A manufacturing company preparing its ESG report often finds the real issue only at the final stage. The finance team has electricity bills for 12 months. The plant team has diesel consumption data for DG sets. The logistics team has freight records, but not tonne-kilometre data. The procurement team has supplier invoices, but no supplier emission factors.
This is where Scope 1 Scope 2 Scope 3 emissions become a business compliance issue. ESG reporting is no longer only about declaring sustainability intent. It requires measurable, traceable and verifiable greenhouse gas data.
In India, emissions reporting has become especially important because SEBI’s Business Responsibility and Sustainability Reporting format requires companies to disclose greenhouse gas emissions, including Scope 1 and Scope 2 emissions, intensity per rupee of turnover and other intensity metrics. Scope 3 emissions are also included as a leadership indicator in the BRSR format.
For businesses, the issue is simple. If emissions data is not collected monthly, verified quarterly and documented annually, the company may struggle during BRSR reporting, ESG assurance, customer audits, export due diligence or investor review.
Key points:
Scope 1 Scope 2 and Scope 3 emissions are categories used to classify greenhouse gas emissions from business operations and value chains. The Greenhouse Gas Protocol Corporate Standard covers 7 greenhouse gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride and nitrogen trifluoride.
Scope 1 emissions are direct emissions. These come from sources owned or controlled by the company. For an Indian factory, this may include diesel generators, boilers, furnaces, company vehicles, process emissions and refrigerant leakage.
Scope 2 emissions are indirect energy emissions. These usually come from purchased electricity. For many manufacturing units, warehouses, commercial buildings and service companies, grid electricity is one of the largest measurable emission sources.
Scope 3 emissions are indirect value chain emissions. These may arise from purchased goods, capital goods, third-party logistics, waste generated in operations, business travel, employee commuting, leased assets, use of sold products and end-of-life treatment.
Quick classification:
Indian businesses are facing more ESG data requests than before. Listed companies need BRSR reporting. Suppliers to listed companies receive ESG questionnaires. Exporters face climate disclosure requirements from global buyers. Energy-intensive industries are also watching India’s Carbon Credit Trading Scheme.
SEBI introduced BRSR Core to strengthen assurance and ESG disclosures for value chains. This means companies must not only report numbers, but also maintain evidence for those numbers.
In March 2025, SEBI issued a circular related to the framework for assurance or assessment, ESG disclosures for value chain and voluntary disclosure on green credits. This shows that ESG disclosure expectations are moving from basic reporting toward verified, structured and comparable data.
For manufacturers, importers, exporters, recyclers, plant owners, MSMEs and corporates, emissions data is now connected with procurement, finance, energy, waste, logistics and compliance records.
Business impact:
| Regulation / Framework | Requirement | Timeline | Applicable To | Business Risk |
|---|---|---|---|---|
| SEBI BRSR | Disclosure of Scope 1 and Scope 2 GHG emissions | Annual reporting cycle | Listed entities | Weak ESG disclosure or incomplete reporting |
| SEBI BRSR Leadership Indicators | Scope 3 emissions disclosure | Annual reporting cycle | Companies adopting leadership indicators | Incomplete value chain reporting |
| BRSR Core | Assurance or assessment of selected ESG indicators | Phased applicability | Top listed entities and value chain partners | Assurance gaps or restatement risk |
| GHG Protocol | Global method for corporate GHG accounting | Reporting year basis | Companies preparing GHG inventory | Boundary error or double counting |
| CEA CO2 Baseline Database | Electricity emission factor reference for Indian grid | Use latest applicable version | Indian operations using grid electricity | Wrong Scope 2 calculation |
| CCTS India | GHG emission intensity targets and carbon credit compliance | Compliance cycle basis | Notified obligated entities | Need to purchase carbon credit certificates |
| Environment Protection Act, 1986 | Environmental compliance and penalties | Continuous | Plants, factories and waste handlers | Penalty, closure or environmental compensation |
The Central Electricity Authority publishes the CO2 Baseline Database for the Indian power sector. The current database page lists Version 21.0, and the user guide describes the database as a source for authentic and consistent CO2 emission baseline quantification for grid-connected power stations in India.
The Carbon Credit Trading Scheme is also important for future readiness. BEE states that obligated entities must comply with prescribed GHG emission intensity targets, and entities that do not achieve the target may need to purchase or surrender equivalent carbon credit certificates based on the shortfall.
Interpretation for businesses:
Scope 1 emissions come directly from assets or activities controlled by the company. These emissions are usually easier to track than Scope 3 because most data is available internally.
For a manufacturing unit, Scope 1 may include diesel used in DG sets, furnace oil used in boilers, LPG used in production, coal used in captive systems, company-owned vehicles and process-related emissions. It may also include refrigerant leakage from air conditioning, chilling systems and refrigeration equipment.
A strong Scope 1 inventory starts with a complete source list. Each DG set, boiler, furnace, vehicle, process stack and cooling system should be mapped. The company should record fuel type, fuel quantity, operating hours, equipment capacity and monthly consumption.
For example, if a factory uses 10,000 litres of diesel in a reporting year, the calculation should not only show the final tCO2e number. It should also show the invoice source, storage record, equipment where diesel was used, emission factor source and unit conversion.
Typical Scope 1 sources:
Documents required:
Scope 2 emissions come from purchased electricity, steam, heat or cooling. The emissions occur outside the company’s premises, but they are caused by the company’s energy consumption.
For most Indian businesses, electricity is the main Scope 2 source. A factory operating 2 shifts or 3 shifts may have very different emission intensity compared to a warehouse, office or service company. Therefore, monthly electricity data is essential.
The calculation should use kWh consumption and a documented electricity emission factor. For India-based operations, the CEA CO2 Baseline Database is commonly used as an official reference point for the Indian power sector emission factor.
Scope 2 data should also be connected with production output. If a company produces 12,000 MT of product in a year and consumes 3,000,000 kWh electricity, the ESG team can calculate emissions per MT of output. This makes the ESG report more useful for management and customers.
Typical Scope 2 sources:
Documents required:
Scope 3 emissions are usually the most difficult part of ESG reporting. These emissions occur outside the direct control of the company but are connected to the company’s value chain.
The GHG Protocol Scope 3 Standard helps companies assess value chain emissions and identify where reduction activities should be focused.
For Indian businesses, Scope 3 can include raw materials, packaging, transportation, capital goods, waste generated in operations, business travel, employee commuting, outsourced activities, use of sold products and end-of-life treatment.
A practical Scope 3 approach should start with materiality. Instead of trying to calculate everything in the first year, companies should identify high-impact categories. For many manufacturers, purchased raw materials, logistics, packaging and waste are the first 4 priority areas.
For example, a packaging manufacturer may find that purchased resin, power consumption, logistics and waste disposal are the most relevant emission sources. A machinery exporter may find that steel, castings, electricity, outbound transport and product use-phase emissions are more material.
Typical Scope 3 categories for Indian businesses:
Documents required:
| Area | What Must Be Reported | Numeric Data Required | Main Evidence | Risk If Missing |
|---|---|---|---|---|
| Scope 1 | Direct emissions | Fuel quantity, tCO2e | Fuel bills, logbooks | Under-reporting |
| Scope 2 | Purchased energy emissions | kWh, tCO2e | Electricity bills, CEA factor | Wrong intensity |
| Scope 3 | Value chain emissions | Material, waste, logistics data | Supplier and waste records | Incomplete ESG disclosure |
| BRSR | GHG emissions and intensity | tCO2e, turnover intensity | BRSR working file | Poor ESG score |
| BRSR Core | Assured or assessed ESG indicators | Data trail and supporting documents | Data room | Assurance failure |
| CCTS | GHG emission intensity | tCO2e per unit of output | Production and emissions data | Carbon credit shortfall |
This table shows why companies should not wait until the annual report stage to calculate emissions. A reliable GHG inventory requires data collection across 12 months, not only at year-end.
A company should ideally maintain a monthly ESG data tracker with separate tabs for fuel, electricity, production, waste, logistics and supplier data. This reduces calculation errors and improves audit readiness.
| Step | Activity | Responsible Team | Recommended Timeline | Key Documents |
|---|---|---|---|---|
| 1 | Define reporting boundary | ESG and finance | Month 1 | Entity list, plant list |
| 2 | Map Scope 1 sources | Plant and EHS | Month 1 | Asset list, fuel source list |
| 3 | Collect Scope 2 data | Finance and engineering | Monthly | Electricity bills, meter logs |
| 4 | Screen Scope 3 categories | ESG and procurement | Quarter 1 | Supplier list, purchase data |
| 5 | Calculate emissions | ESG team or consultant | Quarterly | Calculation sheet |
| 6 | Review assumptions | Management and auditor | Quarter 3 | Methodology note |
| 7 | Prepare BRSR disclosure | ESG and secretarial team | Annual | BRSR tables |
| 8 | Create evidence file | ESG and compliance | Before assurance | Invoices, factors, proof |
| 9 | Final management review | Board or ESG committee | Before publication | Final ESG report |
This timeline gives companies 9 clear steps to avoid year-end errors. It also creates accountability because each data point has an owner.
For larger companies, a quarterly review is strongly recommended. If Scope 1 diesel data or Scope 2 electricity data is wrong in Quarter 1, it can be corrected early. If the error is found only during annual assurance, the company may face delays.
The basic formula is:
Activity data x emission factor = GHG emissions
The final result is usually converted into metric tonnes of CO2 equivalent. This allows different greenhouse gases to be expressed in one common unit.
For Scope 1, activity data may be litres of diesel, kilograms of LPG, tonnes of coal, standard cubic meters of natural gas or kilograms of refrigerant leakage. For Scope 2, activity data is normally kWh of electricity or quantity of purchased steam, heat or cooling. For Scope 3, activity data may include tonnes of raw material, transport distance, waste quantity, employee travel data or supplier-specific emissions.
Example calculation structure:
| Source | Scope | Activity Data | Factor Source | Output |
|---|---|---|---|---|
| Diesel in DG set | Scope 1 | 10,000 litres | Fuel emission factor | tCO2e |
| Grid electricity | Scope 2 | 3,000,000 kWh | CEA grid factor | tCO2e |
| Purchased steel | Scope 3 | 500 MT | Supplier or database factor | tCO2e |
| Waste disposal | Scope 3 | 80 MT | Waste treatment factor | tCO2e |
The calculation file should be simple enough for management to review and strong enough for an assurance provider to verify. Each row should show source document, quantity, unit, conversion, factor, factor source and final emissions.
Calculation discipline:
BRSR Core has increased the importance of assurance-ready ESG data. Companies cannot rely only on broad claims such as “we reduced emissions” or “we are sustainable.” They must show how the number was calculated and what evidence supports it.
SEBI’s BRSR Core framework was introduced for assurance and ESG disclosures for value chains. In December 2024, SEBI also issued industry standards on reporting of BRSR Core.
This is important for listed companies and their suppliers. Even if an MSME is not directly covered under BRSR, it may still receive ESG data requests from customers that are listed, export-oriented or investor-backed.
An assurance-ready emissions file should include 3 layers. The first layer is the final disclosure table. The second layer is the calculation sheet. The third layer is the source evidence, such as invoices, meters, logbooks and emission factor references.
Assurance-ready evidence:
Incorrect emissions reporting can create 4 types of risk: disclosure risk, audit risk, customer risk and regulatory risk.
Disclosure risk arises when Scope 1 Scope 2 Scope 3 emissions are calculated without a correct boundary. For example, if a company reports only 1 plant but the BRSR boundary covers 3 plants, the emissions disclosure becomes incomplete.
Audit risk arises when the company has final numbers but no evidence. If electricity consumption, diesel usage or Scope 3 estimates cannot be verified, the assurance provider may raise observations.
Customer risk arises when exporters or suppliers cannot respond to ESG questionnaires. Large buyers increasingly ask for GHG data, waste data, renewable energy data and product carbon footprint information.
Regulatory risk arises when ESG data reveals environmental compliance gaps. For example, waste generated in operations may connect with hazardous waste authorization, EPR compliance, CPCB portal filings, SPCB approvals, Consent to Establish, Consent to Operate and pollution control license requirements.
Risk areas:
Green Permits supports businesses with structured ESG and sustainability compliance, including Scope 1 Scope 2 Scope 3 emissions assessment, GHG inventory preparation, BRSR support, carbon footprint assessment, ESG documentation and audit readiness.
For manufacturers, importers, recyclers, plant owners, exporters, MSMEs and corporates, the goal is not only to calculate emissions. The goal is to build a compliance-ready ESG data system that can withstand review by management, auditors, customers, investors and regulators.
Green Permits also helps connect ESG reporting with practical environmental compliance areas such as CPCB registration, EPR compliance, waste management authorization, SPCB approvals, recycling compliance, CTE, CTO and pollution control license support.
Support areas:
Scope 1 Scope 2 Scope 3 emissions are now a core part of ESG reporting in India. They help companies measure direct emissions, purchased energy emissions and value chain emissions in a structured way.
For businesses, the real benefit is not only disclosure. A strong emissions inventory helps identify energy inefficiency, fuel dependency, supplier risk, logistics emissions, waste management gaps and future carbon cost exposure.
The cost of early ESG compliance is lower than the cost of correction. If a company waits until the annual report stage, it may face missing invoices, incomplete meter data, weak Scope 3 assumptions and delayed assurance.
A reliable ESG emissions system should include 12 months of data, monthly tracking, quarterly review, official emission factors, documented assumptions and a clear evidence file. This gives companies stronger BRSR readiness, better customer confidence and improved long-term sustainability performance.
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