# Calculation Logic

## **Introduction**

Companies disclose Greenhouse Gas (GHG) Emissions data in many different ways. Some provide only consolidated totals for Scope 1, Scope 2, or Scope 3, while others break data down into categories but omit the total. Many publish a mix of both, and approaches often shift across reporting years, creating inconsistencies that make it difficult to compare performance across peers or track progress over time. 

Tracenable’s GHG dataset applies **hierarchical accounting rules** to ensure that emissions data is consistently aggregated across scopes and categories. These rules reflect the structure of the GHG Protocol and allow users to move seamlessly between granular source-level data and consolidated totals.

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## Hierarchical Structure of GHG Emissions Data

The GHG emissions dataset follows a hierarchical structure based on the Greenhouse Gas Protocol. This hierarchy reflects how emissions are classified and aggregated across **scopes** and their underlying **categories**.

**Scope 1 – Direct emissions**

* *Scope 1 Total*
  * Stationary combustion
  * Mobile combustion
  * Process emissions
  * Direct GHG releases
    * Fugitive emissions
    * Refrigerant emissions
    * Venting emissions
    * Flaring emissions

**Scope 2 – Indirect energy emissions**

* *Scope 2 Total*
  * Electricity
  * Heat
  * Steam
  * Cooling

**Scope 3 – Value chain emissions**

* *Scope 3 Total*
  * Category 1: Purchased goods and services
  * Category 2: Capital goods
  * Category 3: Fuel- and energy-related activities
  * Category 4: Upstream transportation and distribution
  * Category 5: Waste generated in operations
  * Category 6: Business travel
  * Category 7: Employee commuting
  * Category 8: Upstream leased assets
  * Category 9: Downstream transportation and distribution
  * Category 10: Processing of sold products
  * Category 11: Use of sold products
  * Category 12: End-of-life treatment of sold products
  * Category 13: Downstream leased assets
  * Category 14: Franchises
  * Category 15: Investments

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Totals (Scope 1, Scope 2, Scope 3) can be derived from the sum of their respective categories when missing.
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This hierarchical organization provides the foundation for Tracenable’s accounting rules, which ensure that emissions data is always **complete, consistent, and reconcilable** across different reporting practices.

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## Accounting Rules

### <mark style="color:$success;">**Rule 1: Bottom-Up Computation (Sum of Children)**</mark>

When a total for Scope 1, Scope 2, or Scope 3 is not reported but category-level values are available, Tracenable computes it as the sum of whichever child categories are disclosed:

* Total Scope 1 = Sum of categories of Scope 1
* Total Scope 2 = Sum of categories of Scope 2
* Total Scope 3 = Sum of categories of Scope 3

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Companies do not need to report every possible category for the total to be calculated.

For example: If a company reports only stationary combustion and mobile combustion under Scope 1, the Scope 1 total is derived from just those two categories.
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**Example**

If a company reports:

* Stationary combustion = 1,200 tCO₂e
* Mobile combustion = 800 tCO₂e
* Process emissions = 500 tCO₂e

But provides no Scope 1 total, Tracenable computes: **Scope 1 Total = 2,500 tCO₂e**

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This approach ensures that totals are always available, even when companies report only partial category-level data. It avoids gaps and makes the dataset usable across all firms, regardless of disclosure practices.
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#### <mark style="color:$info;">**Dual Representation**</mark>

This accounting system preserves both detail and comparability:

* **Granularity preserved** – Users can analyze emissions at the most detailed level available (e.g., Scope 3 Category 6 – Business Travel).
* **Comparability enabled** – All disclosures, whether granular or aggregated, roll up into consistent Scope 1, Scope 2, and Scope 3 totals. This ensures fair comparisons across companies, even when reporting practices differ.

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#### Note on Consistency Checks

When both category-level data and a reported total are available, Tracenable performs an internal check to ensure they are consistent within defined tolerance levels. If consistent, the reported total is retained; if not, the discrepancy is flagged for review. This guarantees transparency while maintaining trust in reported values.
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## Takeaway:

By applying this structured accounting logic, Tracenable ensures that the GHG emissions dataset is:

* **Complete** – scope-level totals are always available, even if companies report only a subset of categories.
* **Consistent** – child categories and parent totals always reconcile within a clear hierarchy.
* **Comparable** – different reporting styles are harmonized into a single framework.
* **Traceable** – all computed values remain anchored in reported disclosures, ensuring audit-grade reliability.

The result is a dataset that balances detail with usability, giving users both granular insights and high-level comparability.
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