Measure & Verify
Discover how and when to recalculate your company's GHG footprint
Corporate GHG accounting is inventory accounting that reflects GHG emissions occurring at a specific point in time. This facilitates decarbonization performance tracking against established base years. To do so, the methodology and scope of your company's GHG footprint should remain stable.
However, in some cases, the approach might change significantly (e.g., if the company is acquired or divested) and will need an update your company's past GHG footprints to enable relevant performance assessments.
A recalculation is required if your company undergoes significant structural changes such as acquisitions, divestments or mergers or new decarbonization targets, to update your company's GHG footprint of the target base year.
Structural changes trigger recalculation because they transfer emissions from one company to another: for example, an acquisition or divestment will transfer existing GHG emissions from one company’s inventory to another. Any recalculation of base year emissions will depend upon the significance of the changes.
However, base year emissions and any historic data are not recalculated for organic growth or decline.
To understand whether your company should update its base year, it is necessary to develop an 'emissions recalculation policy' that clearly articulates the basis and context for any recalculations. The policy should define any 'significance threshold' applied for deciding on historic emissions recalculation. A 'significance threshold' is a qualitative and/or quantitative criterion used to define any significant change to the data, inventory boundary, or methods.
The GHG Protocol recommends a recalculation of base-year GHG emissions triggered by the following events:
Structural changes in the reporting organization that have a significant impact on your company’s base year emissions. A structural change involves the transfer of ownership or control of emissions-generating activities or operations from one company to another. While a single structural change might not have a significant impact on the base year emissions, the cumulative effect of a number of minor structural changes can result in a significant impact. Structural changes include:
- Mergers, acquisitions, and divestments
- Outsourcing and insourcing of emitting activities
Changes in calculation methodology or improvements in the accuracy of emission factors or activity data that result in a significant impact on the base year emissions data
Discovery of significant errors, or a number of cumulative errors, that are collectively significant
However, your company is free to recalculate or update your past company's GHG footprint for tracking purposes only.
Image: Recalculating for acquisition
Image: Recalculating for divestment