Carbon Accounting Guide

Glossary of Terms

This glossary provides definitions of key terms used in carbon accounting and emissions reporting. Whether you are new to sustainability or looking to deepen your understanding, these definitions will help you navigate the language of carbon management.

Absolute Emissions

The total amount of greenhouse gas (GHG) emissions produced by an organisation, measured in tonnes of CO₂ equivalent (tCO₂e), without adjusting for factors like business growth.

Activity Based

A method for calculating emissions by multiplying a measured quantity of activity, such as litres of fuel or kWh of electricity, by an appropriate emissions factor. Also known as the activity-based method, or a bottom-up approach; contrast with Spend Based.

Baseline Year

A reference year used as a starting point for measuring emissions and tracking reduction progress. Typically, this is the first year for which a full GHG inventory was conducted.

Carbon Dioxide Equivalent (CO₂e)

A standard unit for measuring GHG emissions, expressed in terms of the global warming potential (GWP) of carbon dioxide. This allows for comparing the impacts of different greenhouse gases on a like-for-like basis.

Carbon Footprint

The total amount of GHG emissions caused directly and indirectly by an individual, organisation, event, or product.

Carbon Neutral

A state where an organisation balances its CO₂ emissions by reducing emissions and purchasing carbon offsets to compensate for any remaining emissions.

Carbon Offset

A reduction or removal of GHG emissions made to compensate for emissions occurring elsewhere. Examples include reforestation projects or renewable energy investments.

CDP

An international non-profit, formerly the Carbon Disclosure Project, that runs a global environmental disclosure system through which organisations report their climate impact to investors, customers, and other stakeholders.

Climate Neutral

A broader concept than carbon neutrality, encompassing all greenhouse gases and potentially addressing wider environmental impacts beyond emissions.

Downstream Emissions

GHG emissions that occur after a product or service leaves an organisation, including emissions from product use, disposal, or processing by customers.

Emissions Factor

A coefficient that converts activity data (e.g., kWh of electricity, litres of fuel) into GHG emissions. Typically expressed in kilograms or tonnes of CO₂e per unit of activity.

Fugitive Emissions

Unintentional leaks or releases of GHGs from equipment or processes, such as refrigerant leaks from HVAC systems or methane leaks during natural gas extraction.

Global Warming Potential (GWP)

A measure of how much heat a greenhouse gas traps in the atmosphere over a specific period, relative to CO₂. For example, methane (CH₄) has a GWP of 28–36 over 100 years, meaning it is 28–36 times more potent than CO₂.

Greenhouse Gases (GHGs)

Gases that trap heat in the atmosphere, contributing to the greenhouse effect. Common GHGs include:

• Carbon dioxide (CO₂)
• Methane (CH₄)
• Nitrous oxide (N₂O)
• Hydrofluorocarbons (HFCs)
• Perfluorocarbons (PFCs)
• Sulphur hexafluoride (SF₆)
• Nitrogen trifluoride (NF₃)

Intensity Ratio

A measure of emissions relative to a business metric, such as revenue, employee headcount, or floor space, used to compare carbon performance independently of organisational growth.

Location Based

A method for calculating Scope 2 emissions from purchased electricity, based on the average emissions intensity of the grid(s) on which the energy is consumed. Also known as the location-based method.

Market Based

A method for calculating Scope 2 emissions from purchased electricity, based on the emissions associated with the specific electricity an organisation has chosen to buy — such as through renewable energy contracts or certificates — rather than the grid average. Also known as the market-based method.

Net Zero

A state where an organisation reduces its GHG emissions as much as possible and balances any remaining emissions with permanent carbon removal solutions, achieving no net contribution to global warming.

Operational Boundary

The scope of emissions an organisation reports against its operations, once its organisational boundary is set — defining which activities count as Scope 1, Scope 2, and Scope 3.

Organisational Boundary

The boundary that determines which entities, such as subsidiaries, joint ventures, or facilities, an organisation includes in its GHG inventory, typically set using an equity share or control approach.

PPN 06

Procurement Policy Note 06, a UK government requirement for suppliers bidding on major public contracts to publish a Carbon Reduction Plan.

Science-Based Targets (SBTs)

GHG reduction targets aligned with climate science to ensure they contribute to limiting global warming to 1.5°C or well below 2°C, as outlined in the Paris Agreement.

Scope 1 Emissions

Direct GHG emissions from sources owned or controlled by an organisation, such as fuel combustion in company vehicles or on-site energy generation.

Scope 2 Emissions

Indirect GHG emissions from the consumption of purchased electricity, steam, heating, or cooling. These emissions occur at the energy production facility.

Scope 3 Emissions

All other indirect emissions across an organisation's value chain, including emissions from suppliers, transportation, product use, and end-of-life disposal. Scope 3 often represents the largest portion of a company’s carbon footprint.

SECR

Streamlined Energy and Carbon Reporting, a UK statutory scheme requiring large companies to disclose their energy use and carbon emissions annually.

Spend Based

A method for calculating emissions by multiplying money spent on goods or services by an emissions factor for that spend category, typically used when detailed activity data isn't available. Also known as the spend-based method, or a top-down approach; contrast with Activity Based.

tCO₂e

An abbreviation for "tonnes of carbon dioxide equivalent," a unit used to quantify GHG emissions across different gases.

Upstream Emissions

GHG emissions that occur before a product or service reaches an organisation, including emissions from suppliers, raw material extraction, and transportation.

Value Chain

The full lifecycle of a product or service, from raw material extraction (upstream) to end use and disposal (downstream).

Verification

An independent assessment of an organisation's GHG emissions data to ensure accuracy and compliance with reporting standards.

Voluntary Carbon Market

A marketplace where organisations can purchase carbon offsets to address their emissions, typically used for achieving carbon neutrality or net zero goals.

Well-to-Tank (WTT) Emissions

The upstream emissions from extracting, processing, and delivering a fuel or energy source, shown separately from the emissions released when it's actually used.