Carbon Footprinting for Organisations: Scopes 1–3 and a Defensible Inventory

For many organisations, the first serious climate question is also the most basic: how much are we emitting? Answering it well is less about a single number than about a method — one that is consistent, documented and reproducible. The GHG Protocol provides the architecture, and IFRS S2 sets the disclosure expectations that increasingly frame how that work is reported. This explainer outlines the core concepts and a practical starting sequence.

Start with the organisational boundary

Before any emissions are counted, an organisation must decide how it consolidates emissions across the entities and operations it is connected to. The GHG Protocol offers two broad approaches: the equity-share approach, which accounts for emissions in proportion to ownership interest, and a control approach — financial or operational — which accounts for emissions from operations the organisation controls. The choice matters because it can change whether particular emissions fall into Scope 1, Scope 2 or Scope 3. IFRS S2 requires disclosure of the approach selected and the reasons for that selection, so the decision should be made deliberately and applied consistently.

The three scopes, briefly

The scopes distinguish emissions by where they arise relative to the reporting organisation:

• Scope 1 — direct emissions from sources the organisation owns or controls.
• Scope 2 — indirect emissions from purchased or acquired electricity, steam, heating and cooling.
• Scope 3 — all other indirect emissions across the value chain.

Scope 2 deserves particular care. IFRS S2 requires Scope 2 emissions to be disclosed, and inventory design should document the electricity data and the calculation basis used. The sources available here confirm the disclosure requirement but do not specify Hong Kong-specific electricity factors, so organisations should source and record the factors they apply.

Scope 3 is broad — and not just purchasing

Scope 3 is often treated as shorthand for supply-chain purchasing, but it is considerably wider. The GHG Protocol organises it into 15 categories, spanning upstream purchased goods and services through to downstream activities and investments. Which categories are relevant will differ by organisation, but relevance should be assessed rather than assumed away. IFRS S2 requires consideration of all 15 categories and disclosure of which are included in the reported Scope 3 measure; it does not require every category to be reported where it is not relevant or material.

Report gross, absolute emissions

IFRS S2 calls for absolute gross emissions for the reporting period — not merely an intensity metric, and not a net figure after carbon credits or removals. Scope 1 and Scope 2 emissions are also to be disaggregated between the consolidated accounting group and other investees outside that group. Keeping the gross figure visible preserves comparability and avoids conflating emissions performance with offsetting activity.

Build a documented calculation hierarchy

A defensible inventory rests on a clear order of preference for data. Direct measurement and activity-specific, timely data that represents the relevant geography and technology should be preferred, with verified data used where available. IFRS S2's Scope 3 measurement framework also calls for disclosure of how inputs are prioritised, so the hierarchy itself should be written down.

Keep an audit trail

Reproducibility is the test of a good inventory. Retain the organisational and operational boundaries, the reporting period, source records, activity data, emission factors, estimation methods, assumptions, exclusions and evidence of review. The cited sources establish the measurement and disclosure expectations but do not prescribe a single audit-file template — organisations should design controls that suit their circumstances while meeting those expectations.

Make estimates explicit

Scope 3 commonly involves estimation. IFRS S2 requires the use of reasonable and supportable information available at the reporting date without undue cost or effort, and directs preparers to describe their measurement approach and inputs. Being transparent about estimates is not a weakness; it is part of a credible inventory.

Two boundaries worth keeping clear

First, inventory accounting is distinct from valuation conclusions. Emissions data can inform climate-risk analysis, but a footprint figure alone does not establish an asset's value or a valuation adjustment; the sources available here do not provide IVS-specific carbon-footprinting requirements. Second, on Hong Kong reporting context: IFRS S2 is the global climate-disclosure standard, but the sources available here do not establish the current HKFRS adoption timetable or which Hong Kong entities are in scope. Local requirements should be confirmed before stating applicability or deadlines.

Where to begin

A practical first pass is to fix the boundary and consolidation approach, map activities to the three scopes, assess all 15 Scope 3 categories, choose a documented data hierarchy, and assemble the audit trail as you go. The GHG Protocol Corporate Standard, revised in 2004, and the Scope 3 Standard, published in 2011, remain the foundational references. IFRS S2 requires measurement using the GHG Protocol Corporate Standard unless a jurisdictional authority or exchange requires a different method, and provides first-year transition relief for continuing an existing emissions measurement method. A calculator can help structure the first estimate; the discipline of documentation is what makes it defensible.

Ascent Partners Foundation's climate tools, including its carbon footprint calculator, are available at ascent.partners/tools. For the underlying requirements, see the IFRS S2 GHG emissions educational material and the GHG Protocol Scope 3 FAQ.