What is the GHG Protocol?

The Greenhouse Gas (GHG) Protocol is the world's most widely used standardized framework for measuring and managing greenhouse gas emissions. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides the standards and guidance for businesses and governments to account for their emissions across three categories: Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (all other indirect emissions in the value chain).

As organizations are increasingly under pressure from customers and investors to reduce their carbon footprint, many are seeking to measure and reduce their emissions. One of the most widely recognized frameworks for this type of accounting is the GHG Protocol Corporate Reporting and Accounting Standard.

What Are Scope 1, 2, and 3 Emissions?

Scope 1, 2 and 3 emissions refer to different categories of greenhouse gas (often referred to as ‘GHG’) emissions that are covered by the GHG Protocol. Together they give businesses an idea of how they’re contributing to their carbon footprint based on direct and indirect resources.

Scope 1 emissions

Scope 1 emissions are GHG emissions that come directly from a company's own activities, such as fuel combustion and industrial processes. These are the most easily tracked and managed of all emissions.

Scope 2 emissions

Scope 2 emissions refer to indirect GHG emissions that result from the generation of purchased electricity, heat or steam. These emissions are produced by sources that are owned or controlled by another entity, but are consumed by the reporting entity.

Scope 3 emissions

Scope 3 emissions are also indirect and occur beyond the operational boundaries of an organization, for example, in the supply chain. This includes upstream emissions caused by suppliers or downstream emissions from customer use of a product.

What are avoided emissions?

Avoided emissions (sometimes referred to as Scope 4) are the net GHG emissions that a company's products have prevented from being emitted compared to a baseline scenario. These should be reported separately from Scopes 1, 2, and 3.

What Standards Are Included in the GHG Protocol?

The GHG protocol is comprehensive and has several standards and protocols within it. Some of the included standards are:

• Corporate Accounting and Reporting Standard: The flagship protocol for companies to measure, manage, and report their GHG emissions.
• Policy and Action Standard: For governments to track the impacts of climate policies.
• Project Protocol: For measuring emissions reductions from specific projects.
• Product Life Cycle Standard: For measuring emissions across a product's entire life cycle.
• GHG Protocol for Cities: Adapts the corporate standard for the unique context of cities.

Who Uses the GHG Protocol?

The GHG Protocol is used by a wide range of organizations, including:

• Companies: To measure and manage their own emissions and those in their supply chains.
• Governments: To track national and local emissions and develop climate policies.
• NGOs: To promote transparency and accountability in the private sector.
• Investors: To evaluate the environmental risks and opportunities of companies.
• Standards Organizations: As a basis for other accounting frameworks like ISO 14064.

Why is Adhering to the GHG Protocol Important?

By understanding Scopes 1, 2, and 3, businesses can identify where they can have a significant impact. Key benefits include:

• Regulatory Compliance: Helps organizations comply with GHG reporting requirements.
• Preparation for Future Regulation: Prepares businesses for upcoming carbon pricing or emissions trading schemes.
• Improved Credibility & Transparency: Using a globally recognized framework enhances the credibility of emissions data.
• Better Risk Management: Allows organizations to better understand and manage climate-related risks.
• Competitive Advantage: Differentiates a company in the market and attracts environmentally-conscious consumers and investors.

Is GHG Reporting Mandatory?

This depends on your jurisdiction. While often voluntary, it is increasingly becoming mandatory in many regions. For example:

• In the US, states like California have mandatory reporting programs for large emitters.
• In Canada, the GHGRP requires large emitters to report annually.
• In the UK, the SECR framework mandates reporting for large businesses.
• In the EU, the CSRD applies to large companies meeting certain criteria.

It is highly likely that such measures will become more stringent and widespread over time.