Base years and recalculation

What is a base year?

The base year is the reference point for tracking emissions over time. The GHG Protocol asks companies to choose the earliest year for which they have reliable, verifiable data, to explain the choice, and to avoid unusual years. A company can use a single fixed year, an average of several years to smooth fluctuations, or, less commonly, a rolling base year that moves forward each year. For targets validated by the SBTi, the base year can be no earlier than 2015. See the GHG Protocol explained.

When is base year recalculation required?

• Structural changes: acquisitions, disposals and mergers that move emissions into or out of the inventory boundary, and outsourcing or insourcing of emitting activities.
• Method changes: new calculation methods, emission factors or data that significantly change results, such as moving from spend-based to supplier-specific scope 3 data.
• Errors: the discovery of a significant error, or several errors that together are significant.

Each applies only above the company's significance threshold, set in its recalculation policy. See organisational boundaries and choosing emission factors.

When is no recalculation needed?

Organic growth or decline, such as higher production, new customers or closing a line, is real change and stays visible in the trend. Buying or building a facility that did not exist in the base year does not require recalculation, because there are no base year emissions to add. Changes below the threshold are not recalculated, though a company should track them so that several small changes do not add up to a significant one unnoticed. A real fall in activity, such as during the COVID-19 pandemic, is also not a reason to recalculate.

Base year recalculation in practice: an acquisition and an error

A manufacturer's base year is 2022, with scope 1 and 2 emissions of 200,000 tonnes, and its target is a 30% cut by 2030. Its policy sets a cumulative threshold of 5% of base year emissions. In 2025 it acquires a company whose 2022 emissions were 18,000 tonnes, 9% of the base year. While adding it, the company finds that refrigerant leaks of 3,000 tonnes were omitted from its own 2022 inventory. It also opened a new plant in 2024, which did not exist in 2022.

The acquisition exceeds the threshold, so the base year rises to 221,000 tonnes, including the error, which the company corrects as part of the same recalculation. The new plant is not added, because it had no 2022 emissions. Its 2026 emissions of 195,000 tonnes include both the acquired company and the new plant. Against the original base year, emissions appear to have fallen only 2.5%; against the recalculated base year, the like-for-like fall is 11.8%. The 2030 target becomes 154,700 tonnes instead of 140,000. The company restates the base year and intervening years and explains the changes.

How is an acquisition added to the base year?

The acquired business's emissions for the base year are added as if it had been owned then, using its own records or, where these do not exist, reasonable estimates. A disposal works the other way: its base year emissions are removed. Intervening years are restated on the same basis. In the year of the transaction, current emissions include the acquired business only from the acquisition date, or the company can show both a reported and a full-year pro forma figure. Intensity targets may need no recalculation if the change affects emissions and the denominator, such as revenue, in proportion. See building a GHG inventory.

How should a significance threshold be set?

The GHG Protocol leaves the threshold to the company, but expects it to be quantitative, documented and applied consistently. Five per cent of base year emissions is the most common choice. Assessing changes cumulatively, rather than one by one, prevents a series of small acquisitions from eroding comparability. Verifiers and investors look for a written policy, and a company that recalculates only when it flatters progress will lose credibility. See GHG verification.

What do IFRS S2, the ESRS and the SBTi require?

IFRS S2 asks for each target's base period and any revisions to targets, with explanations. ESRS E1 asks for base year values and expects them to be updated when significant changes in the reporting boundary or methods occur. The SBTi expects targets to be recalculated when structural changes move base year emissions by 5% or more, and revalidated at least every five years. See setting and reporting net zero targets and ESRS E1.

This guide is general information. It is not tax or legal advice for your situation.