Step 1: choose your period and factor year
Use twelve months that match your financial year, so your figures line up with your accounts and your SECR report if you have one. Then pick the UK government conversion factors for the calendar year most of that period falls in: a January to December 2026 year, or an April 2026 to March 2027 year, both use the 2026 set. Our guide to the 2026 factors explains why the year matters: the electricity factor fell by about 26% between 2025 and 2026.
Step 2: set your boundary
Decide which parts of the business are in. Most SMEs use operational control: every site, vehicle and activity you run day to day, owned or leased. List your sites and vehicles. If you are part of a group, decide whether you are reporting for one company or the whole group, and stick to it.
Step 3: list your emission sources
Go through the three scopes and write down what applies to you. For a typical office-based or service business that is gas, electricity, any company vehicles and refrigerant in Scopes 1 and 2, and business travel, commuting, waste, couriers and purchased goods in Scope 3. If you need a PPN 006 Carbon Reduction Plan, make sure the five required Scope 3 categories are on the list.
Step 4: collect the data
| Source | Best data | Fallback |
|---|---|---|
| Gas and electricity | kWh from bills or half-hourly data | Landlord recharge apportioned by floor area |
| Company vehicles | Litres from fuel cards | Miles by vehicle type |
| Refrigerants | kg topped up, from service records | Equipment charge size and a leakage estimate |
| Business travel | Miles and passenger-km from expense claims and booking reports | Spend on travel with a spend-based factor |
| Commuting and homeworking | A short staff survey | Headcount and national averages, clearly labelled as an estimate |
| Waste | Tonnes by type and treatment from your contractor | Bin sizes, collection frequency and typical densities |
| Purchased goods and services | Supplier-specific emissions | Spend by category from your accounts |
Step 5: convert with the government factors
Each line is quantity × factor. The government spreadsheet gives factors in kg CO2e per unit, so divide by 1,000 for tonnes. Make sure the unit matches: gas bills in kWh use the gross calorific value factor, and fuel bought in litres needs the litres factor. For a quick check of energy and fuel, use our kWh to CO2e calculator.
For energy and fuel, also calculate the upstream emissions: well-to-tank factors for each fuel and for electricity, plus electricity transmission and distribution losses. These go in Scope 3 category 3, not in Scope 1 or 2.
A worked example
A 20-person engineering consultancy with one leased office, two diesel vans and a turnover of £2.4 million. Its year runs January to December 2026, so every line uses the DESNZ 2026 factors. The figures below are calculated by the same engine Carbon Recycling uses.
| Source | Data | Scope | Factor (kg CO2e per unit) | tCO2e |
|---|---|---|---|---|
| Office gas | 38,000 kWh | 1 | 0.18231 | 6.93 |
| Van diesel | 6,000 litres | 1 | 2.58354 | 15.50 |
| Air conditioning top-up | 1 kg of R410A | 1 | 1,924 | 1.92 |
| Office electricity | 40,000 kWh | 2 | 0.13096 | 5.24 |
| Couriers | 3,000 tonne-km by van | 3 (cat. 4) | 0.63511 | 1.91 |
| General waste to landfill | 4 tonnes | 3 (cat. 5) | 520.58023 | 2.08 |
| Staff mileage in own cars | 15,000 miles | 3 (cat. 6) | 0.26699 | 4.00 |
| Rail | 20,000 passenger-km | 3 (cat. 6) | 0.03092 | 0.62 |
| Flights, short-haul economy | 8,000 passenger-km | 3 (cat. 6) | 0.12576 | 1.01 |
| UK hotel stays | 40 room nights | 3 (cat. 6) | 10.4 | 0.42 |
| Commuting by car | 80,000 miles (staff survey) | 3 (cat. 7) | 0.26699 | 21.36 |
| Homeworking | 12,000 FTE hours | 3 (cat. 7) | 0.32393 | 3.89 |
| Well-to-tank and grid losses for the energy and fuel above | Same kWh, litres and miles | 3 (cat. 3 and others) | 14.49 |
| Scope 1 | 24.35 |
| Scope 2 (location-based) | 5.24 |
| Scope 3 | 49.77 |
| Total | 79.36 |
| Intensity ratio, tCO2e per £1m turnover | 33.07 |
Upstream emissions for the business travel lines are included in the well-to-tank row, which is why it is labelled "and others": strictly, well-to-tank for travel stays in category 6 and for commuting in category 7. The van diesel factor is 2.58354 kg per litre and the electricity factor 0.13096 kg per kWh, from the DESNZ 2026 set.
Three things stand out. Commuting is the biggest single line, and it would have been missed without a staff survey. The vans are the biggest source the business directly controls. And a single kilogram of leaked refrigerant adds as much as about 15,000 kWh of electricity, which is why a leak check is worth more than it looks.
Adding purchased goods and services
The example leaves out Scope 3 category 1, because doing it properly needs your own accounts. The spend-based method is: take your spend by category from your purchase ledger (excluding VAT, wages, taxes and anything already counted elsewhere, such as energy, fuel and travel), match each category to an industry, and multiply by that industry's emissions per pound from Defra's UK carbon footprint statistics, adjusted for inflation since the factors' base year. Report it as an estimate, and replace the biggest lines with supplier figures over time.
Step 6: check and write it up
- Compare each month with the others and with last year. A spike usually means a missing or duplicated bill.
- Make sure no source is counted twice, for example electric vehicle charging that is already in your electricity bill.
- Choose an intensity ratio, such as tCO2e per £1 million turnover or per employee, and keep it every year.
- Write a short methodology: the standard you followed (the GHG Protocol), your boundary, the factor set and year, your data sources, and any estimates.
- Keep the evidence: bills, fuel card statements, survey results. Anyone checking your figures will ask for them.
Step 7: use it
Your first full year usually becomes your baseline. From there you can publish a Carbon Reduction Plan (our free template follows the government format), answer customer questionnaires, complete your SECR report if you're in scope, and build a net zero plan that starts with your largest sources.
How Carbon Recycling helps
Upload or type in your bills, fuel cards, mileage, survey results and waste reports, and Carbon Recycling does steps 5 and 6 for you: the right factor for each line and year, well-to-tank and grid losses, both Scope 2 methods, intensity ratios and the methodology statement. Every figure links to its DESNZ factor ID, so the worked example above is exactly what you would see in the app.