Guide
Whether a customer, tender or parent company has asked your business for a carbon footprint, or you have decided it is time to establish one for yourself, you may be wondering what calculating one actually involves.
Terms such as Scope 1, Scope 2, Scope 3 and emission factors can make the process sound highly technical. In reality, much of the work comes down to a series of practical decisions: what part of the business you are measuring, which emission sources need to be included, what information you have available and how reliable that information is.
Your first footprint does not need perfect data. It does need a clear boundary, a consistent method and an honest record of where estimates or gaps remain. Done properly, it gives you a baseline you can use and improve rather than simply a number to report.
The first question is what you need the footprint for. You may be responding to a customer request, preparing information for a tender, reporting to a parent company or establishing your own baseline before deciding what emissions reductions to pursue. Understanding that purpose at the outset helps you determine what needs to be included and whether there are any particular reporting requirements you need to follow.
For example, businesses bidding for certain UK public contracts may need to produce a Carbon Reduction Plan under PPN 006 (formerly PPN 06/21). This sets defined reporting requirements for Scope 1, Scope 2 and five Scope 3 categories. A Carbon Reduction Plan is not, however, intended to replace calculation of the organisation’s wider carbon footprint.
That distinction is useful beyond public procurement. A customer questionnaire or reporting requirement may ask for a particular set of information, but that does not necessarily tell you everything you should measure if your aim is to understand the emissions of the business as a whole.
You will need to decide which period the footprint covers. This might be a calendar year, such as January to December 2025, or your company’s financial year. Whichever you use, your activity data should relate to the same period wherever possible so that the final footprint gives you a consistent picture of the business.
You should also decide which recognised accounting framework you are following. Two of the main reference points for organisational greenhouse gas accounting are the Greenhouse Gas Protocol (GHG Protocol) Corporate Standard and ISO 14064-1. You do not need to become an expert in either to calculate a useful footprint, but following a recognised methodology helps you make decisions consistently and makes it easier for someone else to understand how the footprint has been produced.
For many businesses, the first reliable footprint will also become the base year used to compare future performance. That makes it worth recording the reporting period, methodology and important decisions properly from the beginning. If the structure of the business changes substantially later, you may need to revisit the baseline, but that is a question for a future reporting cycle rather than something that needs to complicate your first calculation.
Before deciding which emissions to calculate, you need to establish the organisational boundary: in other words, which companies, sites and operations are actually part of the footprint. For a small business with one legal entity and one or two sites, the answer may be straightforward. It becomes more important if you have subsidiaries, joint ventures, overseas entities or operations where ownership and day-to-day control sit with different organisations.
In practical terms, there are three approaches you are likely to encounter:
For a straightforward owner-operated SME, these approaches may produce exactly the same boundary. The distinction starts to matter where ownership or control is shared. The important thing is to make the decision before collecting the data, record the approach you have used and apply it consistently.
Otherwise, it is surprisingly easy to end up combining different versions of the business. Electricity data might cover every site, for example, while travel data cover only one entity or purchasing data include an operation that has been excluded elsewhere. Setting the boundary first avoids that problem.
Scope 1 covers direct emissions from sources your business owns or controls, such as natural gas burned in a boiler, fuel used by company-owned vehicles or refrigerant lost from refrigeration and air-conditioning equipment. Scope 2 covers indirect emissions from purchased electricity, steam, heat or cooling used by the business. Scope 3 covers the other indirect emissions associated with your value chain, including areas such as purchased goods and services, freight, waste, business travel, employee commuting and emissions associated with products after they leave your organisation.
This classification gives you a structure for working through the footprint rather than trying to collect every piece of environmental information the business holds. It also helps you identify where the data are likely to come from: Scope 1 and Scope 2 information is often already within your own records, while Scope 3 is more likely to depend on suppliers, employees, logistics providers and other organisations.
A company footprint is normally reported in carbon dioxide equivalent (CO₂e). For most SMEs, the technical science behind that does not need to become part of the calculation. Two practical things are worth remembering: use conversion factors that give you CO₂e rather than carbon dioxide alone, and do not overlook other greenhouse-gas sources such as refrigerant losses where they apply to your business.
Scope 1 and Scope 2 are often the easiest place to begin because the underlying data are usually within your control. For Scope 1, look at the fuels and direct emission sources used by the business during the reporting period. Gas bills, fuel-card records, vehicle logs and maintenance records can all be useful. If you operate refrigeration, chillers, heat pumps or air-conditioning systems, check servicing and maintenance information for refrigerant additions or losses as well.
For Scope 2, you will normally start with electricity consumption in kilowatt-hours from bills or meter data, along with any purchased heat, steam or cooling where relevant. Electricity does introduce one additional consideration: under the GHG Protocol Scope 2 Guidance, businesses may need to calculate Scope 2 using both a location-based and a market-based method where suitable contractual information is available.
The location-based figure reflects the electricity grid where the power is consumed, while the market-based figure can reflect qualifying electricity contracts or supplier information. This is particularly relevant if your business buys a renewable electricity tariff. A renewable contract may affect the market-based figure, but it does not mean the location-based calculation disappears. If both methods apply, keep the two results separate rather than adding them together.
For many SMEs, Scope 3 is where carbon footprinting becomes more difficult. The data may not sit in one system, and the business may never previously have asked suppliers or employees for some of the information required.
The GHG Protocol divides Scope 3 into 15 categories. If this is your first Scope 3 footprint, it is worth working through the full list rather than selecting a few categories in advance based on what you expect to be important. For each category, consider whether the activity actually happens within your value chain, what information is available, whether it could represent a meaningful part of your footprint and whether leaving it out would give you a misleading picture of where your emissions come from.
For a first calculation, it can be useful to produce at least an initial estimate for most or all non-zero categories rather than deciding that something is insignificant before it has been assessed. Some of those first estimates may be fairly rough, but they give you evidence about which categories are genuinely important and where better data will make the biggest difference in future.
A professional-services company, for example, might find that employee commuting, business travel and purchased services deserve the most attention. A manufacturer or retailer may find that purchased goods, freight and product-related emissions dominate instead. You cannot always tell which categories matter most simply by looking at the business from the outside.
This is worth highlighting for businesses that already have a Carbon Reduction Plan. PPN 006 requires five Scope 3 categories: business travel, employee commuting, waste generated in operations, upstream transportation and distribution, and downstream transportation and distribution.
Those five categories meet a particular reporting requirement. They are not a substitute for screening all 15 categories when you are calculating a wider company footprint. Purchased goods and services, for example, are not one of the five PPN 006 categories but may be one of the largest sources of emissions for a product-based business.
If you already have a Carbon Reduction Plan, use the work you have done rather than starting again, but check the remaining Scope 3 categories before deciding that your organisational footprint is complete.
Once you know what needs to be measured, the next task is collecting the underlying activity data. Some of this may be straightforward: electricity bills can provide kilowatt-hours, fuel records can provide litres, mileage records can provide distance travelled and travel systems may contain information on flights and rail journeys.
Scope 3 data are often more challenging. Waste information may sit with several contractors, freight records may be spread across logistics providers, employee commuting may never have been measured and suppliers may not provide carbon data in a form you can use. Purchased goods might be recorded as kilograms or units in one business and only as expenditure in another.
Where reliable physical activity data exist, use them. Knowing that you bought a particular weight of material, travelled a particular distance or disposed of a particular quantity of waste will generally allow a more specific calculation than knowing only how much money was spent. Where those data do not exist, estimates, proxies and spend-based calculations can still provide a useful starting point.
The key is knowing which numbers are based on strong activity data and which depend on estimates. That distinction becomes important when you decide where to improve the calculation next year.
Most carbon calculations follow the same basic principle:
Activity data × emission factor = greenhouse gas emissions
If your business used a certain number of kilowatt-hours of electricity, litres of fuel or miles of travel, the relevant emission factor converts that activity into an estimate of the greenhouse gases associated with it.
The multiplication is usually straightforward. Choosing and applying the right factor requires more care. A mileage dataset recorded in miles should not be multiplied by a factor for kilometres. Litres should not be confused with kilowatt-hours. Petrol and diesel use different factors, as can different vehicle types, freight modes and waste-treatment methods. A factor copied incorrectly down a spreadsheet can create an error even when the underlying data are perfectly good.
The geography matters too. The UK Government greenhouse gas conversion factors for company reporting, published by the Department for Energy Security and Net Zero (DESNZ), are intended for calculating emissions associated with UK activities. They should not automatically be applied to activities carried out elsewhere.
If you are calculating emissions from US operations, for example, you would normally look for appropriate US factors, including suitable electricity-grid data. The same principle applies in other countries: use a credible factor that matches the activity, unit, geography and reporting period rather than assuming one factor database works everywhere.
Conversion factors change as electricity generation, fuels, transport and the methodologies used to calculate them change. One of the easiest mistakes to make is therefore to download the latest factor set and apply it automatically to an earlier reporting period.
If you report on a calendar year, the choice of factor set is usually straightforward. A financial year can span two calendar years, so the correct factor set depends on when that financial year starts and ends.
UK Government reporting guidance uses a majority-period approach when a reporting year spans two calendar years. The Environmental Reporting Guidelines say that where the environmental reporting year and financial year differ, the majority of the environmental reporting year should fall within the financial year. UK Government SECR guidance applies the same majority-period principle when selecting the conversion-factor year. In practice, use the conversion factors for the calendar year that covers the greatest proportion of your financial year. For example, a financial year running from April 2025 to March 2026 contains nine months in 2025 and three months in 2026, so you would use the 2025 conversion factors.
A business with a different financial year may therefore need a different factor set. The principle is to look at the actual reporting period rather than assuming that every UK financial year runs from April to March.
Whichever factor set you use, record it. That small piece of documentation makes the calculation easier to review and avoids uncertainty when you return to the footprint the following year.
Once the activity data and factors have been selected, calculate the emissions and bring the results together by Scope and by useful emission category. Keep this breakdown rather than retaining only the final total, because knowing where the emissions come from is what makes the footprint useful later.
Then review the result as a whole. Are there obvious gaps? If the business owns vehicles but has no transport emissions, something is probably missing. If you operate significant air-conditioning or refrigeration but have never considered refrigerants, check the maintenance records. If a company buys and sells large quantities of physical products but purchased goods appear to contribute almost nothing, look again at the calculation.
The same applies to unusually large figures. Check that the correct units and conversion factors have been used and that spreadsheet formulas have not shifted or been copied incorrectly. If you have emissions information from an earlier year, investigate major changes before assuming they reflect genuine improvement or deterioration. There may be a perfectly sensible business explanation, such as opening a new site, acquiring a company, changing a supplier or travelling more. There may also be an error.
A sense-check will not prove that every figure is perfect, but it can catch many of the mistakes that would otherwise become embedded in your baseline.
A first footprint will rarely be based entirely on perfect data, particularly once Scope 3 is included, and that is not a reason to hide the uncertainty. Record where figures have been estimated, which calculation methods have been used and why any emission sources have been excluded.
If employee commuting is based on a small survey, note it. If freight has been calculated using spend because the logistics provider could not provide distance and weight data, record that. If a Scope 3 category genuinely does not apply to the business, document the reason.
This gives someone reviewing the footprint a clear explanation of how it was constructed. Just as importantly, it gives you a record to work from next year instead of having to rediscover why particular decisions were made.
One of the most useful things a first carbon footprint can show you is where your data are weak, and those weaknesses should become actions. If employee commuting is poorly understood, plan a better commuting survey. If freight is estimated from spend, speak to your logistics providers about what activity or emissions data they can supply. If purchased goods rely on broad industry factors, identify the purchasing categories contributing most to the estimate and investigate whether quantities or supplier-specific information can be obtained.
The problem is not having gaps in a first footprint. It is finding the same known gaps year after year because nobody has taken responsibility for improving them. Your carbon-management process should therefore improve both the emissions themselves and the quality of the information you use to measure them.
Your first footprint does not need perfect data. Your second should normally be better measured than your first.
By the end of the process, you should have a credible baseline and a much clearer understanding of where your business’s greenhouse gas emissions come from. You should know which operations and emission sources have been included, where the data are reliable and where estimates or gaps remain.
You should also have something you can repeat: a defined reporting period and organisational boundary, a record of the Scope 1, Scope 2 and Scope 3 sources you assessed, the calculation methods and emission factors you used, and enough documentation to understand the important assumptions next year.
If greenhouse gas emissions are one of the sustainability issues your business needs to measure, that baseline gives you a clear picture of where you stand today. If you are still deciding what your business should measure, our guide to measuring sustainability performance explains how to build a useful first measurement set. From there, you can make better-informed decisions about what you want to achieve and where reductions should come from.
If you are not sure where to start, which emissions need to be included or whether your existing calculation is giving you a reliable baseline, book a free sustainability call with GB Sustainability. We can talk through what your business needs, what information you already have and the most practical way to build or improve your carbon footprint.
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