Introduction to Carbon Reporting

Introduction to carbon reporting

Paia is running a free breakfast briefing on the 16th July to help companies better understand the world of carbon footprinting. If you’re unable to attend, here is a short introduction to the why, who, what, when and how of carbon emissions calculation and reporting.

Why – should you be reporting?

The first thing to consider is how important carbon is as an issue for your business – both now and in the future?  This will help determine the depth and detail you will need to go into in your footprint – and therefore the amount of effort and resources you will need to deploy.

Whilst it can be difficult to quantify the level of importance – especially when looking to the future – it is worth asking some simple questions such as:

  • Do you operate in a sector which uses a lot of energy – such as manufacturing or property?
  • Do your competitors disclose their emissions – and if so, what information do they include?
  • Do your customers or investors ask about your emissions footprint?
  • Are you part of a larger corporate who has set an emissions reduction target?

Simple answers to the above questions will set the scene as to how seriously you need to look at your emissions reporting over the long-term. For many companies there are commercial drivers to reporting their emissions – identifying operational efficiencies, investment benefits, product / brand differentiation.

One last thing, if you’ve identified carbon as one of your material ESG (environmental, social and governance) issues for your sustainability report, SGX requires you to set an annual reduction target. Having a robust emissions calculation is therefore a must, especially as the board, in principle, should sign off on the target.

Who – to include in the footprint

The next thing to think about is setting the organisational boundary for your footprint. In other words, who should I include in the footprint – which parts of my business?

The fundamental principle here is to align the boundary of the footprint with the boundary of your company’s financial report. That is, where you report the financial performance of assets and liabilities, you should also report their emissions.

Of course, in practice, this is not always practical: you may not have operational or financial control of the asset(s) or cannot get the data.

There are two ways to address this:

  1. You can either apply an equity or control approach to determine what is in and what is out of scope. If you own it or control it (or a considerable percentage of it), include it. If not, you can exclude it. This helps address emissions from JV’s, subsidiaries, etc.
  2. Try to obtain the data for and include the largest revenue generating assets / parts of the business.

There is no point in producing a highly detailed emissions calculation from your food manufacturing business, when it makes up only 10% of your revenue, and the other 90% comes from your hospitality business – but you can’t get the data. Better to focus on getting ‘some’ data from the hospitality business.

What – to include in the footprint

Next we need to think about what to include in the footprint from those businesses which you own or control?

That is, what emissions sources should be included from physical activities of your operations? Should you include electricity consumption from the office, gas use in your manufacturing plants, emissions from employee commuting at the sales office?

There are many different types of emissions sources which could be included, but the fundamental principle here is to include emissions from activities by the level of control you have over that activity. In other words, the more control you have over the activity, the more you can make changes reduce its emissions, the more it falls under your responsibility to disclose.

Let’s take an example. In many cases, companies have more control over the fuel, electricity and air conditioning systems they use within their offices, but less control over what transport their employees take to get to work. Both generate emissions, but the company has more control over the former than the latter – and should focus on including it within the footprint.

This is where the notion of ‘scope’ comes in. Emissions sources are classified into 3 scopes depending on the level of control an entity has over the physical process:

Scope 1: Direct Emissions. Emissions from sources owned or controlled by the company (e.g. fuels used in boilers, natural gas for heating, fuels used in owned vehicles, fugitive emissions – from air conditioning units). Basically, what you use and directly control at the operational level.

Scope 2: Indirect Control. Emissions from the generation of electricity (or district heating and cooling) which is consumed by the company, but produced by a third-party. Basically, electricity consumption.

Scope 3: Other Indirect Emissions. Emissions from the entire value chain activities of the company (e.g. transportation of raw materials, waste generated in operations, business travel, etc.). Basically, everything else.

To align with internationally recognised good practice of The Greenhouse Gas Protocol: Corporate Accounting & Reporting Standard companies should be reporting emissions from all their Scope 1 and 2 activities.   

Finally, degree of control is representative – not absolute. Many companies in rented offices have limited control over the A/C or how they use electricity, but in the world of carbon reporting they should still report on the emissions from these activities.

When – timeframe to include

Again, this should align to your financial reporting. Emissions calculations should, generally, be disclosed in line with the physical (and financial) activities to which they relate. Reporting emissions from two years ago to represent last year’s financial activities is misrepresentative.

This does not mean, however, that you need an exact, 365-day precise alignment of emissions data with financial data. Gaps and holes in data as bills or invoices are unavailable. This commonly occurs for December energy consumption data, which is, in many cases, not available in time to meet the Annual Report deadline.

Here, it is perfectly acceptable to extrapolate 11 months’ worth of data (or less) to represent missing months (as long as you disclose this in the report).

How – to calculate emissions

By undertaking the why, who and what you will have some idea of the importance, boundary and scope of the emissions sources to be included in the footprint. Now you need to collect the relevant data and calculate the emissions.

Primary emissions data comes from bills, invoices, suppliers, surveys, finance data and other sources. This primary data (e.g. electricity consumption in kWh) is converted into a value of ‘carbon dioxide equivalent (CO2e)’ by weight (e.g. kg) using specific ‘emissions factors’.

Because the type of primary data varies depending on the emissions activity it represents, and emissions factors are updated regularly, the data collection and calculation process can be resource intensive and technically complex.

There are three ways we help our clients manage their emissions calculation:

  1. Training – for those who want to do the calculation themselves, we run in house ‘GHG Protocol’ training to bring relevant teams up to speed with good practice.
  2. Solutions – we provide integrated technical solutions and support to help clients collect the data and calculate the emissions to meet SGX requirements
  3. Systems – we advise our clients on the most appropriate tools, systems and third-party software solutions to address their carbon reporting requirements (for CDP, DJSI, etc).


Corporate emissions disclosure is something increasingly being asked for by investors and consumers. Emissions calculations themselves identify resource and cost efficiencies.

Indeed, according to our research, between 40 – 50% of the top 100 companies listed on SGX list energy and carbon as one of their key material issues.

However, there is considerable variation in the scope and level of detail in the emissions calculations provided.

By following some simple tips to identify the why, who, what, when and how of emissions reporting, companies can further align their reporting with good practice and unlock business value.

Nik Bollons

Nik Bollons is a Principal Consultant at Paia Consulting Ltd (Singapore). Nik is an experienced GHG assessor and has been involved in climate change management and corporate carbon reporting for over 15 years.