How to Build a Carbon Baseline (Scope 1 & 2)

A carbon baseline is the single most important number in a company’s decarbonisation programme, because everything else is measured against it. Your reduction target, your intensity ratio, your year-on-year progress, your SECR disclosure and any science-based target all reference the baseline — so if the baseline is wrong, everything built on it is wrong too. This guide walks through how a defensible Scope 1 and 2 carbon baseline is actually built, step by step, using the recognised methodology, so you understand what “done properly” looks like and why the shortcuts fail.

What a carbon baseline actually is

A carbon baseline is a greenhouse gas (GHG) inventory for a chosen base year — a complete account of the emissions your organisation is responsible for over that period, expressed in tonnes of carbon dioxide equivalent (tCO2e). It is built to the GHG Protocol Corporate Standard, the globally recognised methodology that the UK government’s environmental reporting guidelines reference, so that the result is consistent, comparable and defensible.

The emissions are organised into scopes:

• Scope 1 — direct emissions from sources you own or control: gas burned in your own boilers, fuel used in your own fleet vehicles, and refrigerant leakage from your own equipment.
• Scope 2 — indirect emissions from purchased energy: principally purchased electricity, and also purchased heat, steam and cooling.
• Scope 3 — all other indirect emissions across your value chain, from purchased goods and services to business travel and the use of products you sell, split into fifteen categories.

A first baseline usually focuses on Scope 1 and 2, because those are the substance of a SECR disclosure, the minimum under TCFD-aligned rules, and largely within your own control to measure. Scope 3 is layered on afterwards, which we cover on our Scope 3 and supply-chain emissions hub. The steps below are how a Scope 1 and 2 baseline is built.

Step 1 — Set the boundary

Before you gather a single meter reading, you have to decide what is in scope. This is the reporting boundary, and getting it right is what stops a baseline from being either incomplete or double-counted.

There are two dimensions to the boundary:

• The organisational boundary — which entities and operations you consolidate into the inventory. For a group with subsidiaries and joint ventures, this means choosing a consolidation approach (broadly, an equity-share approach, or a control approach based on financial or operational control) and applying it consistently. The GHG Protocol Corporate Standard sets out these approaches; the key discipline is choosing one and using it everywhere.
• The operational boundary — which sources and activities you include within each entity, i.e. which Scope 1 and Scope 2 sources are counted.

For a single-entity company the organisational boundary is straightforward; for a multi-site group it is the decision that most affects the size of the footprint, and it is where inconsistency creeps in if it is not documented. The output of this step is a written, defensible statement of exactly which sites, entities and sources the baseline covers — the thing an auditor will check first.

Stat callout — why the boundary comes first. Two companies of identical physical size can report very different footprints purely because they drew their organisational boundary differently. The boundary is a methodology choice, not a fact of nature — which is exactly why it has to be stated, justified and applied consistently year on year.

Step 2 — Choose the base year

The base year is the reference period the whole programme measures against, so it needs to be representative and well-evidenced. In practice, choose your most recent full financial year for which you have complete, reliable data — aligning the baseline with your accounts and, if you are caught, with your SECR reporting.

Two disciplines matter here:

• Avoid an atypical year. A year distorted by an unusual shutdown, a one-off spike, or an acquisition mid-period makes a poor baseline, because every future target is anchored to it.
• Set a base-year recalculation policy. The GHG Protocol expects you to define, in advance, how significant structural changes — an acquisition, a disposal, or a change in methodology — are handled, so the baseline is recalculated consistently rather than quietly drifting. Without this policy, a growing company’s “reductions” can be an artefact of how the numbers were re-cut.

Step 3 — Gather the activity data

This is the step that takes the real work, because a baseline is only as good as the data underneath it. Activity data is the physical measure of what you consumed — kilowatt-hours of electricity, cubic metres or kWh of gas, litres of fuel — before any conversion to emissions.

For Scope 1, gather:

• Natural gas consumption from your gas meters and supplier invoices.
• Other on-site fuels — heating oil, LPG, biomass — from delivery records.
• Owned fleet fuel — litres of petrol and diesel from fuel-card data and mileage records.
• Refrigerant top-ups from maintenance records, since fugitive emissions from air-conditioning and refrigeration count.

For Scope 2, gather:

• Purchased electricity in kWh, ideally from half-hourly meter data where you have it, otherwise from supplier invoices across every site.
• Purchased heat, steam or cooling where you buy it (for example from a district-heat network).

The single biggest determinant of how hard this step is, and how much a programme costs, is data maturity. A company with clean half-hourly data and consolidated supplier records across a handful of meters is a very different job from one reconstructing consumption from paper invoices across twenty sites. Part of building the baseline well is putting a data-collection process in place so that next year’s inventory is a repeat, not a fresh archaeology dig — because a carbon baseline is not a one-off, it is an annual exercise. The mechanics of data collection are the core of our carbon footprint and baseline service.

Stat callout — data over estimates. A baseline built from actual meter and fuel data survives assurance; one built from rough estimates does not. The extra rigour at the data-gathering stage is what makes an ISAE 3000 or ISAE 3410 assurance review straightforward rather than a scramble.

Step 4 — Convert activity data to emissions

Once you have the activity data, you convert it to tonnes of CO2 equivalent using emission factors. In the UK, the recognised dataset is the UK government’s greenhouse gas conversion factors for company reporting, published annually — the same official factors that SECR and TCFD-aligned disclosures rely on. Using this dataset, rather than an unspecified or foreign set, is a large part of what makes a baseline defensible.

The mechanics are, in principle, simple: activity data multiplied by the relevant conversion factor gives the emissions for that source, and the sources sum to the total footprint. The discipline is in the detail — using the correct factor for each fuel and each year, and documenting which version of the dataset you used, so the calculation can be reproduced and checked. Because the government updates the factors each year, a multi-year comparison has to be clear about which year’s factors were applied to which year’s data.

Step 5 — Calculate both Scope 2 figures (this is where honesty lives)

For Scope 2, the GHG Protocol requires dual reporting — two figures, both of which you disclose:

• Location-based Scope 2 uses the average emissions intensity of the grid you draw from. It reflects the physical grid, regardless of your supply contract.
• Market-based Scope 2 reflects the specific electricity you have contracted for. A genuine on-site solar installation or a well-structured power purchase agreement (PPA) reduces your market-based figure; your location-based figure stays the same.

This is the point in a baseline where credibility is won or lost. Buying renewable electricity is a legitimate lever — it can genuinely cut your market-based Scope 2 — but two honest caveats matter and belong in any report:

1. It only touches Scope 2. On-site solar or a PPA does nothing for your Scope 1 fuel use or your Scope 3 value chain, which for many businesses is the larger part of the footprint. Renewables are a lever, not the whole answer.
2. Additionality and quality matter. A genuine on-site array or a proper PPA is far more defensible than unbundled renewable certificates bought to flatter the number. The credibility of the claim depends on it.

Reporting only the market-based figure, and quietly dropping the location-based one, is exactly the kind of selective disclosure the Competition and Markets Authority’s Green Claims Code targets. Reporting both is honest, and it is safer. We treat renewables this way throughout our net-zero roadmap work — as an honest Scope 2 lever inside a costed plan, never dressed up as an ESG strategy in itself.

Step 6 — Produce the outputs that feed everything else

A finished baseline is not just a headline tonnage. Done properly, it produces:

• Your total footprint in tCO2e, broken down by scope and by source, so the hotspots are visible.
• At least one intensity ratio — emissions per unit of turnover, per employee, or per square metre — which is what SECR requires and what makes year-on-year comparison meaningful as the business grows.
• A documented methodology — boundary, base year, data sources, conversion-factor version and any assumptions — the trail an assurer or an auditor follows.

That output is what a target, a roadmap, an SECR disclosure and a Carbon Reduction Plan for a tender are all built against. Build the baseline once, correctly, and it feeds all of them without being redone each time. Build it carelessly, and every downstream document inherits the flaw.

Why the shortcuts fail

It is tempting to reach for a free online carbon calculator and call the result a baseline. For a rough internal steer, those tools have their place — but a calculator cannot set a defensible organisational boundary across a group, cannot reconcile messy multi-site meter data, cannot make the market-based versus location-based Scope 2 judgement, and cannot produce a methodology trail that survives assurance. A baseline that has to stand up in a tender, an audit, a transaction or a regulator’s challenge needs the rigour above, because a wrong or vague number is worse than useless: it can be challenged precisely when the stakes are highest.

For how a programme is scoped to your business — sites, meters, data maturity and whether Scope 3 is in scope — see our ESG compliance cost guide; for the funding available for the decarbonisation measures a baseline leads to (the reporting itself is a paid professional service, not a grant), see our grants and funding page. The regional context for your sites — including the local grid operator relevant to any on-site generation — is set out on our location pages, such as Manchester, Bristol and London.

If you need a defensible baseline built — whether for a SECR filing, a tender or a board that wants real numbers — the first step is a short scoping conversation. Use the enquiry form below, or request a quote, and we will tell you what your baseline involves and how quickly it can be delivered.

Related reading

• What ESG tenders and PQQs actually ask for — why a defensible baseline is the foundation of every winning bid.
• UK SRS and the ISSB: what UK companies need to know — the reporting standards your baseline will feed, now and in future.

Government sources, verified 2 July 2026: the UK government environmental reporting guidelines including SECR (gov.uk), the UK government greenhouse gas conversion factors for company reporting (gov.uk), and the GHG Protocol Corporate Standard.