Before a business can reduce its carbon footprint, it needs to know what it is. That is where an emissions inventory comes in — a structured record of all the greenhouse gases your organisation produces, organised by source, scope, and quantity. Building one is not glamorous work, but it is the foundation that every credible sustainability strategy stands on.
This guide walks through the practical steps of creating your first emissions inventory, written for Indian businesses — small manufacturers, service companies, exporters — who are approaching this for the first time.
What Is an Emissions Inventory?
An emissions inventory is a systematic account of greenhouse gas (GHG) emissions generated by your organisation over a defined period — typically one financial year. It covers all sources across Scope 1, Scope 2, and Scope 3, expressed in tonnes of CO₂ equivalent (tCO₂e).
Think of it as a carbon balance sheet. Just as your accounts tell you where money came in and went out, your emissions inventory tells you where carbon enters the atmosphere as a result of your operations.
Step 1: Define Your Organisational Boundary
The first decision is: what is included? For most businesses, the answer is straightforward — all facilities, vehicles, equipment, and activities under your operational or financial control. If you own or lease a space and control what happens in it, it is in scope.
For businesses with multiple sites, subsidiaries, or joint ventures, the boundary question gets more complex. The GHG Protocol offers two approaches: the operational control method (you include what you operate) and the equity share method (you include a proportion of what you own). For most Indian SMEs, operational control is simpler and sufficient.
Step 2: Set the Inventory Year
Choose a base year — usually the most recent full financial year for which you have complete data. In India, that typically means April to March. This becomes your reference point for measuring future progress. Consistency matters: once you commit to a base year, stick with it unless there is a major structural change to your business.
Step 3: Identify All Emission Sources
Walk through your business operations and list every activity that consumes energy, fuel, or resources. Group them by scope:
- Scope 1 (Direct emissions) — Diesel or petrol in owned vehicles, fuel in generators or boilers, refrigerants leaking from AC units, process emissions from manufacturing
- Scope 2 (Purchased electricity) — Electricity consumed from the grid at all your facilities
- Scope 3 (Indirect, value-chain emissions) — Employee commuting, business travel, purchased goods and services, upstream freight, waste disposal, downstream product use
Start by focusing on Scope 1 and 2 — these are where you have the most direct control and the most reliable data. Scope 3 can be phased in over time.
Step 4: Collect Activity Data
For each source, gather the raw activity data — the actual quantities of fuel used, electricity consumed, kilometres driven, or tonnes of material purchased. Typical sources include electricity bills (units in kWh), diesel purchase invoices (litres), fleet logbooks (kilometres by vehicle type), LPG or PNG invoices, flight booking records, and waste contractor receipts.
Do not worry if data is incomplete in the first year. Make a note of the gaps, estimate where you can using industry averages, and flag estimated figures clearly. Improving data quality is part of the process — it gets better each cycle.
Step 5: Apply Emission Factors
An emission factor converts your activity data into CO₂ equivalent. For Indian businesses, use factors published by the Central Electricity Authority (CEA) for grid electricity (currently around 0.71 kg CO₂/kWh nationally), MoEFCC or IPCC for fuel combustion, and DEFRA or the GHG Protocol for travel and freight where India-specific data is unavailable.
The formula is simple: Emissions (tCO₂e) = Activity × Emission Factor. Add up the totals by scope and then overall.
Step 6: Document and Review
Record everything — your boundary decisions, data sources, emission factors used, any estimates made, and the final totals by scope. This documentation is what makes an inventory credible and auditable. If you face a third-party verification — increasingly required for BRSR reporting or export-market customers — this is what the verifier will ask to see.
Step 7: Use It — Do Not Just File It
An emissions inventory only creates value when it informs decisions. Once you have your baseline, identify your largest emission sources, set a reduction target, and track progress year on year. Indian exporters in particular are finding this increasingly non-negotiable: the EU Carbon Border Adjustment Mechanism (CBAM) requires documented emissions data for goods entering the EU, and large buyers across automotive and textiles are making supply-chain emissions data a procurement requirement.
Common Mistakes to Avoid
- Skipping Scope 2 — Electricity is often the largest source for office-based and manufacturing businesses and cannot be omitted.
- Using global emission factors for Indian electricity — The Indian grid has a higher carbon intensity than many Western grids; a European average will understate your Scope 2 significantly.
- Not documenting estimates — If you estimated a number, say so. Undisclosed estimates undermine credibility.
- Treating it as a one-time exercise — The inventory needs to be repeated annually to track trends.
No business starts with a perfect emissions inventory. What matters is starting — committing to measure, accepting that the first version will have gaps, and improving it over time. Once your inventory is in place, the next challenge is ensuring the data going into it is as accurate as possible. That is covered in the next article in this series.