Greenhouse Gas Inventory Basis of Preparation

What a Basis of Preparation Does

A Greenhouse Gas Inventory Basis of Preparation (BoP) is the methodological foundation of every credible carbon report. It captures, in one controlled document, every choice made during inventory construction — what was included, what was excluded, how each number was calculated, and what limitations apply.

Without a BoP, an emissions figure is just a number. With a BoP, it becomes a defensible, repeatable, and auditable disclosure that withstands scrutiny from regulators, assurance providers, investors, and customers running supply-chain due diligence.

Why It Matters Now

Australian climate-related financial disclosure under AASB S2 has moved from voluntary to mandatory for large entities, with smaller groups phasing in through the late 2020s. Disclosure of methodology and significant assumptions is explicitly required. The EU’s CSRD and the ESRS E1 standard have equivalent requirements for European operations and supply chains.

Beyond regulation, voluntary frameworks have raised the bar:

• CDP scoring criteria explicitly reward methodology transparency and consistency.
• Science Based Targets initiative (SBTi) validation requires documented inventory boundaries and Scope 3 screening.
• External assurance providers under ISAE 3410 cannot issue an opinion without a BoP to test methodology against.

What the Template Covers

1. Reporting Period and Reporting Entity

Defines the entity name, reporting period (typically a financial year), and the legal and operational structures included.

2. Organisational Boundary

Documents the consolidation approach selected — equity share, financial control, or operational control — and the rationale for the choice. Lists all entities included and any joint ventures, associates, or franchises with their consolidation treatment.

3. Operational Boundary

Records which emissions are included by scope:

• Scope 1 — direct emissions from owned or controlled sources (stationary combustion, mobile combustion, fugitive emissions, process emissions).
• Scope 2 — indirect emissions from purchased electricity, steam, heating, and cooling. Includes both location-based and market-based methods.
• Scope 3 — value chain emissions across the 15 GHG Protocol categories. Documents which categories are included, which are screened out, and the materiality reasoning.

4. Calculation Methodology

For each emissions source, the template records:

• Activity data type and unit (kWh, litres, tonne-km, AUD spend)
• Emission factor source, vintage, and units
• Global warming potentials applied (typically AR5 or AR6 100-year)
• Calculation formula and any conversions

5. Emission Factors Register

A consolidated table listing every factor used, its source publication, year, and applicable scope. Common sources include the Australian National Greenhouse Accounts (NGA) Factors, IEA, DEFRA/BEIS, US EPA, ecoinvent, and EXIOBASE.

6. Data Sources and Quality

Captures where activity data originates (utility invoices, fuel card statements, expense systems, supplier surveys, modelled estimates) and assigns a data quality rating to each source. Highlights gaps and the impact on inventory confidence.

7. Assumptions and Estimations

A log of every assumption, proxy, or extrapolation applied — for example, prorating partial-year occupancy, using industry averages where supplier-specific data is unavailable, or assuming default work-from-home patterns. Each entry records the rationale and any conservatism built in.

8. Exclusions

Lists emissions sources or Scope 3 categories that are excluded, with the materiality justification. The GHG Protocol allows exclusions where emissions are not material, but they must be disclosed.

9. Restatement Policy

Defines the significance threshold (commonly 5% of total emissions or scope-level emissions) above which prior-year emissions will be restated. Documents the conditions triggering restatement — acquisitions and divestments, methodology changes, emission factor updates, error corrections.

10. Governance and Sign-Off

Records preparer, reviewer, and approver for each inventory cycle, the date of approval, and the version history.

How to Use the Template

1. Read through the structure — the template is sectioned to map directly to disclosure requirements under AASB S2, CSRD, and ISO 14064-1.
2. Populate during inventory build — document decisions as you make them, not retroactively. Retroactive documentation is the most common audit finding.
3. Have it reviewed before assurance — share the BoP with your assurance provider before fieldwork. Most assurance friction comes from methodology ambiguity, not data errors.
4. Update annually — review with each inventory cycle. Archive previous versions so the audit trail is preserved.
5. Reference it in your sustainability report — the public report should state that emissions are prepared in accordance with the BoP, which is available on request or annexed.

Frameworks the Template Aligns With

• GHG Protocol Corporate Accounting and Reporting Standard (Scope 1 and 2)
• GHG Protocol Corporate Value Chain Standard (Scope 3)
• ISO 14064-1:2018 — Specification with guidance for the quantification and reporting of GHG emissions
• AASB S2 / IFRS S2 — Climate-related Disclosures
• ESRS E1 — European Sustainability Reporting Standard, Climate Change
• CDP Climate Change Questionnaire — methodology disclosure questions

Common Pitfalls This Template Helps You Avoid

Pitfall: Inconsistent emission factors across years How the template helps: The Emission Factors Register requires source and vintage to be logged, making changes visible and triggering documented restatement decisions.

Pitfall: Undocumented Scope 3 exclusions How the template helps: The Exclusions section forces explicit disclosure of which of the 15 categories are out of scope and why.

Pitfall: Mismatched organisational boundary between financial accounts and emissions inventory How the template helps: The Reporting Entity and Organisational Boundary sections require explicit alignment with the financial reporting entity, satisfying AASB S2’s connected information requirement.

Pitfall: No restatement policy, leading to ad hoc decisions when prior years are republished How the template helps: A pre-defined significance threshold and trigger list removes year-end ambiguity.

Pitfall: Methodology decisions stored across emails and spreadsheets, lost when staff change How the template helps: A single controlled document with version history preserves institutional knowledge.

Next Steps

1. Download the template and review the sections against your current documentation.
2. Identify gaps — most companies preparing their first BoP discover that emission factor sources, assumptions, and exclusions have never been documented in one place.
3. Populate during your next inventory cycle rather than retroactively. Document decisions as they are made.
4. Engage your assurance provider early — share a draft BoP before fieldwork to flag any methodology concerns before they become audit findings.
5. Establish a review cadence — annual review, with version control, ensures the document stays current as your business and regulatory environment evolve.