Building Your First GHG Inventory: An ISO 14064-1 Starter Guide

Why a GHG Inventory Is the Starting Point for Every Corporate Climate Strategy

You cannot manage what you do not measure. And if you cannot measure your emissions, you cannot set reduction targets, track progress, or provide credible information to your stakeholders. This is why the first step of any corporate climate strategy is building a comprehensive greenhouse gas (GHG) inventory.

ISO 14064-1:2018 provides the internationally recognized framework for the design, development, management, and reporting of GHG inventories at the organization level (ISO, 2018). This guide walks through the standard's core requirements from a practical perspective, with a focus on multi-site enterprise organizations building their first inventory.

Organizational Boundaries: What Are You Including?

ISO 14064-1 offers two fundamental approaches for setting organizational boundaries. Your choice determines which facilities, subsidiaries, and joint ventures are included in the inventory.

Control Approach

Under this approach, the company reports 100 percent of emissions from facilities over which it has financial or operational control. Two sub-types exist:

• Financial control: Includes facilities where the company obtains the majority of economic benefits and bears the majority of financial risks.
• Operational control: Includes facilities where the company has the authority to direct operational policies.

The operational control approach is the most commonly chosen method for multi-site organizations. The GHG Protocol Corporate Standard (WRI/WBCSD) also recommends it as the primary approach (WRI and WBCSD, 2004).

Equity Share Approach

The company reports emissions in proportion to its ownership share in each facility or subsidiary. For example, if you hold a 40 percent stake in a joint venture, you include 40 percent of that facility's emissions in your inventory.

Which Approach Should You Choose?

Your choice must be applied consistently across all reporting periods. If a change of approach becomes necessary, the base year must be recalculated.

Operational Boundaries: Which Emissions Are You Measuring?

Once organizational boundaries are set, operational boundaries categorize emission sources. ISO 14064-1:2018 defines six emission categories, departing from the Scope 1-2-3 terminology of its predecessor. In practice, however, the GHG Protocol's Scope terminology remains widely used.

Direct Emissions (Scope 1)

Emissions released directly into the atmosphere from sources owned or controlled by the company:

• Stationary combustion sources: Boilers, furnaces, generators
• Mobile combustion sources: Company vehicles, construction equipment, forklifts
• Process emissions: Emissions from chemical or physical processes (e.g., clinker calcination in cement production)
• Fugitive emissions: Refrigerant leaks, methane leakage

Indirect Energy Emissions (Scope 2)

Emissions from the generation of purchased electricity, steam, heating, or cooling. These emissions occur at the energy production facility but are reported within the operational boundaries of the company that uses the energy.

Two calculation methods exist for Scope 2 emissions:

• Location-based method: Uses regional or national grid emission factors.
• Market-based method: Accounts for the company's specific energy procurement contracts and Energy Attribute Certificates (I-RECs, Guarantees of Origin).

The GHG Protocol Scope 2 Guidance recommends that companies report using both methods (WRI and WBCSD, 2015).

Other Indirect Emissions (Scope 3)

Indirect emissions across the company's value chain — often the largest source of emissions, though calculating all categories is not expected in the first inventory. Priority Scope 3 categories include:

• Purchased goods and services
• Fuel- and energy-related activities (not included in Scope 1-2)
• Upstream transportation and distribution
• Business travel
• Employee commuting
• Use of sold products

A sound approach is to focus on Scope 1 and 2 in the first inventory, then progressively add Scope 3 categories based on risk and materiality assessment.

Identifying Emission Sources: The Fieldwork

Facility-Level Data Collection

Systematically compile the following information for each facility:

1. Fuel consumption: Natural gas, diesel, fuel oil, LPG, coal — from invoices or meter readings
2. Electricity consumption: Monthly consumption in kWh — from utility bills
3. Vehicle fleet: Vehicle types, fuel consumption, annual mileage
4. Refrigerant gases: Equipment inventories, refill records, maintenance reports
5. Process data: Production volumes, raw material consumption (sector-specific)

Data Collection Strategy for Multi-Site Organizations

Establishing a centralized data collection protocol is critical for organizations with multiple facilities:

• Assign a data steward for each facility.
• Prepare standardized data collection forms — unit inconsistencies are the biggest source of error in a first inventory.
• Define a clear data collection schedule (monthly or quarterly collection is recommended).
• Document data gaps — record estimation methods and assumptions.

Selecting Emission Factors

Emission factors are coefficients that convert activity data into GHG emissions. Selecting the right emission factors directly affects the reliability of the inventory.

Emission Factor Sources

Follow a hierarchical approach: prefer supplier-specific factors first, then national factors, and finally IPCC default values. The IPCC Emission Factor Database provides a reliable starting point where country-specific data is unavailable (IPCC, 2006).

The conversion factors published by the UK Department for Energy Security and Net Zero (DESNZ) stand out as a comprehensive, annually updated resource, particularly for fuel combustion, vehicle emissions, and supply chain emissions (DESNZ, 2023).

Global Warming Potential (GWP) Values

Global Warming Potential (GWP) values are used to convert different greenhouse gases to CO2 equivalent. Document which IPCC Assessment Report GWP values you are using, and apply them consistently throughout the entire inventory.

Data Quality Management

ISO 14064-1 explicitly requires data quality to be assessed and documented. Your first inventory will not have perfect data — this is expected. What matters is transparently reporting data quality limitations and developing an improvement plan.

Data Quality Assessment Criteria

• Representativeness: Does the data accurately reflect the reporting period and geographic scope?
• Consistency: Are data collection methods consistent across facilities?
• Transparency: Are assumptions, estimation methods, and data gaps documented?
• Accuracy: Are measurement and calculation errors being checked?

Uncertainty Management

Uncertainty is unavoidable, but it can be managed. ISO 14064-1 requires that uncertainty sources be identified and, where possible, quantified. Common uncertainty sources include:

• Measurement errors in activity data
• Use of generic (non-specific) emission factors
• Estimates and extrapolations for missing data

Setting a Base Year

The base year serves as the reference point for future emissions comparisons. Key considerations for base year selection:

• Choose a representative year — avoid years affected by extraordinary circumstances (pandemic, temporary production shutdowns).
• Establish a base year recalculation policy: define how the base year will be updated in the event of structural changes (mergers, divestitures, methodology changes).
• Document base year data carefully — this documentation becomes critical when recalculation is needed later.

Reporting and Verification

GHG Report Contents

An ISO 14064-1 compliant GHG report should include the following components:

1. Description of the reporting organization and organizational boundaries
2. Rationale for the chosen consolidation approach
3. Emission sources and categories
4. Emission calculation methodologies and emission factors
5. Categorized emission results (in CO2e)
6. Base year information and recalculation policy
7. Data quality assessment and uncertainty statement

Preparing for Verification

Third-party verification enhances inventory credibility and is mandatory under many regulatory frameworks. To prepare:

• Archive the sources of all activity data (invoices, meter readings).
• Document calculation steps in a reproducible manner.
• Record the rationale behind assumptions and estimates.

Next Steps

Your first GHG inventory does not need to be perfect — it needs to be consistent, transparent, and improvable. In the first year, build a solid foundation for Scope 1 and 2, institutionalize your data collection processes, and identify areas for improvement.

Action Item: Start by creating a fuel and energy consumption inventory for each of your facilities. This data alone will be enough to calculate over 90 percent of your Scope 1 and 2 emissions.

References:

1. ISO 14064-1:2018, Greenhouse gases — Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals.
2. WRI and WBCSD, The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition), 2004.
3. IPCC, 2006 IPCC Guidelines for National Greenhouse Gas Inventories (Emission Factor Database).
4. DESNZ (Department for Energy Security and Net Zero), UK Government GHG Conversion Factors for Company Reporting, 2023.