IFRS S2 Scope 1, Scope 2 and Scope 3 Emissions: Complete Measurement Guide

A GHG inventory for IFRS S2 is not merely an operational carbon dataset. It is investor-focused information about transition-risk exposure and performance. The measurement method, organisational structure, value-chain boundary, contractual energy instruments, estimates and data quality all affect how users interpret the emissions figure. The inventory therefore needs a controlled connection to the reporting entity, financial consolidation, risk and opportunity assessment, targets, financial planning and governance approval.

The same underlying activity data can often support regulatory, voluntary and management inventories, but the final IFRS S2 disclosure must be tested against IFRS S2 definitions, disaggregation and explanatory requirements. A figure calculated for another purpose should not be imported without a boundary and methodology reconciliation.

Figure 1. IFRS S2 GHG measurement architecture: reconcile the reporting entity, measurement boundary, three scopes, methods, factors, data quality and transition version.

The reporting entity for IFRS sustainability disclosures is the same reporting entity as for the related general purpose financial statements. That does not mean that every GHG emission is classified solely by financial consolidation. The GHG Protocol measurement approach can bring emissions of an associate, joint venture or other investment into Scope 1 and Scope 2 under an equity-share or control approach, or place relevant emissions in Scope 3 when the investee is outside the chosen organisational boundary.

Under the current IFRS S2 requirements, an entity normally measures GHG emissions using the GHG Protocol Corporate Standard. That standard permits an equity-share approach or a control approach. A control approach can be based on financial control or operational control under the GHG Protocol. The IFRS S2 disclosure explains the approach selected, the reasons for the choice and how it relates to the disclosure objective.

A jurisdictional authority or exchange can require a different method for all or part of an entity. The December 2025 amendments clarify that the jurisdictional relief may apply to the affected part while the entity still discloses Scope 1, Scope 2 and Scope 3 for the entity as a whole. A controlled inventory therefore needs a method-by-entity register rather than a single unqualified “GHG Protocol” label.

IFRS S2 requires absolute gross emissions. Carbon credits, offsets, avoided emissions and removals used in a net target do not reduce the gross Scope 1, Scope 2 or Scope 3 disclosure. They are considered separately in target disclosures where relevant.

Where direct measurement is available, the constituent gases are converted to CO2 equivalent using applicable 100-year global warming potential values. Where emission factors already contain the CO2-equivalent conversion, recalculation is not required. Otherwise, the applicable global warming potential values are used. The factor selected must best represent the activity, including relevant technology and jurisdiction. IFRS S2 does not prescribe one universal emission-factor database.

Scope 1 covers direct emissions from sources within the selected organisational boundary. Typical sources include stationary combustion, mobile combustion, process emissions and fugitive emissions. The inventory should be complete across the relevant entities and operations, but the exact scope classification depends on the measurement approach. An emission from an associate can be Scope 1 for the reporting entity under one approach and Scope 3 under another.

Build a source register by facility, equipment, vehicle, process and refrigerant system.

Reconcile fuel purchases, meter readings, production records, maintenance records and refrigerant movements.

Separate measured, calculated and estimated sources and document the method for each.

Investigate unusual movements against production, weather, outages, acquisitions and asset changes.

Retain evidence for biogenic CO2, methane, nitrous oxide and other relevant gas treatment where applicable.

Reconcile the source register to the organisational-boundary bridge and the Scope 1/2 disaggregation.

IFRS S2 requires location-based Scope 2 emissions. This reflects the average emissions intensity of the grids or energy systems where consumption occurs. If the entity has contractual instruments that could inform users’ understanding, it provides information about those instruments. Examples can include energy contracts bundled with generation attributes, renewable energy certificates or other unbundled attribute claims. A market-based Scope 2 figure may be useful additional information, but it does not replace the required location-based figure.

IFRS S2 requires the entity to consider its entire upstream and downstream value chain and all 15 categories described in the GHG Protocol Scope 3 Standard. This does not mean that each category will necessarily be included in the final material disclosure. It means the entity must perform a complete category consideration, apply the applicable category boundaries and materiality, and disclose which categories are included.

The category-screening file should document activity presence, applicable minimum boundary, likely magnitude, transition-risk relevance, data availability, exclusions, overlap risks, method and review conclusion. A category is not “not applicable” merely because supplier-specific data are unavailable: estimation using reasonable and supportable information is expected in many cases.

Scope 3 will often rely on estimates. IFRS S2 therefore focuses not only on the number but on the quality and representativeness of the inputs. The entity uses all reasonable and supportable information available without undue cost or effort and prioritises inputs using four characteristics, with judgement over trade-offs.

The disclosure explains the measurement approach, inputs and assumptions, including the extent to which Scope 3 uses inputs from specific activities and the extent to which inputs are verified. This is a data-quality disclosure, not a requirement to claim that all Scope 3 data are primary or externally assured.

Entities participating in asset management, commercial banking or insurance activities have additional financed-emissions requirements. The December 2025 amendments permit an entity to limit Category 15 measurement and disclosure to financed emissions and permit specified treatment of derivatives, subject to explanation. Where an entity includes broader Category 15 emissions, it discloses the total Category 15 amount and the financed-emissions subtotal. The amendment and its transition provisions must be applied by the correct effective date and version.

Illustrative scenario; not company data. A manufacturer controls two production subsidiaries and owns 35% of an associate. It chooses the operational-control approach. The parent and subsidiaries are operationally controlled and their direct and purchased-energy emissions are measured in Scope 1 and Scope 2. The associate operates independently, so its relevant emissions are assessed in Scope 3 Category 15 rather than included in the group’s Scope 1 and Scope 2 measurement. The group discloses the location-based Scope 2 total and explains renewable-electricity instruments separately. It screens all 15 Scope 3 categories, with purchased materials, logistics, use of sold products and investments included as material categories.

The evidence pack contains the entity-boundary bridge, operational-control assessment, energy invoices, factor register, Scope 3 category screen, supplier and product assumptions, investment methodology, data-quality profile, calculation review and governance approval. The conclusion could change if the group gains operational control of the associate or changes its measurement approach.

Why it works: the wording identifies the method, approach, unit, three scopes, investee disaggregation, required Scope 2 basis, contractual-instrument layer, Scope 3 category consideration, included categories and data-quality approach. It still requires entity-specific values, assumptions, factor sources, limitations and comparative-change disclosures.

Using the consolidated financial perimeter as the GHG organisational boundary without selecting and documenting a GHG Protocol approach.

Failing to disaggregate Scope 1 and Scope 2 between the consolidated accounting group and other investees.

Publishing only a market-based Scope 2 figure or treating renewable certificates as zero physical emissions.

Reducing absolute gross emissions by carbon credits, avoided emissions or offsets.

Screening only the most familiar Scope 3 categories rather than considering all 15 and the entire value chain.

Excluding a category because primary data are unavailable, without attempting reasonable estimation.

Using spend-based factors for material categories without testing activity-specific alternatives or representativeness.

Using the newest factor automatically even when it is less representative of the activity, technology or jurisdiction.

Mixing reporting periods, currencies, energy units, production units or supplier boundaries without reconciliation.

Failing to reassess categories and entities after an acquisition, divestment, supplier change or business-model shift.

Applying the December 2025 reliefs before their effective date without disclosing early application.

Describing all data as verified when only selected inputs or calculations were checked.