Carbon Reporting

The CPA's Guide to GHG Protocol Scope 1, 2 & 3

February 3, 2026· 28 min read· by AI Sustainable Future Team

Many small and mid-sized clients come to carbon accounting because a customer asked: a supplier survey, a CDP request, a clause in a procurement contract. CDP alone requested disclosure from more than 45,000 suppliers in 2025, on behalf of more than 200 requesting organizations. The CPA is a natural first call, because the data sits in the books. This guide is for the CPA who takes the work on.

Carbon accounting reuses data your clients already have. The general ledger, the AP file, utility invoices and fleet fuel receipts are the raw inputs to a GHG Protocol inventory. What the CPA adds is the classification scheme (which line item gets which emission factor) and the documentation trail (so a reviewer can re-run the numbers from source).

Before we start: this guide follows the GHG Protocol Corporate Standard (Revised Edition, 2004), the Scope 2 Guidance (2015) and the Corporate Value Chain (Scope 3) Standard (2011). US factors come from the EPA Supply Chain GHG Emission Factors v1.3 (July 2024, in kg CO₂e per 2022 dollar) for spend-based Scope 3, the EPA GHG Emission Factors Hub (2025 annual update, January 2025, the latest on EPA's page as of October 2026) for fuels, GWPs, travel and commuting, and eGRID2023 (revision 2, June 2025) for electricity. Record the source, version and table of every factor, and use the latest release available when the reporting period closes.

The three scopes, in one block you can hand a client

Hand this to a client at the start of an engagement to save a round of definitions:

Scope 1 (direct): emissions from sources the reporting entity owns or controls. In the client's books: on-site natural gas combustion, company-owned vehicles, refrigerant leakage from HVAC. Calculation: fuel volume × emission factor, and refrigerant kg × global warming potential (GWP), both from the EPA Hub.
Scope 2, location-based: indirect emissions from purchased electricity, using grid-average factors. Source: utility invoices. Calculation: kWh × the eGRID subregion factor for the meter location (or the national grid factor outside the US).
Scope 2, market-based: the same kWh, using the factors the entity's contractual instruments convey (RECs, PPAs, supplier-specific emission rates). kWh not covered by an instrument take a residual mix factor where one is available, and a grid-average factor where it is not.
Scope 3 (all other indirect): 15 categories in the Scope 3 Standard: (1) purchased goods and services, (2) capital goods, (3) fuel- and energy-related activities, (4) upstream transportation and distribution, (5) waste generated in operations, (6) business travel, (7) employee commuting, (8) upstream leased assets, (9) downstream transportation and distribution, (10) processing of sold products, (11) use of sold products, (12) end-of-life treatment of sold products, (13) downstream leased assets, (14) franchises and (15) investments.

Two gaps are common in first-time inventories:

A single Scope 2 figure. The Scope 2 Guidance (section 1.5.1) requires companies with operations in markets that offer contractual instruments, such as RECs, to report both a location-based and a market-based figure ("dual reporting"). ESRS E1 asks for both methods too. A single Scope 2 number is one of the first things a reviewer will query.
Spend-based factors where activity data was available. The Scope 3 Standard asks companies to prioritize data collection on their most significant Scope 3 activities and, in general, to collect high-quality primary data for them (sections 7.1 and 7.3). Spend-based factors are a valid starting point, and California's SB-253 allows secondary data for Scope 3. Where the client has better data, use it: flight segments beat airfare spend, and in Scope 1 a fuel log in gallons beats fuel spend converted at an average price.

Consolidation boundaries, decided before any calculation

Before a gram of CO₂ is calculated, decide which operations count as part of the reporting company. Chapter 3 of the Corporate Standard offers an equity share approach and a control approach, and under control the company chooses financial or operational control. The Standard sets no default. Pick one and apply it consistently across every scope.

Equity share

The company accounts for emissions from each operation according to its share of equity in it. The share reflects economic interest, and economic substance overrides legal form. This mainly matters for clients with joint ventures or minority holdings.

Financial control

The company accounts for 100% of emissions from operations whose financial and operating policies it can direct with a view to gaining economic benefits. The Standard describes this criterion as consistent with financial accounting: an operation fully consolidated as a subsidiary in the financial statements is under financial control.

Operational control

The company accounts for 100% of emissions from operations where it has full authority to introduce and implement its operating policies. The Standard notes that the choice between the two control criteria matters most where ownership and operatorship diverge, as they often do in oil and gas.

Practical note: for a client that wholly owns all its operations, the boundary is the same under every approach, but the choice can still change how emissions are categorized. Leases are where this bites. Under equity share or financial control, a lessee includes a leased asset in its Scope 1 and 2 only if it is a finance or capital lease; under operational control, it includes the leased assets it operates. An office on an operating lease therefore puts its electricity in Scope 2 under operational control, and in Scope 3 Category 8 (upstream leased assets) under financial control. State the chosen approach in the report: Chapter 9 of the Corporate Standard lists it among the required contents of a public inventory.

Data collection: what lives in QuickBooks or Xero, and what does not

For a small office-based client, much of the inventory can be built from the accounting system, and the rest needs a request to the client. (For QuickBooks specifically, see carbon reporting from QuickBooks.)

What is already in the GL or AP file

Utility invoices: natural gas (therms), electricity (kWh), district steam or heat. Take kWh and therms from the invoice lines. The dollar amount includes fixed charges and taxes, so it is a poor proxy for consumption.
Fleet fuel: gasoline, diesel or propane bought for company-owned vehicles is Scope 1. Use gallons from fleet card statements where you have them. If you only have spend, convert it to gallons at a published average price and say so in the methodology.
Business travel: airline, hotel and rental car accounts feed Scope 3 Category 6. A booking-system export with flight segments allows a better, distance-based calculation.
Purchased goods and services: the remaining AP spend becomes Scope 3 Category 1 once vendors are mapped to NAICS codes and matched to EPA Supply Chain factors.
Capital expenditures: fixed asset additions in the year (PP&E subledger) are Scope 3 Category 2.
Freight and courier: transport the company pays for, including outbound delivery to customers, is Scope 3 Category 4. Category 9 covers downstream transport and distribution of sold products that the company does not pay for.

What requires a client-side data request

Refrigerant logs: pounds of R-410A or R-134a recharged into HVAC units during the year, from the facilities manager or the HVAC contractor's invoices. Fugitive Scope 1.
Employee commuting: a short employee survey (mode, distance, days in the office) for Scope 3 Category 7. Record the response rate and how you scaled the answers to the full headcount.
Work from home: the Scope 3 Standard lets companies include teleworking emissions in Category 7 as an option. If you include them, state the method.
Leased space with utilities in the rent: if the landlord bills a flat rent that includes utilities, you will not see kWh in AP. Ask the landlord for an apportionment of the building's metered use, or estimate from the EIA Commercial Buildings Energy Consumption Survey (CBECS), which publishes energy intensities by building type.
Use of sold products (product companies): unit sales × lifetime energy use per unit, Scope 3 Category 11. For sellers of energy-using products it can be the largest category.

Illustrative example (fictional company): an $8.2M architecture firm

The firm, its spend and its survey answers are invented for this guide; the emission factors are real and cited. It has 85 employees, one leased all-electric office in California (12,000 sq ft) and $8.2M of revenue, and it is reporting FY2025. It uses operational control, so the leased office's electricity is Scope 2.

Scope 1: 11.80 tCO₂e

Fugitive refrigerant: 8 lb of R-410A recharged into the office HVAC in FY2025, per the contractor's invoices, with the top-up treated as equal to the amount that leaked. 8 lb × 0.4536 kg/lb = 3.63 kg × GWP 1,924 (IPCC AR5, EPA Hub Table 12) = 6,982 kg = 6.98 tCO₂e.
Company vehicle: one 2022-model gasoline car, 14,800 miles at 27 mpg = 548.1 gallons. CO₂: 548.1 × 8.78 kg per gallon (EPA Hub Table 2) = 4,813 kg. CH₄ and N₂O: 14,800 miles × 0.0050 g and 0.0014 g per mile (EPA Hub Table 3, model year 2022), at GWPs of 28 and 265 = 7.6 kg. Total 4,820 kg = 4.82 tCO₂e.
Stationary combustion: none. The building is all-electric.
Scope 1 total: 6.98 + 4.82 = 11.80 tCO₂e. Keep full precision in the workbook, round only for display, and show each input, factor and source in the methodology appendix so a reviewer can re-run the lines.

Scope 2: 27.85 tCO₂e location-based, 22.00 tCO₂e market-based

Electricity: 142,800 kWh from twelve monthly utility invoices. eGRID2023 (revision 2) total output emission rate for the CAMX subregion (WECC California): 429.983 lb CO₂e per MWh = 0.19504 kg per kWh. Location-based: 142,800 × 0.19504 = 27,851 kg = 27.85 tCO₂e.
Market-based: the firm bought unbundled RECs covering 30,000 kWh that meet the Scope 2 Quality Criteria, so those kWh count at zero. It has no supplier-specific rate or residual mix factor, so the other 112,800 kWh take the eGRID rate, the last tier of the market-based hierarchy (Scope 2 Guidance, Table 6.3), and the report says so: 112,800 × 0.19504 = 22,000 kg = 22.00 tCO₂e. A supplier-specific rate, where the utility discloses one, ranks above the grid average.
Report both figures, as the Scope 2 Guidance requires.

Scope 3: 283.6 tCO₂e

Spend-based lines use EPA Supply Chain factors v1.3, stated in kg CO₂e per 2022 dollar at purchaser prices. FY2025 spend is first converted to 2022 dollars with BEA's GDP implicit price deflator (2017 = 100: 118.026 for 2022, 128.893 for 2025), so each 2025 dollar counts as $0.9157.

Category 1 (purchased goods and services): 186.5 tCO₂e from $1,943,000 of FY2025 spend, each line deflated by 0.9157 before its factor is applied. Rent is left out because the office's energy is already in Scope 2; payroll, taxes and interest are not purchases.
- Subcontracted architecture and engineering design, $1,200,000: × 0.9157 = $1,098,828 in 2022 dollars × 0.103 kg/$ (NAICS 541310, Architectural Services) = 113.2 t
- Design software subscriptions, $280,000 at 0.080 kg/$ (NAICS 511210) = 20.5 t
- Cloud hosting and rendering, $60,000 at 0.093 (NAICS 518210) = 5.1 t
- Printing and reprographics, $90,000 at 0.236 (NAICS 323111) = 19.4 t
- Legal fees $70,000 at 0.041 (NAICS 541110) and accounting fees $40,000 at 0.054 (NAICS 541211) = 4.6 t
- Insurance, $95,000 at 0.033 (NAICS 524126) = 2.9 t
- Telephone and internet, $24,000 at 0.075 (NAICS 517311) = 1.6 t
- Office supplies, $36,000 at 0.296 (NAICS 322230) = 9.8 t
- Janitorial services, $48,000 at 0.214 (NAICS 561720) = 9.4 t
Category 2 (capital goods): 10.7 tCO₂e from $61,000 of FY2025 fixed-asset additions in the PP&E subledger: office furniture, $37,000 at 0.24 (NAICS 337214) = 8.1 t; three laptops, $7,500 at 0.058 (NAICS 334111) = 0.4 t; one large-format plotter, $16,500 at 0.143 (NAICS 334118) = 2.2 t.
Category 3 (fuel- and energy-related activities): 1.1 tCO₂e. Transmission and distribution losses: 142,800 kWh × the CAMX grid gross loss of 4.1% (eGRID2023 revision 2) × 0.19504 = 1,142 kg. Category 3 also covers upstream production of the fuel and electricity used; that needs well-to-tank factors, and the report either estimates it or states why it is left out.
Category 6 (business travel): 27.3 tCO₂e. 142 flight segments from the travel booking system, using the EPA Hub's distance bands (Table 10, CH₄ and N₂O included at AR5 GWPs): 20 short-haul averaging 250 miles (5,000 passenger-miles at 0.2089 kg CO₂e), 110 medium-haul averaging 1,000 miles (110,000 at 0.1301) and 12 long-haul averaging 2,600 miles (31,200 at 0.1644). Flights: 20.5 t. Hotel stays, optional in this category under the Scope 3 Standard: $51,000 × 0.9157 at 0.145 (NAICS 721110) = 6.8 t.
Category 7 (employee commuting): 58.0 tCO₂e. 34 of 85 staff answered a commuting survey (40%): 24 drive alone, 10 walk or cycle, which scales to 60 drivers. 60 × 22 miles round trip × 3.2 office days a week × 46 weeks = 194,304 vehicle-miles × 0.2986 kg CO₂e per mile (EPA Hub Table 10, passenger car, CH₄ and N₂O included) = 58.0 t. Optional teleworking emissions are left out.
Categories 4, 5 and 8 to 15: each is excluded with a written reason, as section 6.2 of the Scope 3 Standard requires. Category 4 (a small courier spend) and Category 5 (office waste) are estimated, found small, and the estimates kept on file. Category 8 does not apply because the office lease is already in Scope 2. Categories 9 to 12 do not apply because the firm sells no physical products, and 13 to 15 because it leases no assets to others, has no franchises and holds no investments.

Total disclosed emissions: 323.3 tCO₂e location-based (11.80 + 27.85 + 283.6) or 317.4 tCO₂e market-based (11.80 + 22.00 + 283.6). Intensity: 39.4 tCO₂e per $M of revenue (location-based). Category 1 is about two-thirds of Scope 3 and subcontracted design is its largest line, so the reduction conversation starts with the firm's subcontractors and their own emissions data. Commuting is the second lever.

What SEC, CSRD and California rules add on top of the GHG Protocol

The GHG Protocol is the measurement standard. Regulations decide who reports, by when, with what assurance and in what format. Here is where each stands in October 2026.

SEC climate disclosure rules (status: stayed, proposed for rescission)

The SEC adopted climate disclosure rules on 6 March 2024 (SEC press release). They would have required large accelerated and accelerated filers to disclose material Scope 1 and 2 emissions, with assurance phased in. The rules were stayed, and on 29 May 2026 the SEC proposed rescinding them. The SEC does not require anyone to report Scope 3, and the 2024 rules did not ask for it. Public and pre-IPO clients may still get emissions questions from investors, lenders or acquirers.

EU CSRD and ESRS E1 (status: narrowed by Directive (EU) 2026/470)

Directive (EU) 2026/470, published on 26 February 2026, limits CSRD to companies with more than 1,000 employees and more than EUR 450 million of turnover, from FY 2027. A non-EU group, such as a US parent, is caught only if its EU turnover exceeds EUR 450 million in each of the last two financial years and it has an EU subsidiary or branch with more than EUR 200 million of turnover. Most SMEs are outside CSRD. Large in-scope companies may still ask suppliers for data, and Delegated Regulation (EU) 2026/1560 caps what they can require from smaller value-chain partners at the VSME standard (see our VSME Report).

ESRS E1, the climate standard adopted in July 2023 (Delegated Regulation (EU) 2023/2772), asks in-scope companies for gross Scope 1, 2 and 3 emissions, with Scope 2 under both methods and Scope 3 covering significant categories. It asks for a transition plan if the company has one; a company without one states whether and when it will adopt one.

California SB-253 and SB-261 (status: first SB-253 reports due 10 November 2026)

SB-253, the Climate Corporate Data Accountability Act, applies to US entities with more than $1 billion of revenue that do business in California. The first Scope 1 and 2 reports are due 10 November 2026, per CARB's bulletin of 24 June 2026, and Scope 3 reporting starts in 2027. The statute allows secondary data, including spend-based and industry-average data, for Scope 3, and the draft rules CARB previewed at its July 2026 workshop require limited assurance for Scope 1 and 2 only. Smaller clients meet SB-253 indirectly, when an in-scope customer asks for their data.

For the first cycle, CARB's December 2024 enforcement notice lets reporting entities submit Scope 1 and 2 emissions determinable from information they already had, or were already collecting, when the notice was issued, and CARB will not take enforcement action for incomplete first reports from companies that make a good-faith effort to retain the relevant data. Track later cycles on CARB's climate disclosure page.

SB-261 (climate-related financial risk reports) applies at $500 million of revenue. Its first reports were due 1 January 2026, but the Ninth Circuit enjoined it on 18 November 2025.

Practical takeaway for the CPA: one well-documented GHG Protocol inventory (Scope 1, Scope 2 under both methods, and the relevant Scope 3 categories with documented screening) is the common input to all of these and to customer questionnaires. Each regime adds its own format, boundary rules and sometimes assurance, so budget a mapping step for each.

Pricing the engagement

Price the work on hours. The first engagement for a client takes the most time, because that is when the classification scheme is built. The four tiers below are a suggested structure with suggested fee bands; check them against your own hours and billing rate.

Tier A, supplier questionnaire response: $500 to $2,000 per questionnaire

A one-off response to a specific customer request: a CDP supply chain questionnaire, a customer's supplier portal, or a supplier code of conduct (section 6.11 of Microsoft's, for example, asks suppliers for disclosure upon request). The deliverable is the completed submission plus the supporting workbook. Plan for 4 to 8 hours once the client's first inventory exists.

Tier B, voluntary annual inventory with screened Scope 3: $3,500 to $6,000 per year

For clients who want the discipline of measurement without a filing requirement. Full Scope 1 and 2 (both methods), Scope 3 Categories 1, 6 and 7 calculated, and the other categories screened with a written reason. Deliverable: PDF report, methodology appendix and base-year statement. Plan for 20 to 30 hours on the first engagement and 8 to 12 on each annual refresh.

Tier C, full inventory prepared for assurance: $5,000 to $15,000 per year

Full Scope 1 and 2, all relevant Scope 3 categories with documented screening, framework mapping (GRI 305, SASB, IFRS S2, CDP), data lineage per category, and a methodology appendix written so an assurance provider can test it. Typical clients: companies inside SB-253's $1 billion threshold, US groups within CSRD, companies facing IPO or acquisition diligence, and suppliers whose customers ask for assured figures (Microsoft's procurement program asks in-scope suppliers for third-party assurance or an external consultant's letter). Plan for 40 to 80 hours on the first engagement and 15 to 25 on each refresh.

Tier D, retainer for ongoing carbon advisory: $8,000 to $25,000 per year

Quarterly refreshes, ongoing questionnaire responses, framework filings (CDP, EcoVadis, supplier portals), target-setting support and advice on disclosure decisions. Pricing scales with client size and the number of filings.

Price the first engagement at the upper end of its band; annual refreshes reuse the classification scheme and can sit lower. For more on structuring fees, see our guide to pricing carbon report services. Our partner pack prices are on the For Accountants page.

Five gaps to close before an assurance review

Assurance providers test a GHG statement against a verification standard, such as ISO 14064-3:2019, and against the GHG Protocol standards it claims to follow. Close these five gaps before the report goes out:

Single-figure Scope 2. No location-based and market-based split. Report both.
Undocumented base year. Chapter 5 of the Corporate Standard requires a base-year recalculation policy and, where one is applied, a stated significance threshold. State the base year, its emissions, and the threshold that triggers a recalculation (for example, a 5% change from an acquisition, a divestment or a change in method).
Spend-based figures where activity data was available. If the client has a fuel log, use it instead of the AP dollar figure, and document the data choice for each category.
Scope 3 exclusions without a written reason. Section 6.2 of the Scope 3 Standard requires companies to account for all Scope 3 emissions and to disclose and justify any exclusions. A one-page screening table (category, estimated emissions, threshold, included or excluded, reason) covers it.
Emission factor vintage. A 2019 factor applied to FY2025 activity will be questioned. Pin every factor to its source document, version and table, and use the latest release available when the reporting period closes.

A four-week workflow for a first engagement

A workflow a firm can follow for a first engagement, alongside normal client work:

Week 1, kickoff. A 30-minute call to confirm the consolidation approach, reporting period, scopes and the request the client has to answer (CDP, a customer questionnaire, CSRD, SB-253). Send the data request: GL export, utility invoices, fleet fuel records, refrigerant log and a commuting survey link.
Week 2, classification and calculation. Map each vendor to a NAICS code and its EPA Supply Chain factor, pull EPA Hub and eGRID factors, calculate preliminary Scope 1, 2 and relevant Scope 3 figures, and flag data gaps.
Week 3, review. Internal QC against the five-gap checklist above, then a 45-minute client call to walk through results, settle classification questions and collect remaining data.
Week 4, delivery. Final report with an executive summary, methodology appendix, factor citations, data lineage per category, a reduction scenario if the client is setting a target, and a framework mapping appendix (GRI 305, SASB, IFRS S2, CDP), delivered on a 30-minute call.

Building this on our platform

Everything above can be done in Excel. Carbon Draft automates the spend-based draft. It takes one accounting export (CSV or Excel from QuickBooks, Xero, NetSuite, Sage, SAP or Tally, or a DATEV, SIE or XAF file), plus optional fields for annual kWh, renewable kWh, a supplier electricity factor, fuel volumes, gas and refrigerant. It classifies each transaction, applies factors cited to their source document and table (the same EPA sources used above for US clients; see the methodology page), and returns a report built on GHG Protocol methods in minutes, with no queue.

Each report is a screening-grade inventory a reviewer or assurance provider can start from, and its cover says "SCREENING / INVENTORY / NOT ASSURED". Spend-based screening carries roughly +/-25-40% uncertainty at the category level (our engineering estimate; the GHG Protocol publishes no figure). Carbon Draft does not take payroll or workforce data, commuting surveys, meter, telematics or cloud-usage imports, or supplier-specific emissions, so those stay in your workbook. The judgment calls in this guide stay with the CPA: consolidation approach, Scope 3 screening, activity data, the client walkthrough and sign-off.

Pricing per report:

Basic, $20: Scope 1 and 2.
Complete, $49: adds Scope 3, up to 8 of the 15 categories: 1, 2, 4, 5, 6 and 7 where the ledger has spend in them, 3 derived from electricity, and 12 when end-of-life tonnages are entered.
Disclosure-Aligned Report, $299: the same Scope 3 coverage as Complete, plus the full priced ledger (every transaction with its factor), per-row confidence, an Excel calculation workbook, and a framework section for the GHG Protocol, CDP, CSRD (ESRS E1) and California SB-253 that sets out what each requires, what the report contains, and the gap.

Approved partner firms buy Disclosure-Aligned Reports in packs, invoiced after approval: 10 reports for $1,490 ($149 each), 25 for $2,975 ($119 each) or 50 for $4,950 ($99 each). A pack report names your firm on the cover as its preparer. For accounting firms setting this up as a service line, see the partner program.

To try it on a client file, upload an accounting export at aisustainablefuture.com/carbon-draft and get a cited, screening-grade carbon report in minutes. Scope 1 and 2 from $20, Scope 3 from $49.