What is the PAS 2080 standard?
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What is PAS 2080, and how does it demonstrate a company’s dedication to carbon neutrality?
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GHG Accounting: What is it And How Does it Work?
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As more companies commit to joining the movement towards net-zero emissions movement by 2050, an increasing number of businesses and organizations are seeking third party expertise to help them effectively measure and manage their carbon dioxide and greenhouse gas emissions. Most companies, while motivated to aid in the fight against climate change – face challenges identifying practical starting points when it comes to reducing their own carbon emissions.
According to peer-reviewed research, 100 energy companies are responsible for up to 71% of all industrial emissions – making it more important than ever before for companies to accurately assess and address their environmental impact.
As a result, organizations increasingly partner with third-party companies that offer greenhouse gas accounting services – but how do GHG accounting services help companies to reduce their carbon emissions and improve their efforts towards sustainability?
In this comprehensive guide, we'll explain the fundamental principles of GHG accounting, the different methodologies and standards used, and evidence-based strategies to reduce GHG emissions to mitigate global warming.
What is Greenhouse Gas Accounting?
Greenhouse gas accounting is the way companies can measure how many overall emissions and greenhouse gases they are producing and emitting into the atmosphere.
“ GHG accounting is useful for states, organizations, and various individuals such as potential investors or stakeholders to delineate how many emissions a company is responsible for through the use of carbon credits. GHG accounting allows a company to fairly trade carbon credits throughout the market, and to better understand the greatest source of their own emissions. ”
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Some of the main greenhouse gases include:
- Carbon dioxide (CO₂)
- Methane (CH₄)
- Nitrous oxide (N₂O)
- Hydrofluorocarbons (HFCs)
- Perfluorocarbons (PFCs)
These greenhouse gases trap heat in the atmosphere and contribute to global warming and overall temperature rise as a result of human activity. According to the comprehensive scientific assessment in the sixth assessment report by the IPCC, these concerning temperatures will continue to rise unless significant, coordinated action is taken to reduce emissions.
In 2022, greenhouse gas emissions in the U.S. reached a massive 6,343 million metric tons of carbon dioxide equivalents. This significant increase in carbon dioxide emissions has occurred since the industrial revolution began as a result of an increase in fossil fuel combustion, efforts to generate electricity and grow the energy sector, land use changes, and overall human activities.
Here's a table depicting the increase in GHG emissions over the last 30 years:
| Sector | Change in GHG Emissions (2022 vs 1990) |
|---|---|
| Power Industry | +92% |
| Industrial Combustion and Processes | +95% |
| Buildings | 0% |
| Transport | +72% |
| Fuel Exploitation | +56% |
| Agriculture | +21% |
| Waste | +58% |
| All sectors | +62% |
Greenhouse gas (GHG) accounting is often referred to as carbon accounting.
Ultimately, greenhouse gas accounting serves as the most surefire, globally accredited way to measure a company's direct GHG emissions and carbon dioxide equivalents so that their efforts to reduce their own emissions can be accurately depicted to others in the carbon market.
What is the main goal of GHG accounting?
The main goal of corporate GHG accounting, or carbon accounting, is to provide the amount of greenhouse gas or carbon dioxide emissions produced with a set value so that they can be fairly traded in the carbon market.
As global temperatures and levels of greenhouse gas concentrations continue to skyrocket, more companies have become aware of the negative impact of their use of fossil fuels and how a large carbon footprint could be troublesome for their future business endeavors.
In fact, as of 2016, a whopping 92% of Fortune 500 companies (or companies part of the list of the largest 500 companies ranked by revenue in the U.S.) made using the Carbon Disclosure Project (CDP), GHG Protocol, or a third-party program which follows the values depicted in the GHG Protocol to monitor and manage their greenhouse gas emissions.
The Greenhouse Gas Protocol provides the comprehensive framework organizations use to report GHG emissions. This standardized approach helps companies submit accurate data to initiatives such as the Carbon Disclosure Project. Through robust greenhouse gas accounting, companies develop greater transparency with their investors, employees and customers by providing verifiable numerical data for which they can be held accountable.
Is there a difference between greenhouse gas accounting and a carbon assessment?
Greenhouse gas accounting is the process of measuring the amount of greenhouse gas emissions a company is producing, whereas carbon assessment is the process of evaluating the data provided by greenhouse gas accounting.
“ The goal of a carbon assessment is to help a company thoroughly understand their own emissions so that a third party, like Greenly, can help them with which actions to take next to build a more sustainable business and reduce their environmental impact. ”
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In short, GHG accounting is nothing more than a number. It’s like learning about how to make sense of your credit score: it’s nothing more than a number until you understand if the number is associated with a good or bad credit score.
For some people, a bad credit score will not motivate them to alter their spending habits – but for others, it will be a wake up call for them to make better credit decisions and be more mindful of how they spend their money going forward.
On the other hand, the number delineated one’s credit score may not influence their financial habits at all, and won’t influence their financial decisions in the future.
The World Business Council for Sustainable Development emphasizes that GHG accounting provides quantitative data that organizations must interpret effectively. Similar to understanding a financial metric, such as your credit score, the emissions figure alone has limited value until analyzed within the context of climate-related risks and organizational performance.
“ Robust greenhouse gas accounting and GHG reporting simply provides a party with information. If the individual or company decides to take action after receiving the numerical data regarding the emissions, that’s great – but it isn’t required ”
A carbon assessment takes the incentive of greenhouse gas accounting one step further, as it evaluates the data from greenhouse gas accounting to help the individual or company responsible for emissions to create new habits that can reduce emissions and climate related risks.
In addition to comprehensive greenhouse gas accounting services that align with international standards, Greenly can offer our clients a detailed carbon assessment to help them on their journey to becoming more environmentally friendly, adhere to climate related financial disclosures, and meet their sustainable development goals.
How does GHG accounting work?
“ Greenhouse gas accounting uses two methods, both of which can be used at the same time to optimize a company's calculation of their carbon footprint for accuracy. ”
Here are the different different methods of greenhouse gas accounting broken down:
Spend-Based Method
The first approach to GHG accounting is the spend-based method. The spend based method works by multiplying the financial value of something a company purchases by the amount of carbon dioxide or greenhouse gas emissions it emits to produce a numerical piece of data.
The spend based method of GHG accounting is often considered the easier approach, as it requires less time to calculate. However, this method of GHG accounting lacks precision as prices are subject to change on a constant basis, especially during periods of inflation.
According to carbon accounting experts, the spend-based method of GHG accounting is appropriate for preliminary assessments and quick calculations, but it isn't the most accurate way to measure a company's comprehensive carbon footprint.
Activity-Based Method
The second method to greenhouse gas accounting is the activity-based method. The activity based method, which is more specific than the spend-based method, uses data to retrieve how many units of specific materials have been purchased.
“ The spend based method would only multiply the price of one laptop purchased by the company, whereas the activity based method accounts for all the steps that may have created a carbon footprint: such as sourcing the raw materials, industrial processes, corporate value chain, various production methods, and even marketing tactics. ”
Research indicates that both the spend-based method and the activity-based method utilize emission factors derived from lifecycle assessment studies to determine a company's impact on overall emissions.
However, it is important to note that while the activity based approach to carbon accounting is more reliable than spend-based method, it is still recommended that companies implement a hybrid model or combined methodology when committing to greenhouse gas accounting. In other words, companies should strive to use both the spend-based method and the activity based method simultaneously. Using both approaches to greenhouse gas accounting can help companies determine their carbon footprint with greater accuracy and completeness.
Why is greenhouse gas accounting important?
Greenhouse gas accounting is important as it can help a company improve in all areas of business, such as by reducing their total emissions or by adhering to GHG accounting standards or other environmental regulations – all of which can make a business more attractive to customers and investors.
For instance, greenhouse gas accounting is a step towards developing corporate sustainability. Potential investors and customers are becoming more interested in investing or purchasing products and services from businesses that implement environmental habits that seek to mitigate climate change, such as by implementing the use of renewable energy or implementing energy efficiency protocols.
According to the World Resources Institute, the concrete data provided by standardized GHG accounting helps to establish transparency and prevent allegations of greenwashing. This is because the statistics provided by greenhouse gas accounting serve as tangible, numerical proof that your company is making a verifiable effort to reduce their emissions.
“ New found financial growth can also occur as a result of utilizing greenhouse gas accounting, as investors, employees, and consumers are more likely to invest or purchase a product or service that seeks sustainability. ”
Here are a few more reasons why GHG accounting is important:
- Can help your company adhere to internationally recognized, global GHG accounting protocols and global GHG accounting and reporting standards;
- Reveals where your company can succeed in reducing emissions such as by mitigating the use of air conditioning;
- Ensure that your efforts to reduce greenhouse gas (GHG) will be developed on a physical science basis and in line the the methodologies endorsed by the Science Based Targets initiative, values depicted by the GHG Protocol, and the Intergovernmental Panel on Climate Change.
Beyond reducing emissions, it's important to note that comprehensive GHG accounting enables organizations to enhance overall environmental quality through improved land management practices and more efficient wastewater treatment systems. By implementing robust corporate standards for environmental performance, companies can track progress toward their Paris Agreement-aligned commitments with greater precision and accountability.
All in all, research demonstrates that comprehensive greenhouse gas accounting delivers multitude of benefits across business operations. In other words, when companies commit to improving sustainability and reducing their emissions through rigorous GHG accounting – they create opportunities for stronger relationships with value chain partners, investors, customers, and employees who will want to take part in the project.
The Science Based Targets Initiative has documented how this integrated approach creates a positive feedback loop for continued financial and environmental success.
How does GHG accounting organize the different categories of emissions?
The categories of greenhouse gas accounting are referred to as, “scopes” – these scopes in GHG accounting aim to make calculating carbon emissions easier.
Scope 1
Scope 1 emissions, scientifically classified as direct emissions, result from environmental impacts caused by industrialization or vehicles used within a company. Any use of fossil fuels or non-renewable energy would fall under this category of greenhouse gas accounting.
Scope 2
Scope 2 emissions, officially categorized as indirect emissions, encompass any energy required to power something within the company, such as purchased electricity, rented or leased office spaces, cars, central heating or air conditioning.
Scope 3
Scope 3 emissions, or comprehensively defined as value chain emissions, include any other miscellaneous activities that don’t qualify for scopes one or two. Carbon emitting activities that could fall under scope three could include the use of raw materials, buying various goods or services, the carbon footprint of employees who commute to work, or even business travel from a flight.
According to the Greenhouse Gas Protocol, Scope 3 emissions typically represent the largest portion of an organization's carbon inventory. These emissions occur outside of the company itself, but the company is still an indirect cause of these emissions. For instance, the company cannot control how many emissions a flight produces – but sending an employee on a business trip means the company is still contributing to the carbon footprint inducing activity.
Therefore, research confirms that scope 3 emissions are known to be the most difficult category in greenhouse gas accounting to measure and require specialized methodologies for accurate quantification.
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What is the best GHG accounting tool to use?
Choosing the right GHG (greenhouse gas) accounting tool is key to accurately tracking your emissions and aligning with climate targets – especially as this is becoming a key step for large companies and other entities to demonstrate their commitment to greater sustainability.
In 2025, several reputable platforms are available to help companies meet their carbon reporting and reduction goals, including:
- Greenly
- Good.Lab
- Net Zero Cloud
- Plan A
- Terrascope
- IBM
Pro tip: Select a tool that aligns with recognized carbon accounting methodologies such as the GHG Protocol or ISO 14064, and check for compatibility with emission factors relevant to your industry and geography.
It's important to remember that when choosing a greenhouse gas accounting software, tool, or resources to ensure that the platform of your choice can help your company to achieve its specific climate change goals.
When selecting a GHG accounting platform, ensure it offers:
- Transparent methodology
- Options for third-party verification
- Seamless integration with your existing data systems
- Support for scope 1, 2, and 3 reporting
- Compatibility with standards like CDP, SBTi, and the World Business Council guidance
Explore our in-depth guide to the best carbon accounting tools here.
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Can greenhouse gas accounting help mitigate greenhouse emissions and global warming?
Yes – greenhouse gas (GHG) accounting plays a crucial role in identifying and mitigating emissions, making it a foundational step in any credible climate strategy. However, while GHG accounting itself does not reduce emissions, it equips organizations and individuals with data-driven insights needed to take meaningful climate action. This can include inspiring a company to implement new, healthier environmental measures.
Greenhouse gas accounting can provide one with the data necessary to evaluate which areas can be improved upon, but it is ultimately up to the individual or company to establish those new carbon emissions reducing measures – and then work hard to sustain them.
By accurately measuring emissions across scopes 1, 2, and 3, companies can pinpoint high-impact areas in their operations and supply chains. This enables decision-makers to implement targeted strategies, such as adopting energy-efficient technologies, transitioning to renewable energy, or optimizing logistics, to reduce their carbon dioxide equivalent (CO₂e) footprint.
GHG accounting is most effective when paired with actionable plans, such as:
- Setting science-based targets aligned with the Science-Based Targets initiative (SBTi)
- Following reputable frameworks such as the Task Force on Climate Related Financial Disclosures (TCDF)
- Participating in carbon offsetting or by purchasing verified carbon credits
- Applying credible emission factors to monitor and ensure continuous improvements
Overall, GHG accounting is not the end goal – but a guide that can help companies to effectively employ improved sustainability and emission reduction strategies. When leveraged effectively, GHG accounting can help to support long-term climate resilience and contributes to the global effort to limit warming to 1.5°C.
How can you reduce greenhouse gas emissions without the help of GHG accounting?
Greenhouse gas accounting isn’t the only way a company can reduce their emissions. While it’s best to hire third-party assistance for optimal results in classifying and reducing a company’s emissions – it doesn’t mean a company can’t do anything about their emissions if they can’t afford to hire someone to do their greenhouse gas accounting for them.
Research shows that rising global temperatures are encouraging several countries worldwide to re-evaluate their approach to GHG emissions management and recognize the value in exceeding basic reporting requirements to meaningfully reduce their climate impact.
Here are 3 small steps your company can take to begin reducing their emissions
Shut Off Electricity When it’s Not Necessary
Whenever no one is in the office, ensure that all heating, air conditioning, lights, and devices are turned off when not in use to prevent using electricity when it’s not necessary.
According to energy efficiency experts, implementing this practice will not only reduce your organization's carbon footprint – but also results in measurable cost savings through lower electricity bills. These financial resources can then be reallocated to fund other environmental initiatives within the company.
Provide Employees with Public Transportation
If your company still hasn’t switched to remote status, it would be extremely effective to offer your employees with public metro passes, ride share service discounts, or a subscription to a shared bike or scooter service.
Environmental transportation studies, such as from the SBTi, indicate that this approach serves as an effective strategy for companies to significantly reduce their Scope 3 emissions related to employee commuting, which often represent a substantial portion of an organization's overall carbon footprint.
Re-evaluate Rented and Leased Spaces or Vehicles
Do you have leased office spaces or vehicles that aren’t being used as much as they were before?
Optimizing your organization's physical footprint can deliver substantial environmental benefits. By canceling the lease of underutilized office spaces or vehicles, your company won't only achieve cost savings – but will significantly reduce energy consumption and associated greenhouse gas emissions by eliminating the resources needed to power, heat, cool, and maintain these assets.
Property management research indicates this strategy can effectively decrease both Scope 1 and Scope 2 emissions, particularly in organizations with multiple locations or distributed operations.
office spaces or cars, your company won’t only save money – but will be exerting less energy and greenhouse gas emissions by not using electricity to power or maintain these leases, and ultimately reduce the level of greenhouse gas emissions your company is emitting.
What about Greenly?
If reading this article about GHG accounting, how it works, and why its important has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Figuring out how to manage GHG accounting on your own to help fight against climate change and reduce your emissions can be stressful.
Here’s how Greenly can support your business:
- Carbon Assessments: We offer detailed carbon footprint assessments to help you understand your emissions across Scopes 1, 2, and 3, identifying where your biggest environmental impacts lie.
- Emission Tracking: Our platform streamlines the process of tracking your emissions over time, providing clear data visualization and actionable insights to monitor progress.
- Reduction Strategies: Greenly helps you develop tailored decarbonization pathways to meet your sustainability goals, whether it’s reducing operational emissions or decarbonizing your supply chain.
- Supplier Sustainability: We provide tools to evaluate and engage with sustainable suppliers, helping to reduce upstream emissions and enhance your value chain's overall sustainability.
- Achieving Science-Based Targets: Greenly supports businesses in setting and achieving science-based targets, ensuring your efforts align with global climate goals like the Paris Agreement.
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance with boosting supplier engagement, personalized assistance, and new ways to involve your employees.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
Sources
NRDC https://www.nrdc.org/bio/josh-axelrod/corporate-honesty-and-climate-change-time-own-and-act
World Resources Institute https://www.wri.org/insights/ghg-accounting-corporate-climate-disclosures-explained
National Atmospheric Emissions Inventory https://naei.energysecurity.gov.uk/greenhouse-gases
IPCC https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Headline_Statements.pdf
Department for Energy Security & Net Zero https://assets.publishing.service.gov.uk/media/6604460f91a320001a82b0fd/uk-greenhouse-gas-emissions-provisional-figures-statistical-release-2023.pdf
EDGAR Emissions Data Base https://edgar.jrc.ec.europa.eu/report_2023
GHG Protocol https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf and https://ghgprotocol.org/companies-and-organizations and https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf and https://ghgprotocol.org/sites/default/files/standards/Scope3_Calculation_Guidance_0.pdf
World Business Council https://www.wbcsd.org/
UN Environment Program https://www.unep.org/news-and-stories/press-release/nations-must-close-huge-emissions-gap-new-climate-pledges-and
SBTi Value Chain Report https://sciencebasedtargets.org/resources/files/SBT_Value_Chain_Report-1.pdf
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