Guide 06
A small business's first emissions inventory
Before a business buys a single credit, it needs to know what it emits. A first inventory takes a few days of gathering bills and a spreadsheet. Here is how to do one using the scope framework from the Greenhouse Gas Protocol.
- By
- Vida Carbon Guide editorial team
- Updated
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- 4 min
An emissions inventory is a list of the greenhouse gases your business is responsible for over a year, converted into tonnes of CO₂ equivalent. The standard way to build one comes from the Greenhouse Gas Protocol, a framework developed by the World Resources Institute and the World Business Council for Sustainable Development. Almost every reporting rule and customer questionnaire uses its vocabulary, so it is worth learning.
The three scopes
The Protocol sorts emissions into three scopes.
Scope 1 covers direct emissions from sources you own or control. For a small business that usually means natural gas, propane or heating oil burned on site, fuel in company vehicles, and refrigerant gases that leak from air conditioning or refrigeration equipment.
Scope 2 covers emissions from the electricity, steam, heat or cooling you buy. The power plant emits, but you caused it by using the energy.
Scope 3 is everything else in your value chain, upstream and downstream. The Protocol lists fifteen categories, including purchased goods and services, business travel, employee commuting, waste, shipping and the use of the products you sell. For many service firms and retailers, scope 3 is the largest share by far.
A first inventory should get scopes 1 and 2 right and make a reasonable estimate of the biggest scope 3 categories. You can refine the rest later.
Step 1: set the boundary and the year
Decide which locations and activities count. A common approach is operational control: you include anything you run day to day, even in a leased office. Pick a recent full year, such as the last calendar or fiscal year. This becomes your base year, the point you will measure progress against.
Step 2: gather activity data
Activity data is the measured amount of each thing that causes emissions. You probably have most of it in your accounts.
| Source | Scope | Data you need | Where to find it |
|---|---|---|---|
| Natural gas, propane, heating oil | 1 | Therms, gallons or cubic feet used | Utility and fuel bills |
| Company vehicles | 1 | Gallons of fuel, or miles by vehicle type | Fuel cards, receipts, mileage logs |
| Refrigerant leaks | 1 | Pounds of refrigerant added during servicing | HVAC service records |
| Electricity | 2 | Kilowatt-hours | Monthly electric bills |
| Business travel | 3 | Flights by route, hotel nights, rental car miles | Expense reports, travel bookings |
| Purchased goods and services | 3 | Spend by category | Accounting software |
| Waste | 3 | Tonnes or hauls, by type | Waste contractor invoices |
| Employee commuting | 3 | Distance and mode | A short staff survey |
If a bill is missing for a month or two, estimate from the months you do have and note it.
Step 3: find emission factors
An emission factor converts activity into emissions, such as kilograms of CO₂e per gallon of gasoline or per kilowatt-hour. Use a published source and record which edition you used. In the US, the Environmental Protection Agency publishes an annual set of factors for common fuels in its GHG Emission Factors Hub, and its eGRID data gives electricity factors by grid region. In the UK, the government publishes yearly greenhouse gas conversion factors for company reporting.
For scope 2 the Protocol asks for two figures. The location-based number uses the average emission factor of your local grid. The market-based number reflects the electricity you chose to buy, for example a green tariff or renewable energy certificates. If you have no such contracts, the two will be close.
For purchased goods and services, the easiest start is a spend-based estimate: multiply what you spent in each category by an average emission factor per dollar from a published economic input-output database. It is rough, but it shows where the big numbers are.
Step 4: calculate
Multiply each activity figure by its factor, convert to tonnes and add them up. A worked example for a small design studio with one office and one van might look like this. The factors are rounded for illustration; use current published values in your own sheet.
| Line | Activity | Rounded factor | Tonnes CO₂e |
|---|---|---|---|
| Office heating, natural gas | 1,200 therms | 5.3 kg per therm | 6.4 |
| Van, gasoline | 900 gallons | 8.9 kg per gallon | 8.0 |
| Electricity | 30,000 kWh | 0.37 kg per kWh (varies by grid) | 11.1 |
| Flights | 12 domestic round trips | per-trip estimate | 4.0 |
| Purchased services and equipment | spend-based | per dollar by category | 22.0 |
| Total | 51.5 |
Even with rough scope 3 numbers, the picture is useful. In this example, purchased goods and electricity matter more than the van.
Step 5: write down what you did
Record your boundary, base year, data sources, emission factors and any estimates. A one-page method note will save you hours next year, and it is what a customer or auditor will ask for.
Step 6: act on the results
Look at the largest lines first. Typical early wins for small firms include switching to a renewable electricity tariff where one exists, fixing refrigerant leaks, replacing a fuel-hungry vehicle, cutting flights in favor of video calls or trains, and asking big suppliers about their own emissions.
If you decide to buy carbon credits for what remains, buy them after cutting, and describe them honestly. Our guides to judging credit quality and spotting investment scams explain what to check, and the homepage checklist gives a quick read on a specific offer.
Useful references
- Greenhouse Gas Protocol: standards and guidance
- US EPA: GHG Emission Factors Hub
Questions readers ask
Do small businesses have to report their emissions?
In most places, small businesses have no direct legal duty to report emissions. Larger companies in some jurisdictions now must disclose emissions, including those of their suppliers, so small firms increasingly receive questionnaires from customers. A simple inventory lets you answer them.
Should we offset our emissions once we have measured them?
Cut what you can first, because reductions in your own operations are certain and credits are not. If you then buy credits, choose carefully, retire them in your name and describe them accurately, for example as a contribution to climate action rather than proof that your business has no impact.
Independent educational guide, relaunched in 2026. Not affiliated with Vida Carbon Corp, Vida Energy or any carbon-credit seller. Nothing here is investment advice.