with good data, and a policy for recalculating it | Ch 5 |
| 7. Quality checks | Re-performance, completeness checks, variance against last year with reasons | Ch 7 |
| 8. Report | Boundary, approach, figures by scope, methods and factors, exclusions, changes | Ch 9; the regime’s own list |
Most UK reporters take factors from the government conversion factors, published by DESNZ each June, using the set for the year the activity falls in.
They cover fuels, UK electricity, refrigerants, transport, waste and water; where they run out — purchased goods, overseas activity — supplier data or other published factors fill the gap, and the methodology note says which.
Scope 2 is calculated location-based at minimum, because UK SRS S2 requires it; the market-based figure is added where contracts and certificates exist.
The gases are the seven the Corporate Standard now names, nitrogen trifluoride having been added to the original six by amendment.
The GHG Protocol reference covers the standard and its revision, and UK SRS Scope 3 reporting the value chain for listed companies.
Base year and restatement
When a change means recalculating the base year
A base year is the reference every later claim of progress is measured against, so how it moves matters more than how it was first set.
Read the provisions and qualifications
The Corporate Standard’s Chapter 5 asks for a recalculation policy, and GHG Protocol’s 2019 inventory guidance says the standard has no fixed definition of “significant” — the company sets and discloses its own threshold.
Structural changes — an acquisition or divestment, outsourcing or insourcing, a change of boundary or method, the discovery of an error — trigger recalculation when they cross that threshold, alone or together.
Organic growth and genuine reductions never do, because erasing them would erase what the base year exists to show.
A factor change sits between the two: the 2026 UK electricity factor fell 26%, partly through a change of method, and DESNZ leaves it to the reporter whether to restate earlier years.
UK SRS S2 adds a different trigger: ¶B34 makes a significant event a reason to reassess which Scope 3 categories and entities are included, which is not the same as recalculating a base year.
Base-year changes
Reference year
Base-year changes
Recalculation policy
Base-year changes
Structural changes
Base-year changes
Organic growth
Tables and tools
Restatement checker · 2019 Guidance and Chapter 9
Assurance-grade
What “assurance-grade” means without a general SECR or UK SRS assurance duty
SECR and the FCA’s UK SRS rules do not require assurance over a corporate carbon inventory. Specific schemes have separate duties: UK ETS requires verified emissions reporting.
Read the provisions and qualifications
The government’s Environmental Reporting Guidelines say in terms that “there is no statutory requirement to have your environmental information audited”.
The FCA’s final rules for listed companies keep the shape the consultation proposed (CP26/5 ¶¶7.5–7.7): a statement of whether assurance was obtained and, if it was, the provider, what was assured and to what level, the assurance standards used and where the report can be found.
The FCA names no assurance standard.
The FRC issued ISSA (UK) 5000 on 12 November 2025 for voluntary use, effective for periods beginning on or after 15 December 2026, and the IAASB approved withdrawing ISAE 3410, the old greenhouse gas assurance standard, from ISSA 5000’s effective date.
The government has chosen a voluntary oversight regime for sustainability assurance and tasked the FRC with an interim register by mid-2026 (government response); we have not seen it confirmed as live.
Procurement says the same thing differently: the PPN 006 Technical Standard asks for a footprint “conducted to a reasonable level of assurance” and then says “there is no requirement to have your carbon footprint audited”.
So “assurance-grade” describes how the inventory is built, not a certificate it holds.
It means a documented boundary and approach; activity data traceable to bills, meter exports, fuel cards and payroll; factors named with their source, year and version; calculations a third party could re-perform; a change log; and a review and sign-off before publication.
An inventory built that way can be assured later at little extra cost; one built without it usually has to be rebuilt first.
The sustainability assurance reference covers the standards and the oversight regime in more depth.
Evidence quality
Separate duties
Evidence quality
SECR guidance
Evidence quality
FCA statement
Evidence quality
Assurance standards
What the inventory feeds
The UK regimes that use the numbers
| Regime | What it takes from the inventory | Who | Status |
|---|---|---|---|
| SECR | Energy in kWh; emissions from fuel, facilities and purchased energy (quoted) or gas, transport fuel and electricity (unquoted); an intensity ratio | Quoted companies; large unquoted companies and LLPs | In force for years beginning on or after 1 April 2019 |
| UK SRS S2 | Gross Scope 1, 2 and 3; location-based Scope 2; the Scope 3 categories included; methods and changes | Listed in UKLR 6, 14, 15, 16, 22; anyone voluntarily | Comply or explain for periods beginning on or after 1 January 2027 |
| PPN 006 | Scope 1, 2 and Scope 3 categories 4, 5, 6, 7 and 9; baseline and targets | Bidders for central government contracts above £5m a year including VAT | In force for procurements advertised from 24 February 2025 |
| ESOS | Energy, not emissions: total consumption across buildings, transport, industrial processes and other uses | Large undertakings | Phase 4 notification due 5 December 2027 |
SECR is most organisations’ first carbon accounting deliverable; DESNZ’s evaluation counted about 19,900 organisations in scope, 76% more than the 2018 forecast.
The SECR reporting guide covers what goes in the directors’ report.
UK SRS S2 is based on IFRS S2, and the differences that matter for an inventory — location-based Scope 2, the untimed Scope 3 relief — are in IFRS S2 and UK SRS S1 and S2.
Connected information
Carbon accounting and the financial statements
IFRS S2 uses the language of connectivity; UK SRS S1 heads the same idea “Connected information” at ¶¶21 to 24.
Read the provisions and qualifications
The requirement is the same either way: the same reporting entity, the same reporting period, and consistent data and assumptions across the sustainability disclosures and the accounts.
In practice the inventory can no longer sit only in the sustainability function.
Finance needs to trace an emissions figure to the same records the accounts draw on — the energy invoices, the fleet ledger, the purchase ledger behind a spend-based estimate — and to explain any difference in boundary or period.
That is also what an assurance practitioner tests first.
A UK SRS listed company can cross-refer to disclosures elsewhere where S1 permits it, but the figures still have to agree with the accounts they sit beside.
Connected information
Connectivity
Connected information
Entity and period
Connected information
Finance involvement
Connected information
Source records
Tools and help
Software, consultants and what to check
Most organisations above the SECR thresholds use software to collect data, apply factors and hold the audit trail.
Read the provisions and qualifications
The useful questions are about method rather than features: does it keep each year’s factor set rather than overwriting it, record which method produced each Scope 3 category, produce both Scope 2 figures, and export the trail an assurer would ask for?
Carbon accounting software sets out what the measurement layer has to do, and the carbon reporting software comparison reviews platforms against UK requirements.
Our sister site ranks the market under its broader labels in best carbon accounting software.
Organisations that would rather outsource the build can look to specialist carbon consultants; we do not provide the service ourselves.
There is no published price list for any of this, and we do not publish one.
Software evidence
Collection
Software evidence
Factor versions
Software evidence
Two software layers
Software evidence
Vendor research
A reading and preparation sequence
carbon accounting: from the question to the evidence
- Step 0101
Measure and report
Carbon accounting is the measurement of greenhouse gas emissions to a standard method.Read the detail. - Step 0202
Inventory principles
One sentence in the completeness discussion settles a question that comes up constantly.Read the detail. - Step 0303
Reporting boundary
Chapter 3 of the Corporate Standardsays companies “shall account for and report their consolidated GHG data according to either the equity share or control approach”.Read the detail. - Step 0404
Base-year changes
A base year is the reference every later claim of progress is measured against, so how it moves matters more than how it was first set.Read the detail. - Step 0505
Evidence quality
SECR and the FCA’s UK SRS rules do not require assurance over a corporate carbon inventory. Specific schemes have separate duties: UK ETS requires verified emissions reporting.Read the detail. - Step 0606
Connected information
IFRS S2 uses the language of connectivity; UK SRS S1 heads the same idea “Connected information” at ¶¶21 to 24.Read the detail. - Step 0707
Software evidence
Most organisations above the SECR thresholds use software to collect data, apply factors and hold the audit trail.Read the detail.
Dates, with their status
The relevant dates, drawn in order
- 200401
Revised Corporate Standard
The accounting standard fixes the organisational boundary, principles and reporting method. A disclosure framework can specify an edition. - 201102
Scope 3 Standard
The corporate value-chain standard supplies the fifteen-category taxonomy. UK SRS S2 references this edition. - January 201503
Scope 2 Guidance
The guidance adds contractual-instrument quality criteria and the location-based and market-based reporting rules. - 29 July 202604
Consolidated development plan
The owner sets out the GHG Protocol–ISO development programme. This plan does not itself replace the operative standards. - Q2 2027 · estimated05
Draft consultation
The plan estimates consultation on a consolidated draft in Q2 2027. This is an estimated programme date, not an effective date. - Q4 2028 · estimated06
Revised standard publication
Publication is estimated for Q4 2028. Pilot testing could extend the timetable; supporting guidance is expected later on a separate timetable.
Continue your research
Related reporting guides, one question at a time
Frequently asked
Carbon accounting, answered
What is carbon accounting?
Carbon accounting, also called GHG accounting, is the measurement of an organisation’s greenhouse gas emissions to a standard method: setting a boundary, collecting activity data, applying emission factors and arriving at figures in tonnes of CO2e by scope.
The global method is the GHG Protocol Corporate Standard.
What you then have to publish, and where, is carbon reporting.
What are the five principles of carbon accounting?
The GHG Protocol Corporate Standard’s five: relevance, completeness, consistency, transparency and accuracy.
Completeness means accounting for every source inside the chosen boundary and disclosing and justifying any exclusion; accuracy means figures systematically neither over nor under actual emissions, with uncertainty reduced as far as practicable.
Is there a materiality threshold in the GHG Protocol?
No. The Corporate Standard says a minimum emissions threshold below which sources are left out is not compatible with its completeness principle.
The 5% figures in circulation come from the SBTi’s target criteria — exclusions from a target boundary, and the threshold for recalculating targets — not from the GHG Protocol.
Is carbon accounting mandatory in the UK?
Measuring is required wherever reporting is.
SECR requires every quoted company and every large unquoted company and LLP to report energy and emissions in the annual report — about 19,900 organisations, by DESNZ’s evaluation.
Listed companies report against UK SRS on a comply-or-explain basis for periods beginning on or after 1 January 2027.
Bidders for large central government contracts provide a Carbon Reduction Plan.
What emission factors should UK companies use?
For UK activity, usually the government conversion factors published by DESNZ each June, using the set for the year the activity falls in.
UK SRS S2 prescribes no factors and asks for those that best represent the activity; supplier-specific data, overseas grid factors and other databases fill the gaps the government set does not cover.
State the source and year of each.
What does assurance-grade carbon measurement mean?
A figure an independent practitioner could test: a documented boundary, activity data traceable to source records, named factors and years, calculations that can be re-performed, consistent methods year to year, and a record of every change.
SECR and the FCA’s UK SRS rules do not require assurance over the corporate inventory; schemes such as UK ETS have separate verification duties.
ISSA (UK) 5000 is available for voluntary use, and listed companies say whether they obtained assurance and, if so, from whom and to which standard.
Do I need third-party assurance on my carbon accounting?
Not under SECR or the FCA’s UK SRS rules.
Specific schemes, including UK ETS, have separate verification duties.
The government’s SECR guidelines say there is no statutory requirement to have environmental information audited.
The FCA’s final rules ask listed companies only to state whether they obtained assurance and, if they did, the provider, what was assured and to what level, and the standards used.
How does carbon accounting connect to the financial statements?
Under UK SRS S1 the sustainability disclosures cover the same reporting entity and period as the financial statements, and S1’s “Connected information” paragraphs ask for consistent data and assumptions.
In practice that means the boundary and period of the inventory match the accounts, and finance can trace each figure to its source.
What is the difference between carbon accounting and carbon reporting?
Carbon accounting is the measurement; carbon reporting is what the law or a standard then asks you to publish.
The same inventory feeds SECR, UK SRS S2, a Carbon Reduction Plan and customer questionnaires, each on its own boundary and in its own place.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
- GHG ProtocolCorporate Accounting and Reporting Standard (revised edition, 2004), Chapters 1, 3, 4, 5 and 9
The five principles, the consolidation approaches, the scopes, the base year and required reporting.
- GHG ProtocolCorporate Standard — landing page
Seven gases; updated in 2015 by the Scope 2 Guidance; applies to government agencies too.
- GHG ProtocolCorporate Value Chain (Scope 3) Standard (2011)
The fifteen categories.
- GHG ProtocolScope 1 and Scope 2 inventory guidance (2019)
Base-year recalculation and the company’s own significance threshold.
- World Resources InstituteGHG accounting and corporate climate disclosures, explained
An explainer by one of the GHG Protocol’s two conveners.
- DESNZ (GOV.UK)UK government conversion factors for company reporting
The factor sets, one per activity year.
- DESNZ (GOV.UK)Streamlined Energy and Carbon Reporting (SECR) regulations: evaluation (29 January 2026)
About 19,900 organisations in SECR scope.
- HM GovernmentEnvironmental Reporting Guidelines (March 2019)
“There is no statutory requirement to have your environmental information audited.”
- Department for Business and TradeUK SRS S2 Climate-related Disclosures
GHG Protocol measurement (¶29(a)(ii)), location-based Scope 2, no prescribed factors (¶B29).
- IFRS FoundationIFRS S2 Climate-related Disclosures
The international standard UK SRS S2 is based on.
- Financial Conduct AuthorityPS26/19: final rules on UK SRS for listed issuers (30 September 2026)
Comply or explain; the assurance statement in UKLR 6.6.6R(8)(d).
- Financial Conduct AuthorityCP26/5 — the consultation PS26/19 finalised
¶¶7.5–7.7: no mandatory assurance; a statement of what was obtained.
- Financial Reporting CouncilISSA (UK) 5000 (PDF)
Issued 12 November 2025 for voluntary use; effective for periods beginning on or after 15 December 2026.
- Financial Reporting CouncilAssurance standards
The FRC’s assurance standards page.
- IAASBIAASB announces withdrawal of ISAE 3410
Withdrawal approved in March 2025, from ISSA 5000’s effective date.
- Department for Business and Trade (GOV.UK)Assurance of sustainability reporting — government response
A voluntary oversight regime; the FRC tasked with an interim register by mid-2026.
- Cabinet Office (GOV.UK)PPN 006 Technical Standard, ¶18
“Reasonable level of assurance”, but “no requirement to have your carbon footprint audited”.