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What is the Greenhouse Gas Protocol?

In this article, we explore the Greenhouse Gas Protocol, highlighting its definition, features, and how it guides global emissions reporting.
Business
2024-04-12T00:00:00.000Z
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In the race to reduce greenhouse gas (GHG) emissions, the Greenhouse Gas Protocol has established critical guidelines that serve as a benchmark for businesses and governments to measure and manage emissions. Its standards are internationally recognised and extensively used, forming the core framework for carbon accounting in the CDP (Carbon Disclosure Project) and various environmental, social, and governance (ESG) frameworks. 

Whether or not you've heard of the Greenhouse Gas Protocol, you can probably guess that emissions reduction is meaningless without standards for measurement. 

Developed in the late nineties by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG protocol emerged at a time when global efforts to address climate change and reduce emissions were just starting to take off. Today, it offers some of the most widely accepted standards for measuring and reporting greenhouse gas emissions. 

Its guidelines are used by governments, cities, companies, and organisations to translate their activities into quantifiable inventories of CO2 and other emissions data. 

In this article, we explore the Greenhouse Gas Protocol, highlighting its definition, features, and how it guides global emissions reporting.

What is the Greenhouse Gas Protocol?

The Greenhouse Gas Protocol (also commonly referred to as the GHG Protocol) is the main global standard for public and private sector entities to measure greenhouse gas emissions. Its standards apply to operations, value chains, and climate change mitigation actions.  

What's the purpose of the GHG Protocol?

The purpose of the Greenhouse Gas Protocol is twofold: It helps us track and monitor emissions for individual entities and supports greenhouse gas reductions by helping companies identify the most effective ways to reduce their climate impact. 

Reducing the level of greenhouse gases in the atmosphere is crucial to prevent further global temperature rise and mitigate the impacts of climate change. As GHG emissions contribute significantly to global warming, their reduction is essential for a sustainable future. The GHG Protocol and GHG accounting play pivotal roles in this endeavour by providing companies with a clear framework to measure and report their emissions accurately. This enables organisations to identify key areas where emissions can be reduced and to track their progress in implementing effective climate action strategies. By standardising these measurements, the GHG Protocol ensures that efforts to reduce emissions are both effective and comparable across different sectors and regions.

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How was the Greenhouse Gas Protocol established?

The Greenhouse Gas Protocol was established in 1998 to fill the need for an international standard that corporations could use to calculate and report greenhouse gas emissions emissions. It published its first Corporate Standard in 2001. 

The Greenhouse Gas Protocol guidelines arose from a collaborative effort by governments, industry associations, NGOs, and corporations, in partnership with the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).  

What is the GHG Protocol most known for?

The Greenhouse Gas Protocol established the most well-known system for greenhouse gas emissions measurement with its Scope 1, 2, and 3 emissions categories. But this only covers one part of its work.   

The Greenhouse Gas Protocol's contribution goes beyond its well-known system of categorising greenhouse gas emissions into Scope 1, 2, and 3. The Protocol has also developed standards tailored for a variety of specific situations and applications. These standards are not static; they are updated over time to stay relevant and effective. Additionally, the GHG Protocol has created tools and training programs to assist in more accurate and efficient calculation and reporting of greenhouse gas emissions.

Since the Paris Agreement was signed in 2015, the GHG Protocol has expanded to include various standards and tools allowing governments and cities to track climate action. 

In 2019 the Greenhouse Gas Protocol launched its Partnership for Carbon Accounting Financials (PCAF) initiative. It aims to develop a global standard for the financial industry to report on GHG emissions related to investments. 

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What does the GHG Protocol do?

The Greenhouse Gas Protocol provides standardised frameworks and tools for measuring, managing, and reporting greenhouse gas emissions across different organisational and geographic scales.

Climate change is a challenge defined by identifiable factors; it is well-understood that greenhouse gas (GHG) emissions are driving the global temperature rise, and the specific activities leading to these emissions are known.

The tricky part is getting everyone to reduce their emissions in a clear and consistent manner. Accounting for these reductions requires data, so companies need guidelines for data collection, measurement, and reporting. The Greenhouse GasProtocol standards make it easier to do these things. 

To develop standards that are useful to all kinds of entities, the GHG Protocol spends time working with governments, NGOs, industry associations, and businesses to develop useful standards for lowering emissions. It regularly updates its standards and adds new ones for specific use cases. 

In essence, the Protocol supports a data-driven approach to addressing climate change. This helps make the alarming, complex, and long-term problem of climate change more manageable.  

The GHG Protocol aids organisations in advancing their climate action efforts by identifying key priorities for reducing GHG emissions, encompassing both direct and indirect emissions within their operations and across their value chains. This way, companies can gain clarity on the most impactful actions they can take to address climate change. 

Why is the Greenhouse Gas Protocol useful to companies?

In 2016, 92% of the Fortune 500 companies that responded to the CDP reported using the GHG Protocol either directly or indirectly through a program grounded in GHG Protocol standards.

The GHG Corporate Standard and Value Chain Standards are the two most useful standards available to organisations. 

The Corporate Standard helps companies measure and keep GHG inventories of their operations, while the Value Chain Standard helps organisations conduct carbon accounting across their value chain. 

Approximately 80% of the greenhouse gas (GHG) emissions for most companies originate from their value chain, including both direct and indirect emissions. The GHG Protocol's Value Chain Standard assists companies in identifying and mitigating these emissions effectively.

It also helps them adhere to the recommendations for some of the most rigorous ESG frameworks in the world, frameworks such as the Science Based Targets Initiative (SBTi), the Global Reporting Initiative (GRI), the various standards of the Sustainability Accounting Standards Board (SASB).   

While the GHG Protocol initially began as a tool designed for the private sector, it has since expanded its reach to collaborate effectively with the public sector as well.

Climate risk reporting mandates, such as those in the EU's Sustainability Finance Disclosure Regulation (SFDR) and the Sustainability Disclosure Requirements (SDR) in the UK, could also be adopted elsewhere in the future. The GHG Protocol provides the foundational guidelines for meeting these requirements. 

To learn more about the SFDR and the SDR head over to our blog.

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What are the different GHG Protocol scopes?

When measuring and tracking GHG emissions, companies have to outline the scope of emissions they refer to in their reports.  The Greenhouse Gas Protocol categorises emissions into Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from the generation of purchased energy), and Scope 3 (all other indirect emissions occurring in a company’s value chain).T

The GHG Protocol devised this system of scope-based classification to subdivide the direct and indirect sources of emissions for businesses. In fact, the GHG Protocol is most well-known for its creation of these GHG emissions scopes.

Let's take a closer look at the different scopes:

Scope 1

Scope 1 emissions are direct GHG emissions from business operations, such as emissions from combustion in owned or controlled boilers, furnaces, and vehicles, and from chemical production in owned or controlled process equipment.

Scope 2

Scope 2 emissions cover power plant emissions from business energy requirements, including their purchased electricity, steam, heat, and cooling. This might involve emissions generated offsite but associated with a company's energy use, like electricity used in office buildings or factories.

Scope 3

Scope 3 emissions are indirect GHG emissions from upstream (supply chain) and downstream (consumer and waste stream emissions) activities associated with a company's operations. Upstream examples include emissions related to the production of purchased materials, while downstream examples include emissions from the disposal of products sold by the company.

These scopes reflect the fact that companies create GHG emissions both directly in their offices and warehouses and indirectly from the energy they consume and the GHG emissions their products produce across their lifespan. 

GHG emissions scopes are designed to communicate which emissions are included in the accounting system of a company. This helps to benchmark their greenhouse gas reduction progress across industries and understand emissions accounting gaps. 

What are the different GHG Protocol Standards?

The GHG Protocol has developed a wide range of standards for organisations of all types: businesses, NGOs, countries, and cities. By applying the GHG Protocol standards, these entities can report their carbon footprints and reduce GHG emissions. 

Each standard addresses a unique need for different situations: emissions reduction projects, long-term emissions reduction targets, reporting corporate-level emissions, and reporting the emissions of communities in cities or other regional districts. 

Let's explore the different GHG Protocol standards.

Corporate Standard

The Corporate Accounting and Reporting Standard defines the steps and provides recommendations for companies to prepare a GHG inventory.

Did you know? The Carbon Majors Report found that 71% of global emissions since 1988 came from just 100 companies worldwide. 

Of course, many of these companies are energy companies supplying the world's fuel. This is why minimizing reliance on fossil fuels, the primary source of carbon dioxide emissions, in every aspect of business operations is essential for corporations to effectively address and reduce their carbon footprint.

The high-level data of a corporate GHG inventory serves as a stepping stone to help corporations strategically reduce and report GHG emissions. It supports standardisation and transparency across industries to reduce emissions accounting gaps. 

The GHG Corporate Accounting and Reporting Standard provides guidance for GHG accounting principles, inventory scopes, GHG emissions sources, setting a base year, and periodically tracking and monitoring emissions. 

In addition to corporations, this standard is also used by NGOs, government agencies, and universities. 

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GHG Protocol for Cities

Cities are another major source of carbon emissions because they generate 75% of all global emissions. Cities are strategically poised to lower their carbon emissions, bolstered by public support and the imperative to mitigate risks posed by sea level rise, extreme temperatures, and severe floods and storms.

To respond to this need, the GHG Protocol developed its Community-Scale Greenhouse Gas Emission Inventories (GPC). Cities and larger governmental regions such as states and provinces and even entire countries can use this standard to measure emissions consistently. 

This GHG Protocol standard supports benchmarking across regions. It also highlights the need for cities to reduce greenhouse gas emissions worldwide. 

Mitigation Goal Standard

While many of the standards of the GHG Protocol focused on consistent GHG measurement, the mitigation standard goes one step further by training countries and cities on how to manage greenhouse gas emissions in order to meet their GHG emissions mitigation (reduction) targets

The standard was developed to support countries in achieving their Nationally Determined Contributions as signatories of the Paris Agreement. Countries can use the standard both to evaluate and report their performance towards reaching their goals. 

The standard aids countries in evaluating the impact of various decarbonisation policies and actions, facilitating their progress toward reducing carbon emissions. Additionally, it streamlines the process of reporting to other international organisations.

To learn more about the Paris Agreement take a look at our article.

Corporate Value Chain (Scope 3) Standard

Value chain emissions (ie. Scope 3 emissions) are where the bulk (80%) of corporate emissions fall. Yet, tracking and monitoring these indirect emissions has proven difficult for many organisations. To simplify the process, the GHG Protocol developed its Value Chain Standard. 

Supply chain emissions include those resulting from the production, transportation, or use of a corporation's products and services. In other words, these emissions result from a company's upstream or downstream activities. 

Given the immense control, corporations have over their supplier selection, manufacturing processes, logistics, and product designs, they are well-positioned to reduce their Scope 3 emissions.  

Increasingly, global climate reporting standards, including those from the CDP and the Task Force on Climate-Related Financial Disclosures (TCFD), are advising businesses to disclose their Scope 3 emissions.

The GHG Protocol Corporate Value Chain (Scope 3) Standard provides guidance for companies to assess their supply chain emissions for 15 different categories of emissions. 

Both companies and organisations alike can benefit from this GHG Standard. 

Policy and Action Standard

Countries and Cities can use the GHG Protocol Policy and Action Standard to evaluate the effectiveness of a range of different policies and actions. It helps policymakers compare and contrast potential regulations, laws, or carbon tax and pricing mechanisms in a standardised format. 

The GHG Protocol Policy and Action Standard provides a framework for estimating the associated GHG emissions for any policy or governmental action. 

This helps policymakers understand the GHG emission reduction impacts their activities will have, allowing them to achieve better results and to better manage emissions. 

Product Standard

Life Cycle Analysis estimates the environmental impacts of a product across its entire lifespan: from production to decomposition in the waste stream. The GHG Protocol Product Life Cycle Standard outlines a framework for estimating GHG emissions within a product Life Cycle Assessment. 

This helps businesses design products that have a lower carbon footprint. Oftentimes reducing emissions by changing the design of a product also has the benefit of lowering costs and inefficiencies associated with its production.  

Companies and organisations can use this standard to create and market more sustainable products in response to consumer demand. 

Project Protocol

Projects and initiatives to reduce greenhouse gas emissions require rigorous carbon accounting to verify their claims. The GHG Protocol Project Accounting Standard is designed to comprehensively quantify the GHG emissions reduction benefits associated with a specific project. 

The greenhouse gas accounting standards supply project creators of all types - be it corporations, organisations, companies, countries, or cities - with the means to include GHG accounting in their project specs. This accounting standard is used to assess GHG emissions-reducing projects under “current policy” scenarios. 

Examples of climate change mitigation projects include reforestation projects, renewable energy projects, and projects to reduce ocean acidification. 

Round up

The Greenhouse Gas Protocol has been instrumental in establishing GHG accounting standards to aid corporate accounting and reporting, thereby enabling organisations to accurately track and mitigate emissions. By creating the GHG protocol scopes (scope 1, 2, and 3 emissions) the GHG Protocol has helped to clarify the various GHG emission sources, ensuring that actual emissions are comprehensively accounted for. This framework is pivotal in aiding businesses and governments in managing emissions effectively, utilising greenhouse gas accounting as a tool to reduce greenhouse gas emissions and promote environmental sustainability.

What about Greenly?

Greenly specialises in helping companies apply the different GHG Protocol standards through our carbon accounting platform. With our platform your organisation can easily measure, track, and reduce your carbon emissions. Request a demo to learn more about our four-step process.

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