What Is a GHG Inventory and Why Does Your Alberta Business Need One?

Customers, lenders, and government programs are asking more businesses to report their greenhouse gas emissions. For many small and mid-sized companies in Alberta, the first request arrives as a line in a supplier questionnaire. The question is simple: what are your emissions? Answering it well starts with a greenhouse gas (GHG) inventory.

An inventory is not a marketing exercise or a compliance burden for its own sake. It is a structured, documented count of the emissions your business causes. Done once and done properly, it becomes the foundation for every climate conversation that follows.

This guide explains what an inventory is, what it measures, and who wants the numbers. It walks through the process step by step, flags the mistakes we see most often, and shows how to turn the results into savings.

What greenhouse gas emissions are and why they matter

Greenhouse gases trap heat in the atmosphere. Carbon dioxide is the best known, but methane, nitrous oxide, and several industrial gases also count. The GHG Protocol covers seven gases or gas families in total. These include hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, and nitrogen trifluoride.

Each gas has a different warming effect. Methane, for example, traps far more heat than carbon dioxide over a 100-year period. To make the totals comparable, inventories convert everything into one unit: tonnes of carbon dioxide equivalent, written as CO2e.

For a business, emissions are a measure of how much energy and material it uses, and how efficiently. They are also becoming a measure that other organizations use to judge risk. A lender that finances your equipment, or a buyer that purchases your product, increasingly counts your emissions as part of its own.

Take a small Edmonton food processor. Its boilers burn natural gas, its coolers draw electricity, and its trucks burn diesel. Each of those activities has an emissions figure, and together they describe the company’s climate footprint.

There is also a direct link to cost. Most emissions in a typical SME come from burning fuel and buying electricity. Measuring them often reveals waste, such as equipment running after hours, that also shows up on utility bills.

An emissions inventory is, in large part, an energy audit written in a different unit.

That is why we encourage owners to see the inventory as a management tool first. The reporting value is real, but the operating insight often pays for the work on its own.

The three scopes explained in plain language

The GHG Protocol Corporate Standard is the most widely used method for building an inventory. It sorts emissions into three groups, called scopes.

• Scope 1 covers direct emissions from sources you own or control, such as furnaces, boilers, vehicles, and process equipment.
• Scope 2 covers indirect emissions from the electricity, steam, heat, or cooling you buy.
• Scope 3 covers all other indirect emissions in your value chain. It runs from the goods you purchase to the use and disposal of the products you sell.

Scope 1 and Scope 2 are usually the starting point because the data sits in records you already keep. Scope 3 is broader and often the largest share, but it relies on information from suppliers and customers.

Scope 1: what you burn and what escapes

Scope 1 sources usually fall into four groups. Stationary combustion covers boilers, furnaces, generators, and space heaters. Mobile combustion covers company cars, trucks, and mobile equipment such as forklifts.

Process emissions come from chemical reactions in manufacturing, rather than from burning fuel. Fugitive emissions are unintended releases, such as refrigerant leaking from coolers or air conditioning units.

Most Alberta SMEs find that natural gas for heating and fuel for vehicles make up the bulk of Scope 1. Refrigerants are the source most often missed, and we return to them below.

Scope 2: the electricity you buy

Scope 2 deserves a note for Alberta businesses. The province finished phasing out coal power in 2024, but its grid still relies heavily on natural gas. Electricity therefore remains a meaningful source of emissions here.

The GHG Protocol asks companies to report Scope 2 two ways. A location-based figure uses the grid average. A market-based figure reflects any renewable power contracts or certificates you hold.

For most small businesses on a standard retail contract, the two figures will be close. They diverge once a business signs a renewable power agreement or buys certificates. Reporting both keeps the picture honest and comparable.

Scope 3: your value chain

The GHG Protocol divides Scope 3 into 15 categories. Eight are upstream, such as purchased goods, business travel, and employee commuting. Seven are downstream, such as transporting and using the products you sell.

Few SMEs need all 15 categories in a first inventory. The practical approach is to screen them, estimate which are large, and focus on those. Exclusions are allowed, but the Scope 3 Standard expects you to explain and justify them.

Back to the food processor. Natural gas for its boilers is Scope 1. Grid electricity for its coolers is Scope 2. The packaging it buys and the trucks that deliver its products to grocers fall under Scope 3.

Who is asking for this data

Requests usually come from three directions. Knowing which one applies to you shapes how detailed your inventory needs to be.

Customers. Large companies are measuring the emissions in their supply chains, and those emissions include yours. Many send suppliers questionnaires, some through programs such as CDP’s supply chain program. A supplier that cannot answer may find itself scored lower in a procurement decision.

Lenders and investors. Canada’s federally regulated banks follow the Office of the Superintendent of Financial Institutions (OSFI) Guideline B-15 on climate risk management. That guideline sets expectations for how banks manage and disclose climate risk, including emissions linked to lending. Business borrowers can expect more questions about emissions from their banks.

Governments and programs. Facilities that emit 10,000 tonnes of CO2e or more each year must report to Environment and Climate Change Canada. Most SMEs fall well below that threshold. Voluntary programs also ask for inventories: participants in Canada’s Net-Zero Challenge commit to developing a base-year GHG inventory.

Consider a small Alberta manufacturer that supplies parts to a national retailer. The retailer asks for Scope 1 and Scope 2 figures before renewing the contract. With an inventory in place, the manufacturer answers in days rather than scrambling for weeks.

There is a quieter fourth audience as well: your own team. Employees, especially newer hires, increasingly ask what their employer is doing on climate. A clear set of numbers gives leaders something concrete to say.

What a GHG inventory actually involves

An inventory follows a clear sequence. Each step is documented so the results can be checked later, by you, a customer, or a verifier.

1. Set boundaries. Decide which facilities, vehicles, and operations are included, and apply one approach consistently.
2. Identify sources. List every activity that produces emissions within those boundaries, from fuel use to refrigerant leaks.
3. Collect activity data. Gather utility bills, fuel receipts, mileage logs, refrigerant service records, and purchasing data.
4. Apply emission factors. Multiply each activity by a published factor that converts it into CO2e.
5. Assess data quality. Note where data is measured, estimated, or missing, and how confident you are in each figure.
6. Report the results. Present totals by scope, the methodology used, and the assumptions behind the numbers.

The first inventory sets your base year. Future inventories are compared against it, which is how you track progress and support reduction targets.

Setting organizational boundaries

The GHG Protocol describes three ways to draw your boundary. Under operational control, you count everything you operate. Under financial control, you count what you direct financially. The equity share approach counts your percentage ownership of each operation.

Most SMEs choose operational control. It is the easiest to explain, and it matches the sites and vehicles the team actually manages. What matters most is choosing one approach and sticking with it year to year.

Leased space needs a decision of its own. A business that leases a warehouse and pays its own utilities usually includes that energy. Write the rule down, because the same question will come up again next year.

Collecting activity data

Activity data is the raw record of what your business used. It is the most time-consuming part of a first inventory, because records are spread across departments and suppliers.

A typical data request for a single-site business includes:

• Natural gas bills, showing gigajoules or cubic metres, for every month of the year.
• Electricity bills, showing kilowatt-hours, for every meter.
• Fuel card statements or receipts, showing litres of gasoline, diesel, or propane.
• Refrigerant service records, showing top-ups and the type of refrigerant used.
• A vehicle and equipment list, with fuel type for each item.

Measured quantities are always better than dollar amounts. A fuel bill in litres converts directly into emissions. A fuel bill in dollars must first be converted using an average price, which adds uncertainty.

Applying emission factors

An emission factor converts an activity into emissions. For example, a factor tells you how much CO2e results from burning one cubic metre of natural gas.

Canadian inventories typically use factors from Environment and Climate Change Canada’s National Inventory Report. Provincial electricity factors matter in particular, because grid emissions vary widely between provinces. Using the wrong province can distort Scope 2 significantly.

Always record which factor you used, its source, and its year. Factors are updated over time, and a documented choice lets you explain any change in your totals.

Assessing data quality

Not every number in an inventory is equally reliable. A metered gas bill is strong evidence. An estimate of employee commuting based on a short survey is weaker.

A simple data quality table helps everyone read the results correctly. Rate each source as measured, calculated, or estimated, and note the reason. This also shows you where better records would most improve next year’s inventory.

What the final report includes

A useful inventory report is short enough to read and detailed enough to check. Expect to see:

• Total emissions by scope, and by source within each scope.
• The boundary approach and the sites included.
• Emission factors and their sources.
• A data quality assessment and any exclusions, with reasons.
• Recommendations on where to look first for reductions.

This documentation matters when a customer, lender, or verifier asks how a number was calculated. It also makes next year’s inventory faster, because the method is already written down.

Common mistakes in a first inventory

Most first inventories have gaps. None of them are fatal, but each one is easier to avoid than to fix after the numbers have been shared.

Missing refrigerants. A grocery distributor might count its fuel and electricity but overlook leaks from its cold storage. Refrigerants can have a strong warming effect, so a careful source review matters.

Mixing time periods. Utility bills rarely line up with a calendar or fiscal year. Pick one reporting period and pro-rate bills that straddle its start or end.

Double counting. A company that charges an electric vehicle at its own facility should count that electricity once, in Scope 2. Counting it again as vehicle fuel inflates the total.

Undocumented estimates. Estimates are acceptable when data is missing. An estimate without a written method is not, because nobody can check or repeat it next year.

Ignoring small sites. A satellite office or a single yard truck can seem too small to matter. Leave it out only after estimating its size and recording why it was excluded.

Choosing and protecting your base year

The base year is the reference point for every future comparison. It should be a year with reliable data that reflects normal operations.

Many businesses avoid years affected by unusual events, such as a temporary shutdown or a one-off surge in production. A base year that is unusually low or high makes later progress look better or worse than it really is.

The GHG Protocol also expects a base year recalculation policy. If you acquire a business, sell a division, or change your method, you may need to restate the base year. This keeps the comparison fair, so a reduction reflects real change rather than a reshuffled boundary.

Write the recalculation threshold into your methodology from day one. A common approach is to recalculate when a change shifts the base year total by a set percentage. The exact threshold is your choice, as long as you state it and apply it consistently.

Verification: when you need a third party

Not every inventory needs external verification. Many customer questionnaires accept a well-documented internal inventory, especially from smaller suppliers.

Verification becomes relevant when the numbers carry more weight. Examples include public reduction claims, green financing, or a customer that requires assured data. In those cases, an independent verifier reviews your inventory against a standard such as ISO 14064-3.

Verifiers offer two levels of assurance. Limited assurance confirms that nothing suggests the numbers are materially wrong. Reasonable assurance goes further and tests the data in more depth, which takes more time and costs more.

A well-documented inventory makes either level of verification faster. The verifier follows the same trail your report already describes, from source records to final totals.

How long it takes and what it costs for an SME

Time and cost depend on scope, the number of sites, and the state of your records. A single-site business with organized utility and fuel records is a very different job from a company with several facilities and incomplete data.

Scope 1 and Scope 2 inventories are the most practical place to start. They draw on data you already have and answer most customer questionnaires. Scope 3 work can follow, focused on the categories your customers ask about most.

You can shorten the process by preparing in advance:

• Gather at least 12 months of utility bills and fuel records.
• List every site, vehicle, and major piece of fuel-burning equipment.
• Pull refrigerant service records for cooling and refrigeration systems.
• Name one person inside the company to coordinate data requests.

Cost follows the same logic as time. Fewer sites and cleaner records mean a smaller engagement. Ask any provider for a fixed scope and price before work begins, so there are no surprises.

The second year is almost always faster. The boundary is set, the sources are listed, and the data requests are already familiar to your team.

From inventory to action

An inventory tells you where your emissions come from. The next question is what to do about them, and the answer usually starts with the largest sources.

For many Alberta SMEs, the first opportunities are operational rather than capital projects. Heating schedules, compressed air leaks, idling policies, and refrigerant maintenance often cost little to address. Each also lowers operating costs.

Larger projects, such as equipment upgrades or fleet changes, benefit from the same data. The inventory gives you a baseline to estimate savings and later to confirm them.

Back to the food processor one last time. Its inventory shows that boilers and refrigeration dominate the footprint. It schedules a boiler tune-up, adds a refrigerant leak check to routine maintenance, and tracks both in next year’s inventory.

Questions to ask before you hire help

Some businesses build their first inventory in-house. Others bring in an advisor. If you choose outside help, a few questions will tell you a lot about the provider.

• Which standard will you follow, and will the report say so?
• Which emission factors will you use, and how will you document them?
• What data will you need from us, and in what format?
• Will we receive the calculation files, or only a summary report?
• How will you help us repeat the inventory next year?

The last two questions matter most. An inventory you cannot inspect or repeat leaves you dependent on one provider. Ask for working files you can open, and a methodology your own team can follow.

Getting started

A GHG inventory turns a vague question into a clear set of numbers. It answers customer questionnaires, supports conversations with your lender, and gives you a baseline for reducing emissions and costs.

You do not need a perfect inventory to begin. You need a documented one, built on records you already keep, that you can improve each year.

If your business has received its first emissions request, or you expect one soon, Terrivis can help you build an inventory you can stand behind. Book a free consultation to talk through your situation with our team.