Imagine a manufacturing company in Gujarat that has been supplying automotive components to domestic and international customers for more than 15 years. Its operations are running smoothly, production is increasing, and the company has recently secured an opportunity to supply components to a large European manufacturer.
During the supplier evaluation process, the European customer asks a question that the Indian manufacturer has never had to answer in detail: “What are your annual Scope 1, Scope 2 and Scope 3 greenhouse gas emissions?”
The company has electricity bills, diesel purchase records, production reports and transport invoices. However, its finance, production and maintenance departments have never combined this information to calculate the company’s carbon footprint.
This is a common challenge for Indian manufacturers. Businesses often have the operational records required for carbon accounting, but lack a structured process for converting those records into reliable greenhouse gas emission figures.
GHG accounting in India helps companies measure emissions, identify carbon-intensive activities, prepare sustainability disclosures and develop practical emission-reduction strategies.
For businesses preparing BRSR disclosures, responding to international buyers or improving ESG performance, accurate GHG accounting begins with three essential activities: collecting the right data, selecting appropriate emission factors and establishing a consistent reporting workflow.
Greenhouse Gas (GHG) accounting is the process of identifying, measuring, calculating and reporting greenhouse gases released through an organisation’s operations and value chain.
The calculations generally follow internationally recognised frameworks such as the GHG Protocol and ISO 14064-1. These frameworks help organisations define their reporting boundaries, classify emission sources and develop consistent carbon inventories.
GHG emissions are commonly reported in metric tonnes of carbon dioxide equivalent (tCO2e). This measurement converts different greenhouse gases into a common unit based on their global warming potential.
For example, an industrial facility may generate carbon dioxide through diesel combustion, methane through certain waste-management processes and fluorinated greenhouse gases through refrigerant leakage.
Although these gases have different environmental impacts, GHG accounting enables companies to quantify their combined climate impact using a standardised approach.
The objective is not merely to prepare an emissions report. A reliable GHG inventory helps management understand where emissions originate and which operational changes can reduce them.
Indian companies are increasingly receiving carbon-data requests from investors, multinational customers, financial institutions and supply-chain partners.
Large manufacturers may need emissions information for sustainability disclosures, while exporters may be required to provide product-level carbon information to overseas customers.
India’s Business Responsibility and Sustainability Reporting (BRSR) framework has also increased attention on environmental performance among listed companies.
Under the SEBI framework introduced through successive circulars, BRSR Core assessment or assurance requirements have been phased in across the top 1,000 listed entities by market capitalisation through FY 2026-27, subject to the applicable requirements.
However, GHG accounting is not automatically mandatory for every private company or MSME. Reporting obligations depend on the relevant law, contractual requirement or voluntary reporting commitment.
Even where reporting is voluntary, preparing an emissions baseline can support better business decisions. It enables companies to compare energy performance, identify inefficient equipment and evaluate investments in solar energy, fuel efficiency or cleaner technology.
The GHG Protocol classifies corporate emissions into three categories. Understanding these categories is essential because each requires different operational data and calculation methods.
Scope 1 covers emissions released directly from sources owned or controlled by the reporting organisation.
For an Indian manufacturing facility, these may include diesel generators, industrial boilers, furnaces, company-operated vehicles and refrigerant leakage from air-conditioning systems.
A factory consuming diesel in its own generator records the resulting combustion emissions under Scope 1.
Scope 2 covers indirect emissions associated with purchased electricity, steam, heating and cooling consumed by the organisation.
For most Indian factories, grid electricity is an important Scope 2 source.
A factory consuming 750,000 kWh of electricity annually must account for the associated emissions using an appropriate electricity emission factor and the required accounting methodology.
Scope 3 includes other indirect emissions that occur outside the organisation’s direct operations.
The GHG Protocol Scope 3 Standard identifies 15 categories covering upstream and downstream activities.
These may include purchased raw materials, third-party transportation, business travel, employee commuting, waste processing and the use or disposal of sold products.
For a manufacturer purchasing steel, aluminium, plastics or chemicals, Scope 3 emissions can be significant. Therefore, focusing exclusively on electricity and diesel may provide an incomplete picture of the organisation’s overall value-chain emissions.
A structured GHG accounting process helps businesses avoid missing data, calculation inconsistencies and reporting delays.
The following workflow can be applied by manufacturing units, industrial groups, exporters and other businesses preparing an organisational greenhouse gas inventory.
Before collecting data, the company must determine which facilities, operations and business entities will be included in its GHG inventory.
Consider a company operating two manufacturing plants in Haryana, one warehouse in Delhi and a corporate office in Gurugram.
The sustainability team must establish whether all four locations fall within the reporting boundary and how leased facilities or jointly controlled operations will be treated.
The GHG Protocol provides three main consolidation approaches: equity share, financial control and operational control.
The selected approach influences which emissions are included and how they are classified.
The company must also establish the reporting period. Many Indian businesses use the April-to-March financial year because their electricity bills, purchase registers and financial statements can be reconciled against that period.
The approved boundary, reporting period and any exclusions should be documented before calculations begin.
Once reporting boundaries are established, the next step is to identify activities that generate greenhouse gas emissions.
For a manufacturing facility, this requires coordination between environmental, production, maintenance, procurement and logistics departments.
The assessment should cover fuel-burning equipment, purchased energy, refrigerant systems, transport activities, industrial processes and relevant value-chain operations.
Special attention is required for industries such as steel, cement, aluminium and chemicals because certain manufacturing processes release emissions independently of fuel combustion.
Every material source should be entered into an emissions register containing the equipment or activity name, location, scope classification, data owner and calculation method.
This register becomes the foundation for annual GHG accounting.
Accurate data collection is the most important operational requirement for reliable GHG accounting.
Activity data represents measurable business operations, such as litres of diesel consumed, kilowatt-hours of electricity purchased or tonnes of raw material procured.
In most companies, this information already exists but is distributed across several departments.
| Activity data | Supporting documents | Responsible department |
|---|---|---|
| Electricity consumption | Monthly electricity bills, meter readings | Accounts / Maintenance |
| Diesel and other fuels | Purchase records, fuel consumption logs | Production / Utilities |
| Refrigerant usage | Equipment records, maintenance reports | Maintenance |
| Raw material purchases | Purchase orders, supplier invoices | Procurement |
| Transport activity | Freight invoices, shipment records | Logistics |
| Waste generation | Waste registers, disposal records | EHS Department |
| Business travel | Travel bookings, expense reports | Administration |
For example, suppose a factory purchases 20,000 litres of diesel during the year but its generator logbook confirms actual consumption of 18,000 litres.
Using the entire purchase quantity without accounting for remaining stock would overstate fuel combustion emissions.
Similarly, electricity consumption should be collected for all included meters and facilities rather than relying on a single consolidated payment statement.
Companies should collect 12 months of records for a full-year inventory and reconcile missing periods before proceeding.
Operational records often use different measurement units, making standardisation necessary before emissions can be calculated.
Diesel may be recorded in litres, coal in tonnes, LPG in kilograms and electricity in kilowatt-hours.
The reporting team must convert these measurements into the units required by the selected emission factors.
For example, if a fuel invoice records consumption in tonnes while the emission factor is expressed per kilogram, the activity quantity must be converted accordingly.
Data validation should also identify duplicate invoices, missing months, unusual consumption changes and inconsistencies between purchase and consumption records.
A facility reporting significantly lower electricity consumption despite higher production may have achieved efficiency improvements. However, the reporting team should first confirm that no meter or production unit was omitted.
These checks reduce the risk of material reporting errors.
An emission factor represents the quantity of greenhouse gas released per unit of activity.
Emission factors may be expressed as kilograms of CO2e per litre of fuel, per kWh of electricity or per tonne of material.
Selecting an appropriate factor is essential because an outdated or unsuitable factor can materially affect the calculated emissions.
For Indian electricity consumption, companies commonly examine emission-factor information published by the Central Electricity Authority (CEA).
For fuels and industrial processes, relevant national methodologies, recognised IPCC guidance and appropriate supplier-specific information may be used.
However, companies should not assume that every published factor is suitable for every reporting purpose.
A factor used for electricity project emission-reduction calculations, for example, may not be appropriate for corporate Scope 2 accounting.
Each factor should be evaluated according to its geographical relevance, reporting year, units, greenhouse gas coverage and methodology.
For Scope 2 reporting, companies must also consider whether location-based and market-based calculations are required under the applicable standard.
Renewable electricity purchases or certificates should only be reflected through the appropriate accounting treatment after checking contractual evidence and relevant quality criteria.
Once activity data and emission factors are finalised, the company can calculate its greenhouse gas emissions.
The basic formula is:
GHG Emissions = Activity Data × Emission Factor
Where different greenhouse gases are calculated individually, they must be converted into carbon dioxide equivalent using appropriate global warming potential values.
The calculation must maintain consistent units and document the methodology used.
For example, if a facility consumes 100,000 kWh of electricity and the illustrative accounting factor is 0.70 kg CO2e per kWh:
100,000 × 0.70 = 70,000 kg CO2e
After converting kilograms into tonnes, the result is 70 tCO2e.
The 0.70 factor is a hypothetical example used to explain the calculation. Actual corporate reporting must use the applicable documented factor for the relevant period.
Consider an illustrative medium-sized automotive component manufacturer operating a production facility in Haryana.
The company has machining equipment, LPG-fired heating systems, a diesel generator and electricity-intensive production machinery.
Management wants to prepare its first annual Scope 1 and Scope 2 GHG inventory before responding to a sustainability questionnaire from an international customer.
The accounts and maintenance teams compile the following annual data.
| Operational activity | Annual consumption | Illustrative factor |
|---|---|---|
| Purchased electricity | 750,000 kWh | 0.70 kg CO2e/kWh |
| Diesel consumed | 18,000 litres | 2.68 kg CO2e/litre |
| LPG consumed | 30,000 kg | 3.00 kg CO2e/kg |
These factors are illustrative assumptions, not prescribed Indian emission factors.
Electricity emissions:
750,000 × 0.70 ÷ 1,000 = 525 tCO2e
Diesel emissions:
18,000 × 2.68 ÷ 1,000 = 48.24 tCO2e
LPG emissions:
30,000 × 3.00 ÷ 1,000 = 90 tCO2e
Therefore, the illustrative annual results are:
| Emission category | Calculated emissions |
|---|---|
| Scope 1 – Diesel and LPG | 138.24 tCO2e |
| Scope 2 – Purchased electricity | 525.00 tCO2e |
| Total Scope 1 and 2 | 663.24 tCO2e |
This simplified calculation excludes other possible emission sources, including refrigerants, process emissions and Scope 3 activities.
If annual production is 3,000 tonnes, the combined Scope 1 and Scope 2 emissions intensity is approximately 0.221 tCO2e per tonne of finished product.
The exercise helps management identify purchased electricity as its largest quantified emissions source.
The company can now examine electricity efficiency, machine utilisation, solar energy procurement and other energy-management improvements.
Importantly, the reported figures remain estimates until actual activity records, appropriate emission factors and the full reporting boundary have been validated.
Scope 3 accounting requires information from suppliers, logistics providers and other external stakeholders.
For Indian manufacturing businesses, purchased raw materials and outsourced transportation are often useful starting points.
For example, a company purchasing 2,000 tonnes of steel annually may need supplier-specific emissions information or an appropriate secondary-data factor to estimate the associated upstream emissions.
Similarly, outsourced freight emissions may be calculated using transported weight, distance and transport mode when sufficiently reliable information is available.
Scope 3 calculations may use supplier-specific, activity-based, average-data or spend-based methods, depending on the category and available records.
Companies should prioritise significant emission sources, document assumptions and improve data quality over successive reporting cycles rather than claiming unsupported precision.
After completing the calculations, the company should conduct an internal quality review.
Every significant emissions figure should be traceable to an underlying source document, calculation method and emission-factor reference.
The review should examine data completeness, calculation accuracy, consistent methodology and appropriate treatment of missing information.
A well-maintained GHG inventory file should include supporting records, calculation workbooks, factor registers, documented assumptions and management approvals.
This documentation is particularly important when reports are assessed or verified independently.
Where appropriate, companies should also establish a base year and document when significant changes to operations or accounting methodology require recalculation.
The reporting framework depends on the organisation’s business activities and disclosure obligations.
Companies covered by SEBI’s BRSR requirements must follow the applicable disclosure format and requirements. Other businesses may prepare inventories for customer requests, sustainability reports, ISO 14064-1-aligned reporting or voluntary climate commitments.
Exporters supplying products covered by the European Union’s Carbon Border Adjustment Mechanism may also need installation-level and product-specific emissions information.
However, corporate GHG accounting and CBAM embedded-emissions reporting have different boundaries and calculation requirements. A corporate inventory should not automatically be treated as a compliant CBAM calculation.
For Indian businesses, the practical objective is to maintain one reliable operational data system from which different reporting requirements can be supported using their respective methodologies.
Companies preparing their first GHG inventory frequently encounter incomplete records, inconsistent measurement units and uncertainty about the appropriate emission factors.
Another common issue is assigning all sustainability reporting work to the environment department, even though the required information belongs to finance, production, procurement and logistics teams.
Businesses may also overlook refrigerant leakage, include fuel purchases instead of actual consumption or misunderstand the treatment of renewable electricity.
The most effective response is to establish clear data ownership and maintain records throughout the year.
Regular data checks, consistent calculation methods and documented management reviews make annual reporting more accurate and considerably easier.
A professional GHG accounting consultant can help businesses establish a practical emissions-accounting system without unnecessarily complicating their existing operations.
Green Permits Consulting supports Indian businesses with organisational-boundary assessment, emission-source mapping, Scope 1, Scope 2 and Scope 3 data collection, emission-factor evaluation and GHG inventory documentation.
The consulting process can also identify data-quality gaps, review calculation workbooks and assist companies in preparing information for applicable BRSR, ESG and customer reporting requirements.
For businesses planning long-term decarbonisation, the emissions inventory provides a starting point for identifying improvement opportunities and measuring subsequent performance.
GHG accounting in India is becoming an important business capability for manufacturers, exporters and companies working with sustainability-focused customers.
An accurate emissions inventory begins with reliable operational records, suitable emission factors and a clearly defined reporting boundary.
By bringing together information from production, maintenance, finance and procurement, businesses can develop consistent greenhouse gas reporting systems and make more informed decisions about energy efficiency and emissions reduction.
Businesses preparing their first carbon inventory can explore Green Permits’ GHG accounting, ESG reporting and sustainability consulting services. Our team helps organisations understand reporting requirements, evaluate operational emissions and develop practical strategies to improve environmental performance.
Green Permits Consulting helps manufacturers, exporters and corporate businesses with GHG emission calculations, Scope 1, Scope 2 and Scope 3 assessments, emission-factor evaluation and structured emissions reporting.
Website: https://www.greenpermits.in
Phone: +91 78350 06182
Email: wecare@greenpermits.in
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