Carbon accounting comes with its own vocabulary, and it can be genuinely confusing when a business is just getting started. Terms like Scope 3, emissions factor, and carbon offset get used interchangeably by people who mean slightly different things by them — which makes it easy to misreport, misunderstand a vendor’s claims, or misread a regulatory requirement.
This glossary collects the terms that come up most often once a business moves from asking what is carbon accounting to actually doing it — building an inventory, setting a carbon baseline, and reporting progress. Keep it handy as a quick reference.
The Basics
- GHG (Greenhouse Gas): Gases that trap heat in the atmosphere — carbon dioxide, methane, nitrous oxide, and others — typically converted to a common unit for reporting.
- CO2e (Carbon Dioxide Equivalent): The standard unit used to express the combined warming impact of different greenhouse gases as a single, comparable figure.
- Carbon Footprint: The total GHG emissions caused directly or indirectly by an activity, product, organisation, or individual, usually expressed in CO2e. See how this differs from carbon accounting.
- Emissions Inventory: A structured, itemised record of an organisation’s GHG emissions across its chosen scopes and categories — the working document that carbon accounting is built on. See how to build a basic emissions inventory.
The Scopes
- Scope 1: Direct emissions from sources a business owns or controls — company vehicles, on-site fuel combustion, owned machinery.
- Scope 2: Indirect emissions from purchased electricity, steam, heating, or cooling consumed by the business.
- Scope 3: All other indirect emissions across the value chain — purchased goods and services, business travel, waste, and use of sold products. Usually the largest and hardest category to measure. Read more on why Scope 3 emissions matter most.
Measurement and Methodology
- Emissions Factor: A standardised value used to convert activity data (like litres of diesel or kWh of electricity) into an estimated quantity of GHG emissions.
- Base Year / Carbon Baseline: The fixed reference period against which future emissions are measured to track progress. See our full explainer on carbon baselines.
- Organisational Boundary: The rules a business uses to decide which entities, sites, or operations are included in its emissions reporting (e.g. operational control vs. equity share approach).
- Activity Data: The raw operational data — fuel purchased, electricity consumed, distance travelled — used as an input for emissions calculations.
Targets and Claims
- Carbon Reduction Target: A specific, measurable commitment to lower emissions by a defined amount within a set timeframe, benchmarked against the baseline.
- Net Zero: A state where any remaining GHG emissions are balanced by an equivalent amount removed from the atmosphere. Different from carbon neutral — see carbon neutral vs net zero.
- Carbon Offset: A credit representing a verified reduction or removal of emissions elsewhere, purchased to compensate for emissions a business cannot yet eliminate directly.
- Decarbonisation: The process of reducing the carbon intensity of operations, energy use, or products over time — the action, as distinct from offsetting.
Reporting and Compliance
- BRSR (Business Responsibility and Sustainability Reporting): India’s mandatory ESG disclosure framework for the top listed companies by market capitalisation, requiring structured emissions and sustainability reporting.
- ESG (Environmental, Social, Governance): The broader reporting framework carbon accounting typically feeds into — see how carbon data supports ESG reporting.
- CBAM (Carbon Border Adjustment Mechanism): An EU import mechanism that prices embedded carbon in certain goods, directly affecting Indian exporters. Full explainer: CBAM for Indian businesses.
- Assurance: Independent, third-party verification of an organisation’s reported emissions data, increasingly expected alongside voluntary and mandatory disclosures.
Why the Vocabulary Is Worth Learning
Carbon reporting terms aren’t jargon for its own sake — each one marks a specific decision point in how emissions get measured, compared, and disclosed. A business that understands the difference between a Scope 3 estimate and an assured Scope 1 figure, or between an offset and an actual reduction, is far better placed to set realistic goals and avoid common carbon accounting mistakes. Bookmark this glossary and return to it as new terms come up in supplier conversations, audits, or reporting cycles.