The Greenhouse Gas Protocol (GHGP) is a widely recognized and widely used accounting framework for businesses and organizations to measure, manage, and report their greenhouse gas (GHG) emissions. It was developed jointly by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) in 1998 and has since become the global standard for GHG accounting.

It has formed the basis for the ISO standards for Greenhouse Gas Measurement and Reporting along with major initiatives such as the Climate Disclosure Project, Science Based Targets and extended into other areas such as Land use and Water.^[1] ^[2] ^[3] ^[4]

Overview

The GHG Protocol provides guidelines and tools for companies to quantify and report their emissions from different sources, such as direct emissions from burning fossil fuels or indirect emissions from purchased electricity. It also outlines various scopes of emissions, including Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased electricity), and Scope 3 (indirect emissions from the supply chain).^[1]

The protocol helps organizations to understand their carbon footprint and identify areas where they can reduce emissions. By tracking emissions over time, companies can set reduction targets and develop strategies to meet them. It also provides a standardized way for companies to report their emissions, which enables stakeholders to compare performance across different organizations.

Since its inception, the GHG Protocol has been continuously updated and refined to reflect the latest developments in GHG accounting and reporting. In 2004, the protocol was revised to include guidance on emissions from specific sectors, such as the oil and gas industry and the financial sector. In 2011, the GHG Protocol launched the Scope 3 Standard, which provides guidance for measuring and reporting indirect emissions from the value chain.^[5]

The Standard

The standard is split into Scopes.^[6]^[7]

Scope 1, scope 2, and scope 3 are three different categories of greenhouse gas (GHG) emissions that are commonly used in the context of the Greenhouse Gas Protocol. The Protocol is a widely used accounting tool that helps organizations measure, manage, and report their GHG emissions.^[6]^[7]

Here is a brief explanation of each scope:

Scope 1: This category includes direct GHG emissions that occur from sources that are owned or controlled by the reporting organization. Examples of scope 1 emissions include emissions from combustion of fossil fuels in boilers, furnaces, vehicles, and other equipment owned or controlled by the organization.^[6]^[7]

Scope 2: This category includes indirect GHG emissions that occur from the generation of purchased electricity, heat, or steam that the organization consumes. These emissions occur at sources that are not owned or controlled by the reporting organization, but are used by the organization. Scope 2 emissions are also known as "electricity indirect emissions".^[6]^[7]

Scope 3: This category includes all other indirect GHG emissions that occur in the value chain of the reporting organization. Scope 3 emissions are not directly owned or controlled by the organization, but they result from activities that are associated with the organization's operations. Examples of scope 3 emissions include emissions from the production of purchased goods and services, transportation of products, employee commuting, and waste disposal.^[6]^[7]

In general, scope 1 and scope 2 emissions are considered to be the most direct and controllable emissions for an organization, while scope 3 emissions tend to be more diffuse and difficult to quantify. However, scope 3 emissions can also be a significant portion of an organization's overall GHG footprint, and therefore it is important to account for them in order to develop a comprehensive GHG inventory. Scope 3 emissions measurement is mandatory in standards such as PAS 2060 and for initiatives like Science Based Targets.^[7]

Scope 1 Emissions

Scope 1 emissions are direct greenhouse gas (GHG) emissions that result from sources that are owned or controlled by the reporting organization. These emissions are often associated with the combustion of fossil fuels in stationary and mobile sources, such as boilers, furnaces, vehicles, and other equipment. Some common sources of Scope 1 emissions include:

Fossil fuel combustion in stationary sources, such as boilers and furnaces used for heating or manufacturing processes;
Fossil fuel combustion in mobile sources, such as vehicles used for transportation or delivery;
Process emissions from chemical reactions, such as those that occur during the production of cement or steel;
Fugitive emissions from the extraction, production, processing, and transportation of fossil fuels, such as methane leaks from oil and gas pipelines.

The Greenhouse Gas Protocol provides detailed guidance for organizations to measure, report, and verify their Scope 1 emissions. The Protocol recommends that organizations use a bottom-up approach to identify and quantify their Scope 1 emissions, by measuring the fuel consumption and activity data associated with each emission source.

There are several benefits to tracking and reducing Scope 1 emissions, including:

Cost savings from improved energy efficiency and fuel management;
Reduced environmental impacts from GHG emissions;
Improved stakeholder trust and reputation, as customers, investors, and regulators increasingly demand more sustainable practices.

However, reducing Scope 1 emissions can also present challenges for organizations, particularly in industries that are heavily dependent on fossil fuels.

Strategies to reduce Scope 1 emissions may include:

Improving energy efficiency in buildings and equipment;
Using cleaner fuels, such as renewable natural gas or biofuels;
Capturing and utilizing waste heat;
Implementing process changes to reduce emissions;
Investing in low-emission vehicles and transportation modes.

Scope 2 Emissions

Scope 2 emissions are indirect greenhouse gas (GHG) emissions that result from the consumption of purchased or acquired electricity, heat, steam, or cooling by the reporting organization. These emissions are often associated with the generation of electricity, heat, and other forms of energy by third-party providers.

The Greenhouse Gas Protocol recognizes two different types of Scope 2 emissions:

Scope 2, Market-based: These emissions refer to GHG emissions associated with the generation of electricity, heat, or other energy that the reporting organization purchases from an external provider. The emissions are calculated based on the GHG emissions factors of the specific energy sources, such as coal, natural gas, or renewable energy.

Scope 2, Location-based: These emissions refer to GHG emissions associated with the generation of electricity, heat, or other energy that the reporting organization consumes at its own facilities. The emissions are calculated based on the average GHG emissions factors for the electricity grid in the geographic location where the reporting organization operates.

Measuring and reporting Scope 2 emissions is important for organizations to understand the full extent of their carbon footprint and identify opportunities to reduce emissions.

Some common strategies to reduce Scope 2 emissions include:

Increasing the use of renewable energy sources, such as wind or solar power;
Implementing energy efficiency measures to reduce energy consumption;
Investing in on-site or off-site renewable energy projects.

There are several benefits to tracking and reducing Scope 2 emissions, including:

Cost savings from improved energy efficiency and renewable energy procurement;
Reduced environmental impacts from GHG emissions;
Improved stakeholder trust and reputation, as customers, investors, and regulators increasingly demand more sustainable practices.

Scope 3 Emissions

Scope 3 emissions are indirect greenhouse gas emissions that are a result of a company's activities, but occur outside of its organizational boundary. These emissions can be attributed to a company's suppliers, customers, and other stakeholders. Scope 3 emissions can account for a large portion of a company's overall greenhouse gas emissions, but are often more difficult to quantify and reduce than Scope 1 and Scope 2 emissions.

Some common sources of Scope 3 emissions include purchased goods and services, upstream transportation and distribution, waste disposal, employee commuting, and the use of products sold by the company.

Reducing Scope 3 emissions has become a growing concern for many companies, as stakeholders increasingly demand more sustainable and responsible practices. Companies may set targets for reducing their Scope 3 emissions, work with suppliers to reduce emissions in their supply chain, and implement sustainable practices throughout their operations to reduce their overall carbon footprint.

Scope 3 Emissions Subcategories

The Greenhouse Gas Protocol divides Scope 3 emissions into 15 subcategories, which are further divided into two groups: upstream and downstream.

Upstream Emissions

1. Purchased goods and services

Emissions from the production and transportation of goods and services purchased by a company, such as raw materials, equipment, and supplies.

2. Capital goods

Emissions from the production of capital goods used by a company, such as buildings, machinery, and vehicles.

3. Fuel- and energy-related activities not included in Scope 1 or Scope 2

Emissions from the production and transportation of fuels and energy sources used by a company, but not included in its Scope 1 or Scope 2 emissions.

4. Upstream transportation and distribution

Emissions from the transportation and distribution of goods and services used by a company, such as the transportation of raw materials and finished products.

5. Waste generated in operations

Emissions from waste generated by a company's operations, such as solid waste and wastewater.

6. Business travel

Emissions from business travel by a company's employees, such as air travel and hotel stays.

7. Employee commuting

Emissions from the daily commuting of a company's employees.

Downstream Emissions

8. Downstream transportation and distribution

Emissions from the transportation and distribution of goods and services sold by a company.

9. Processing of sold products

Emissions from the processing and use of products sold by a company, such as the energy used to operate appliances and electronics.

10. Use of sold products

Emissions from the use of products sold by a company, such as the fuel used to power vehicles and the electricity used to operate buildings.

11. End-of-life treatment of sold products

Emissions from the disposal or recycling of products sold by a company.

12. Downstream leased assets

Emissions from the operation of assets that are leased or rented by a company, such as leased vehicles.

13. Franchises

Emissions from the operation of franchised businesses.

14. Investments

Emissions from the companies and projects in which a company invests, such as emissions from the production of fossil fuels.

15. Joint ventures

Emissions from joint ventures in which a company participates.

Reducing Scope 3 emissions has become a growing concern for many companies, as stakeholders increasingly demand more sustainable and responsible practices. Companies may set targets for reducing their Scope 3 emissions, work with suppliers to reduce emissions in their supply chain, and implement sustainable practices throughout their operations to reduce their overall carbon footprint.

Greenhouse Gas Protocol Derived Standards

The Greenhouse Gas Protocol (GHGP) has developed several "derived standards" that provide more specific guidance and methodologies for measuring and managing greenhouse gas (GHG) emissions within particular sectors or for particular types of activities. These standards build upon the GHGP's general framework for GHG accounting and reporting, which includes Scope 1, 2, and 3 emissions as well as several principles and guidelines for data quality and management.

Standards

Some of the derived standards developed by the GHGP include:

Corporate Value Chain (Scope 3) Accounting and Reporting Standard

The Corporate Value Chain (Scope 3) Accounting and Reporting Standard provides guidance for companies to measure and manage their Scope 3 emissions, which are indirect emissions that result from a company's value chain, including its upstream and downstream activities. The standard covers 15 categories of Scope 3 emissions, including purchased goods and services, employee commuting, and waste disposal.

Product Standard

The Product Standard provides guidance for companies to measure and report the GHG emissions associated with their products throughout their life cycles, including production, use, and disposal. The standard covers four stages of the product life cycle: materials extraction and processing, manufacturing, use, and end-of-life.

GHG Protocol for Project Accounting

The GHG Protocol for Project Accounting provides guidance for organizations to account for and report the GHG emissions reductions associated with specific projects or activities, such as renewable energy projects or energy efficiency retrofits. The standard includes several methodologies for estimating emissions reductions and ensuring their credibility.

Policy and Action Standard

The Policy and Action Standard provides guidance for governments and other organizations to track and report their GHG emissions reductions resulting from specific policies and actions, such as renewable energy targets or transportation efficiency programs. The standard includes methodologies for estimating emissions reductions and ensuring their accuracy and credibility.

Other Guidance

The Greenhouse Gas Protocol has served as a foundational framework for the development of several other standards and guidance documents, including:

Land Use, Land-Use Change and Forestry (LULUCF) Guidance: provides a methodology for accounting for emissions and removals from land use, land-use change, and forestry activities.^[8]

Sector-specific Guidance: developed for several industries, including the oil and gas sector, the power sector, and the agriculture and livestock sector, among others.^[9]

These standards and guidance documents provide more specific and tailored methodologies for measuring and managing greenhouse gas emissions and other environmental impacts within particular sectors or for particular types of activities.

Adoption

The GHG Protocol has been widely adopted by businesses, governments, and other organizations around the world. It is used by more than 90% of the Fortune 500 companies and is required by many national and international reporting programs, such as the Carbon Disclosure Project (CDP) and the Global Reporting Initiative (GRI). ^[5]

Since its launch in 2001, the Greenhouse Gas Protocol has been widely adopted by companies, governments, and organizations around the world. The protocol is recognized as the global standard for measuring and managing greenhouse gas emissions. ^[5]

Many large corporations, including Walmart, Coca-Cola, and IBM, have adopted the protocol to track and reduce their greenhouse gas emissions. Governments and municipalities, including the United Kingdom, the European Union, and the city of New York, have also used the protocol to measure their emissions and set reduction targets.

In addition to its use by corporations and governments, the protocol has been adopted by a number of industry groups and initiatives. The Carbon Disclosure Project (CDP), a non-profit organization that works with companies to disclose and manage their environmental impacts, uses the Greenhouse Gas Protocol as its standard for measuring greenhouse gas emissions. The protocol has also been incorporated into other sustainability standards and initiatives, including the Global Reporting Initiative (GRI) and the Dow Jones Sustainability Index.^[5]

The adoption of the Greenhouse Gas Protocol has been driven in part by growing awareness of the need to address climate change and reduce greenhouse gas emissions. In recent years, there has been increasing pressure on companies and organizations to take action on climate change from stakeholders such as investors, customers, and employees.

To further encourage adoption of the protocol, the Greenhouse Gas Protocol provides a range of resources and tools for companies and organizations to measure and manage their emissions. These include guidance documents, calculators, and training courses.

The protocol has also been incorporated into various sustainability initiatives, such as the Science Based Targets initiative and the RE100 campaign.

Usage

Organization Carbon Footprint

The Greenhouse Gas Protocol can be used by organizations to measure and manage their own carbon footprints. This involves assessing the emissions from their operations, such as manufacturing processes, transportation, and buildings. The emissions are typically classified into Scope 1, Scope 2, and Scope 3 categories as outlined by the Greenhouse Gas Protocol.

Organizations can use the Greenhouse Gas Protocol to set emissions reduction targets, track their progress, and report on their emissions to stakeholders. This helps them identify opportunities to reduce emissions, improve energy efficiency, and minimize costs.

Several companies, such as Walmart, Coca-Cola, and Google, have used the Greenhouse Gas Protocol to measure and manage their carbon footprints. Walmart, for instance, has set a goal to become a "regenerative company" and aims to reach net-zero emissions across its operations by 2040.

The use of the Greenhouse Gas Protocol by organizations has been driven by a growing awareness of the impacts of climate change and the need for corporate responsibility. It has also been encouraged by regulations and reporting frameworks, such as the Carbon Disclosure Project and the Task Force on Climate-related Financial Disclosures.

However, the accuracy and completeness of organization carbon footprints have been criticized. For example, some emissions sources, such as leased assets and waste disposal, may not be fully captured by organizations. The Greenhouse Gas Protocol continues to evolve to address such concerns and to promote more robust and transparent reporting.

Product Carbon Footprint

The Greenhouse Gas Protocol provides guidance for measuring and reporting the carbon footprint of a company's products, also known as Product Carbon Footprint (PCF). The PCF enables companies to identify and assess the carbon emissions associated with the production, use, and disposal of their products. This information can help companies to develop strategies to reduce emissions and improve the sustainability of their products.

The PCF methodology is based on a life cycle assessment (LCA) approach that takes into account the carbon emissions associated with each stage of a product's life cycle, including raw material extraction, production, distribution, use, and disposal. The PCF guidance also includes guidelines for setting boundaries, selecting data sources, and calculating emissions.

In recent years, there has been an increasing focus on the PCF among companies, governments, and consumers as a means of assessing the environmental impact of products. The adoption of PCF methodology is seen as a key step towards achieving a circular economy and reducing the carbon footprint of products.

Several companies have started reporting their PCF as part of their sustainability reporting. For instance, in 2021, Nestle announced that it will start reporting the PCF of its products, making it the first major food and beverage company to do so. Other companies such as Unilever, L'Oreal, and Danone have also started reporting their PCF.

However, there are challenges associated with measuring and reporting PCF, such as data availability, data quality, and boundary setting. To address these challenges, the Greenhouse Gas Protocol provides guidance and standards for measuring and reporting PCF.

Influence

Several standards and initiatives have been developed based on the GHG Protocol, including:

Carbon Disclosure Project (CDP): The CDP is a global non-profit organization that runs a disclosure system for companies, cities, states, and regions to manage their environmental impacts. The organization uses the GHG Protocol as a basis for its climate change questionnaire and scoring methodology.^[10]

ISO 14064: The International Organization for Standardization (ISO) developed the ISO 14064 standard for greenhouse gas accounting and verification based on the GHG Protocol. The ISO 14064 standard provides guidance for organizations to quantify and report their GHG emissions and reductions.

Climate Registry (TCR): The TCR is a non-profit organization that provides tools and resources for organizations to measure, verify, and report their GHG emissions. The TCR uses the GHG Protocol as a basis for its reporting requirements and data management systems.^[11]

Global Reporting Initiative (GRI): The GRI is an independent international organization that provides a framework for sustainability reporting. The GRI uses the GHG Protocol as a basis for its greenhouse gas emissions reporting guidance.^[12]

Science-Based Targets Initiative (SBTi): The SBTi is a collaboration between the CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature. The initiative uses the GHG Protocol as a basis for setting science-based targets to reduce GHG emissions.^[13]

Criticisms

While the GHG Protocol is widely recognized as the leading GHG accounting framework, it has faced criticisms from some quarters. Critics have argued that the protocol's focus on emissions reporting can sometimes distract from more meaningful action to reduce emissions, and that the protocol's reliance on self-reported data can lead to inaccuracies and inconsistencies. Despite its widespread adoption, the Greenhouse Gas Protocol has also faced criticism from some quarters.

One common criticism is that the protocol does not go far enough in addressing the full extent of a company's environmental impact. For example, the protocol focuses only on greenhouse gas emissions, rather than broader environmental impacts such as water use or waste generation.

Others have pointed out that the protocol does not fully capture the social and environmental impacts of GHG emissions, such as the health effects of air pollution or the impacts of climate change on vulnerable communities.

Others have criticized the protocol for being too complex and difficult to implement, particularly for smaller companies with limited resources. The protocol's reliance on detailed emissions data can make it challenging for companies to accurately measure and report their emissions, particularly if they operate in multiple countries or have complex supply chains.

Despite these criticisms, the Greenhouse Gas Protocol remains the most widely recognized and adopted standard for measuring and managing greenhouse gas emissions. As the need for action on climate change continues to grow, it is likely that the protocol will continue to play a central role in efforts to reduce greenhouse gas emissions around the world.

Future developments

The GHG Protocol continues to evolve in response to these criticisms and to reflect new developments in GHG accounting and reporting. In 2019, the WRI and WBCSD launched the GHG Protocol for Project Accounting, which provides guidance on accounting for emissions reductions and removals from specific projects, such as renewable energy or reforestation.

Scope 2 Consultation

There is a current consultation around Market Based vs Location Based accounting for scope 2 emissions. This has a major potential impact on the certificates industry.^[5]^[14]

References

↑ ^1.0 ^1.1 "Greenhouse Gas Protocol". Greenhouse Gas Protocol. Retrieved 30 April 2023.
↑ "About GRI". Global Reporting Initiative. Retrieved 30 April 2023.
↑ "Science Based Targets". Science Based Targets. Retrieved 30 April 2023.
↑ "RE100". RE100. Retrieved 30 April 2023.
↑ ^5.0 ^5.1 ^5.2 ^5.3 ^5.4 Browner, Burling LLP-Carol; Feldman, Daniel F.; Jack, rew; Levy, Martin; Duncheon, Tim; Poloncarz, Kevin (21 December 2022). "Corporate Carbon Counting Under Scrutiny—Comments Requested on Pending Updates to the Greenhouse Gas Protocol". Lexology. Retrieved 9 May 2023.
↑ ^6.0 ^6.1 ^6.2 ^6.3 ^6.4 "List of Sustainability Definitions". Carbon Disclosure Project. cdp.net. Retrieved 9 May 2023.
↑ ^7.0 ^7.1 ^7.2 ^7.3 ^7.4 ^7.5 "What is the difference between Scope 1, 2 and 3 emissions, and what are companies doing to cut all three?". World Economic Forum.
↑ "Land Use, Land-Use Change and Forestry Guidance". World Resource Institute. Retrieved May 9, 2023.
↑ "Sector-specific Guidance". GHG Protocol. Retrieved May 9, 2023.
↑ "What we do?". CDP. Retrieved May 9, 2023.
↑ "About Us". The Climate Registry. Retrieved April 30, 2023.
↑ "About GRI". Global Reporting Initiative. Retrieved April 30, 2023.
↑ "About SBTi". Science Based Targets. Retrieved April 30, 2023.
↑ Brandt, Jared (February 23, 2023). "Greenhouse Gas Protocol Revisions Could Rattle Environmental Markets". S&P Global. Retrieved April 30, 2023.