In this article, we define what Scope 1, 2, and 3 emissions are and their significance in managing a company's carbon footprint.

What are Scopes 1, 2 and 3 Emissions?

You might not have read the Paris Agreement cover to cover, but there's a good chance you've heard about one of its primary goals: keeping the rise in global temperatures below 1.5°C. This figure hasn't been plucked from thin air - it's a crucial benchmark to keep the more extreme effects of climate change at bay.

So, what's the best way to achieve this? Well, the key is reducing greenhouse gas emissions (GHGs). And a big part of that comes down to keeping an eye on something called Scope 1, 2, and 3 emissions. 

These categories aren't just industry jargon, they're key to identifying the sources of emissions and figuring out effective ways to reduce them and prevent global warming. In this article, we'll unravel these terms and explain why they're essential in our collective effort to combat climate change.

👉 In this article, we clarify what Scope 1, 2, and 3 emissions are and their significance in managing a company's carbon footprint.

Why do we need to understand Scope 1, 2 and 3 emissions?

Why is it important to work out Scope 1, 2, and 3 emissions? Let's start with a quick refresher: the greenhouse effect is a natural process that helps keep the Earth's temperature at a level suitable for human life. But here's the catch – the excessive GHG resulting from human activities is supercharging this effect, leading to a rise in the average global temperature. And the fallout? It's putting the Earth's ecosystems in a tight spot, threatening the delicate balance that supports life as we know it.

To effectively reduce your carbon emissions, whether as an individual or a company, the first step is understanding how much carbon you're actually emitting. This is where the concept of GHG emissions Scopes comes into play. They provide a structured way to categorise and measure these emissions, laying the foundation for targeted strategies to cut down on carbon output.

💡 To learn more about the Earth's carbon cycle and why it's out of balance head over to our article on the topic. 

Climate experts are warning that the Earth is heading toward a “climate danger zone,” and many scientists say greenhouse gas emissions are to blame. Here’s what greenhouse gases are and how they contribute to climate change.

What are greenhouse gases and how do they contribute to climate change?

The Greenhouse Gas Protocol (GHG Protocol)

To understand Scope 1, 2, and 3 emissions we need to look to the Greenhouse Gas Protocol. This initiative is a comprehensive multi-stakeholder partnership, encompassing businesses, non-governmental organisations (NGOs), governmental bodies, and other entities, all brought together by the World Resources Institute (WRI) in 1998.

Their mission? To develop and establish international standards for accounting and reporting GHG emissions for businesses and to encourage widespread adoption.

Over the years, the GHG Protocol has expanded to include several standards, each designed to address different aspects of greenhouse gas measurement and management. Below is a brief overview of the key standards:

<table>
  <thead>
    <tr>
      <th>Standard</th>
      <th>Purpose</th>
      <th>Best For</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Corporate Accounting and Reporting Standard</td>
      <td>Provides requirements and guidance for companies and other organizations to prepare a corporate-level GHG emissions inventory.</td>
      <td>Companies and Organizations</td>
    </tr>
    <tr>
      <td>Corporate Value Chain (Scope 3) Standard</td>
      <td>Allows companies to assess their entire value chain emissions impact and identify where to focus reduction activities.</td>
      <td>Companies and Organizations</td>
    </tr>
    <tr>
      <td>Product Life Cycle Accounting and Reporting Standard</td>
      <td>Helps understand the full life cycle emissions of a product and focus efforts on the greatest GHG reduction opportunities.</td>
      <td>Companies and Organizations</td>
    </tr>
    <tr>
      <td>Policy and Action Standard</td>
      <td>Offers a standardized approach for estimating the greenhouse gas effect of policies and actions.</td>
      <td>Countries and Cities</td>
    </tr>
    <tr>
      <td>Mitigation Goal Standard</td>
      <td>Provides guidance for designing national and subnational mitigation goals and a standardized approach for assessing and reporting progress toward goal achievement.</td>
      <td>Countries and Cities</td>
    </tr>
    <tr>
      <td>GHG Protocol for Cities (Global Protocol for Community-Scale GHG Emission Inventories)</td>
      <td>Provides a robust framework for accounting and reporting city-wide greenhouse gas emissions.</td>
      <td>Cities and Communities</td>
    </tr>
    <tr>
      <td>GHG Protocol for Project Accounting</td>
      <td>The most comprehensive, policy-neutral accounting tool for quantifying the greenhouse gas benefits of climate change mitigation projects.</td>
      <td>Companies and Organizations; Countries and Cities</td>
    </tr>
  </tbody>
</table>


To learn more about the GHG protocol head over to our blog. 

The term 'Scope emissions' first made its appearance in the GHG Protocol Corporate Accounting and Reporting Standards (the gold standard for corporate carbon accounting). These standards are a go-to resource for companies aiming to measure and report their GHG emissions accurately. They play a crucial role in breaking down a company's emissions into distinct categories, which are more commonly known as 'scopes.' More specifically, Scope 1, Scope 2, and Scope 3 emissions - each category represents a different source of emissions.

<table>
  <thead>
    <tr>
      <th>Scope</th>
      <th>Description</th>
      <th>Examples</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Scope 1</td>
      <td>Direct emissions from sources owned or controlled by the company.</td>
      <td>
        - Fuel combustion from company-owned vehicles<br>
        - Emissions from on-site boilers, furnaces, and generators<br>
        - Process emissions from chemical production in owned facilities<br>
        - Fugitive emissions from refrigeration or air conditioning leaks
      </td>
    </tr>
    <tr>
      <td>Scope 2</td>
      <td>Indirect emissions from the generation of purchased electricity, steam, heat, or cooling.</td>
      <td>
        - Electricity used in offices and manufacturing plants<br>
        - Purchased heating or cooling for office buildings<br>
        - Steam used in industrial production processes<br>
        - District energy systems
      </td>
    </tr>
    <tr>
      <td>Scope 3</td>
      <td>All other indirect emissions in the value chain, not included in Scope 2.</td>
      <td>
        - Purchased goods and services (e.g., raw materials, office supplies)<br>
        - Business travel (e.g., flights, hotel stays)<br>
        - Employee commuting (e.g., car, bus, or train)<br>
        - Waste disposal (e.g., landfill, incineration)<br>
        - Use of sold products (e.g., fuel in cars sold by an auto manufacturer)<br>
        - Transportation and distribution (e.g., third-party logistics)<br>
        - End-of-life treatment of sold products (e.g., recycling, disposal)
      </td>
    </tr>
  </tbody>
</table>


By understanding and categorising emissions in this way, companies can develop more targeted strategies to reduce their overall carbon footprint.

Let's explore the different scopes in more detail.

What are scope 1, 2, and 3 emissions?
New climate-related reporting rules from the SEC would require publicly traded companies to account for their Scope 1 and Scope 2 emissions, and some companies will be required to report Scope 3 emissions. But what does that mean?  Watch our quick video - the first in Climate Now's video mini-explainer series - to find out!

Scope 1, 2, and 3 Emissions explained | Climate Now Mini Video 01

Scope 1 emissions are directly released into the atmosphere as a result of a company's activities. These direct emissions originate from resources that are owned or controlled by the company. To ensure comprehensive tracking and management, Scope 1 emissions are categorised into four distinct groups:

Stationary combustion - This category includes all fuels that produce greenhouse gas emissions during combustion (natural gas, oil, coal, etc). It encompasses a wide range of stationary sources such as boilers, furnaces, and other combustion equipment.

Mobile combustion - This encompasses all vehicles owned or controlled by the firm that burn fuel, including cars, vans, trucks, etc. It's important to note that emissions from electric vehicles are classified under Scope 2.

Fugitive emissions - These emissions are associated with the unintentional release of greenhouse gases. Common examples include emissions from refrigeration and air conditioning units, as well as leaks from industrial gases.

Process emissions - These are emissions released during industrial processes or general production activities. This category includes emissions from manufacturing processes, such as factory fumes, and the release of chemicals like nitrous oxide.

Unlike Scope 1 which covers direct emissions, Scope 2 emissions refer to indirect GHG emissions that arise from the consumption of purchased electricity, steam, heat, and cooling in buildings and production processes. These emissions are classified separately because they originate from sources not directly controlled by the company.

The majority of Scope 2 emissions typically stem from electricity consumed by the company. This category encompasses the indirect emissions produced during the generation of the electricity purchased, which is then transmitted and distributed to the company. 

Scope 3 emissions represent a significant part of GHG accounting. However, because it involves quantifying carbon emissions associated with a company's supply chain it is often seen as the most challenging to quantify. Unlike Scope 1 and 2 emissions, Scope 3 emissions are not directly linked to the company's own operations, but rather to the entire value chain, incorporating both upstream and downstream emissions. These significant carbon emissions are associated with the company's operations, yet they occur outside of its direct control.

Scope 3 emissions encompass a wide range of indirect emissions, examples include:

Purchased goods and services - This includes emissions related to the production of goods and services before their purchase by the company.

Business travel and employee commuting - This covers emissions from air travel, railway travel, taxis, and the commuting practices of employees.

Waste disposal - Emissions arising from landfill operations, wastewater treatment, and other waste management activities.

Use of sold products - Emissions that result from the end use of the company's products and services by consumers.

Transportation and distribution - This involves emissions from transporting and distributing goods via land, sea, and air, including those related to third-party warehousing.

Investments - Emissions linked to equity investments, debt investments, capital goods, project finance, managed investments, and client services.

Leased assets and franchises - Emissions from assets leased by the company and operations of franchises.

Scope 3 emissions provide a comprehensive view of a company's environmental impact, extending beyond its immediate operations to the broader impacts associated with its value chain emissions.

💡 Scope 3 emissions typically constitute the majority of a company's greenhouse gas output. According to the World Economic Forum, value chain emissions can account for as much as 70% of a business's total emissions footprint.

As businesses and public organisations strive to take impactful climate action, it's essential to pay attention to Scope 3 emissions. These indirect emissions from your upstream and downstream activities like purchasing goods and services or the use phase of products can make up 70-90% of your carbon footprint.

Scope 3 emissions: what are they and why do they matter?

Why is it important to measure Scope 3 emissions?

Unless a company has significant real estate holdings and energy consumption the majority of a company's total greenhouse gas emissions, around 70%, typically comes from Scope 3 sources. This statistic underscores the extent to which a company's environmental impact extends beyond its direct activities, into its wider value chain. Addressing these emissions is crucial not only for reducing a company's carbon footprint but also for identifying cost efficiencies and reinforcing sustainable practices.

Additionally, it's revealing to note that 71% of global emissions can be traced back to just 100 companies. This fact emphasises the enormous responsibility and influence businesses have in tackling global warming. Nowadays, the role of businesses extends beyond mere product and service delivery; they are expected to be at the forefront of environmental responsibility. The growing demand from customers, employees, and investors is for companies to actively incorporate sustainability and environmental considerations into their operations.

Companies that embrace sustainable practices also position themselves for new growth and investment opportunities. Those who ignore this shift risk falling behind, as regulatory environments tighten and consumer expectations lean heavily towards environmental stewardship.

Measuring all emissions, particularly Scope 3, is therefore not just a regulatory formality, it's a strategic necessity, allowing companies to:

Pinpoint key GHG emission sources within their value chain

Assess the environmental practices of their partners and suppliers

Uncover operational inefficiencies and financial risks

Identify potential for cost savings and operational improvements

Strategise effective ways to lower their carbon emissions

Cultivate a culture of sustainability among all stakeholders

Stay prepared for evolving environmental regulations and responsibilities

Last, but not least, we have Scope 3!

Accounting for your company’s GHG emissions doesn’t just stop at your energy consumption and direct emission. Scope 3 is the focus area of GHG impact that follows a company’s value chain, allowing for decisions to be made all throughout every component of what makes your business what it is.

What is Scope 3? | Greenly  #climatechange #scope3

When we talk about measuring carbon footprints in terms of carbon and carbon dioxide equivalents, we are referring to the quantification of different greenhouse gases (GHGs) in terms of their impact on global warming. This measurement is crucial because different gases have varying levels of effect on the Earth's atmosphere.

The most common unit of measurement is the carbon dioxide equivalent (CO2e), which standardises various GHGs based on their Global Warming Potential (GWP).

Carbon dioxide (CO2) is the most prevalent GHG emitted through human activities, such as fossil fuel combustion and deforestation. It serves as the baseline for the CO2e metric, with a GWP of 1.

Other greenhouse gases like methane(CH4), nitrous oxide (N2O), and fluorinated gases (HFCs, PFCs, SF6, and NF3) are also significant contributors to global warming. Each of these gases differs in GWP and atmospheric lifespan:

<table>
  <thead>
    <tr>
      <th>Gas</th>
      <th>Global Warming Potential (GWP)</th>
      <th>Atmospheric Lifespan</th>
      <th>Common Sources</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Carbon Dioxide (CO2)</td>
      <td>1</td>
      <td>300–1,000 years</td>
      <td>Burning fossil fuels, deforestation, cement production</td>
    </tr>
    <tr>
      <td>Methane (CH4)</td>
      <td>~28–34 (over 100 years)</td>
      <td>~12 years</td>
      <td>Agriculture (livestock digestion), landfills, natural gas extraction</td>
    </tr>
    <tr>
      <td>Nitrous Oxide (N2O)</td>
      <td>~265–298</td>
      <td>~114 years</td>
      <td>Fertilizers, industrial processes, combustion of fossil fuels</td>
    </tr>
    <tr>
      <td>Hydrofluorocarbons (HFCs)</td>
      <td>12–14,800</td>
      <td>15–29 years</td>
      <td>Refrigeration, air conditioning, aerosol propellants</td>
    </tr>
    <tr>
      <td>Perfluorocarbons (PFCs)</td>
      <td>~6,500–12,200</td>
      <td>Thousands of years</td>
      <td>Aluminum production, semiconductor manufacturing</td>
    </tr>
    <tr>
      <td>Sulfur Hexafluoride (SF6)</td>
      <td>~23,500</td>
      <td>~3,200 years</td>
      <td>Electrical insulation, circuit breakers</td>
    </tr>
    <tr>
      <td>Nitrogen Trifluoride (NF3)</td>
      <td>~17,200</td>
      <td>~500 years</td>
      <td>Semiconductor manufacturing, LCD panel production</td>
    </tr>
  </tbody>
</table>


How are Scope 1, 2, and 3 emissions used in reporting?

Understanding and reporting Scope 1, 2, and 3 emissions is not just about categorising emissions - it’s about ensuring transparency, regulatory compliance, and aligning with climate action goals to reduce emissions. Each scope plays a unique role in reporting, helping organisations measure their impact comprehensively and communicate effectively with stakeholders.

Purpose: These emissions give organisations a clear picture of their direct environmental footprint, offering a starting point for reductions.

Often mandatory in regulatory frameworks like the EU Emissions Trading System (EU ETS) or national GHG reporting schemes.

Data collection typically involves on-site fuel logs, emission meters, or operational activity reports.

CO2e emissions from vehicles, on-site boilers, or industrial processes.

Annual emissions totals for internal performance tracking and regulatory compliance.

Ensuring accuracy in emissions measurements, especially for fugitive or process emissions.

Purpose: Scope 2 highlights an organisation’s reliance on energy and identifies opportunities to transition to renewable sources.

Frequently included in corporate sustainability reports and frameworks like CDP (Carbon Disclosure Project) and TCFD (Task Force on Climate-related Financial Disclosures).

Requires electricity, heat, and steam consumption data from utility bills or invoices.

Annual CO2e emissions from purchased electricity, adjusted for renewable energy credits or grid emission factors.

Accurately accounting for emissions from shared or outsourced facilities.

Purpose: Scope 3 reporting provides a complete view of an organisation’s environmental impact, enabling them to address emissions across their value chain.

Often voluntary but increasingly expected by stakeholders under frameworks like the Science-Based Targets Initiative (SBTi) or ESG disclosures.

Data collection involves collaboration with suppliers, partners, and customers.

CO2e emissions broken down by category (e.g., transportation, purchased goods).

Lifecycle analysis (LCA) metrics for products or services.

Gathering reliable data from third parties and accounting for variability across industries.

Incorporating all three scopes into emissions reporting achieves several goals:

Regulatory compliance: Scope 1 and 2 are often required for compliance with national and international regulations.

Stakeholder engagement: Scope 3 reporting demonstrates a commitment to transparency and climate leadership, attracting customers, investors, and partners.

Identifying opportunities: Comprehensive reporting helps pinpoint inefficiencies and high-impact areas for emission reductions, leading to cost savings and innovation.

Benchmarking and goal-setting: Enables organisations to track progress toward sustainability targets, such as net-zero commitments.

<table>
  <thead>
    <tr>
      <th>Scope</th>
      <th>Reported Where?</th>
      <th>Purpose in Reporting</th>
      <th>Challenges</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Scope 1</td>
      <td>Regulatory frameworks (e.g., EU ETS), internal reporting</td>
      <td>Tracks direct impact and sets a baseline for reductions.</td>
      <td>Accurate measurement of fugitive and process emissions.</td>
    </tr>
    <tr>
      <td>Scope 2</td>
      <td>Corporate sustainability reports, CDP, TCFD</td>
      <td>Highlights energy consumption and opportunities for renewables.</td>
      <td>Adjusting for renewable energy credits or grid factors.</td>
    </tr>
    <tr>
      <td>Scope 3</td>
      <td>ESG disclosures, SBTi, voluntary initiatives</td>
      <td>Provides a complete picture of environmental impact.</td>
      <td>Data collection across supply chains and value chains.</td>
    </tr>
  </tbody>
</table>


Practical steps for measuring and reporting emissions

While Scope 1, 2, and 3 emissions provide a clear framework for categorising and understanding greenhouse gas emissions, putting this knowledge into practice can be challenging. For many companies, measuring and reporting emissions requires navigating a complex web of data collection, reporting frameworks, and value chain engagement.

Steps to begin your emissions reporting journey

Identify key emission sources
Start by mapping your operational and value chain activities to their associated emissions categories.

For Scope 1: Focus on direct emissions from company-owned facilities and vehicles.

For Scope 2: Account for purchased electricity, heat, and cooling.

For Scope 3: Analyse upstream and downstream activities, such as supplier emissions and product end-of-life.

Choose the right reporting framework
Frameworks like the Carbon Disclosure Project (CDP) and Task Force on Climate-related Financial Disclosures (TCFD) provide guidance on reporting emissions transparently and comprehensively.

<table>
  <thead>
    <tr>
      <th>Framework</th>
      <th>Description</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Greenhouse Gas Protocol (GHG Protocol)</td>
      <td>The foundation for many emissions reporting initiatives, providing comprehensive standards for measuring and managing Scope 1, 2, and 3 emissions.</td>
    </tr>
    <tr>
      <td>Global Reporting Initiative (GRI)</td>
      <td>A widely used framework for sustainability reporting, including disclosures on greenhouse gas emissions and climate impacts.</td>
    </tr>
    <tr>
      <td>Science-Based Targets initiative (SBTi)</td>
      <td>Helps organizations set science-based emissions reduction targets in line with the Paris Agreement’s goal of limiting global temperature rise to 1.5°C.</td>
    </tr>
    <tr>
      <td>ISO 14064 Standards</td>
      <td>An international framework for quantifying and reporting greenhouse gas emissions. Includes organization-level (ISO 14064-1) and project-level (ISO 14064-2) standards.</td>
    </tr>
    <tr>
      <td>Climate Disclosure Standards Board (CDSB)</td>
      <td>Provides guidance for integrating climate-related information into mainstream financial reports with an emphasis on consistency and comparability.</td>
    </tr>
    <tr>
      <td>Sustainability Accounting Standards Board (SASB)</td>
      <td>Focuses on material ESG factors, including greenhouse gas emissions, tailored to specific industries with sector-specific standards.</td>
    </tr>
    <tr>
      <td>United Nations Framework Convention on Climate Change (UNFCCC)</td>
      <td>Offers guidelines for nations and organizations participating in climate agreements, including reporting requirements for emissions inventories.</td>
    </tr>
    <tr>
      <td>European Sustainability Reporting Standards (ESRS)</td>
      <td>Developed under the EU Corporate Sustainability Reporting Directive (CSRD), requiring detailed reporting of Scope 1, 2, and 3 emissions.</td>
    </tr>
    <tr>
      <td>The Carbon Trust Standard</td>
      <td>Certifies organizations that successfully measure, manage, and reduce their carbon footprint in alignment with global best practices.</td>
    </tr>
    <tr>
      <td>B Corp Certification</td>
      <td>Includes requirements for environmental impact reporting and targets to reduce carbon emissions as part of broader sustainability efforts.</td>
    </tr>
  </tbody>
</table>


Leverage data collection tools
Collecting accurate and consistent data is critical. Use utility records, transportation logs, and supplier data to quantify emissions.

For Scope 3, collaborate with partners to gather lifecycle data and estimate emissions where necessary.

Why companies struggle with emissions reporting

Even with a clear framework, many companies face barriers to effective emissions reporting:

Data complexity: Tracking emissions across multiple facilities, supply chains, and third-party operations requires extensive coordination.

Accuracy vs. estimation: While direct emissions (Scope 1) can often be measured precisely, indirect emissions (Scope 3) frequently rely on estimates and averages.

Time and resource constraints: Smaller organisations may lack the capacity to manage comprehensive data collection and reporting processes.

Regulatory evolution: Keeping up with changing laws and expectations around emissions reporting can be overwhelming.

Connect your tools. Measure your emissions.

At Greenly, we understand the challenges businesses face in measuring and reporting their carbon emissions. That’s why we’ve developed tools and services designed to take the complexity out of emissions management:

Emissions Monitoring: Track Scope 1, 2, and 3 emissions across your operations and supply chain. Gain the visibility needed to reduce both direct and supplier emissions effectively.

Lifecycle Assessment (LCA): Evaluate the carbon footprint of your products from raw material sourcing to disposal. Identify and address the most carbon-intensive stages of your product lifecycle.

Sustainable Supply Chain Strategies: Work collaboratively with suppliers to enhance resource efficiency, lower emissions, and build a more sustainable supply chain.

Decarbonisation Pathways: Create tailored, actionable plans for reducing emissions—whether through energy efficiency upgrades, transitioning to renewable energy, or other targeted solutions.

Science-Based Targets: Set ambitious yet achievable emissions reduction goals aligned with the Science-Based Targets initiative (SBTi) and take meaningful steps to achieve them.

Partner with Greenly to track your company's greenhouse gas emissions, enhance operational efficiency, and make measurable progress toward sustainability. Reach out to us today. 

Understand the Greenhouse Gas Protocol and its role in emissions reporting. Explore its standards, including Scope 1, 2, and 3, and how it helps businesses reduce their carbon footprint.

What is the Greenhouse Gas Protocol?

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. 

👉  Understand the Greenhouse Gas Protocol and its role in emissions reporting. Explore its standards, including Scope 1, 2, and 3, and how it helps businesses reduce their carbon footprint.

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.  

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.

Discover the intricacies of greenhouse gas accounting with our comprehensive guide on the Greenhouse Gas Protocol! Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG Protocol is a critical international standard used worldwide for measuring and managing GHG emissions.

Mastering the Greenhouse Gas Protocol: Your Comprehensive Guide

Why was the Greenhouse Gas Protocol established? 

The Greenhouse Gas Protocol was established in 1998 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) in response to growing global concerns about climate change. At the time, businesses and organisations faced significant challenges in measuring and reporting their greenhouse gas (GHG) emissions due to the lack of a standardised framework. This inconsistency created barriers to meaningful climate action, making it difficult for companies to benchmark their performance, for stakeholders to evaluate emissions data, and for governments to design effective policies.

The Protocol aimed to address these challenges by providing a comprehensive, science-based methodology that could be universally applied. Its founders recognised the need for a globally accepted standard to ensure transparency, comparability, and credibility in emissions reporting. By doing so, the Protocol not only harmonised existing efforts but also established a foundation for businesses and governments to take coordinated action toward reducing GHG emissions.

Developed through a collaborative process involving experts from business, government, and non-profits, the Protocol created a shared language for tracking emissions, enabling organisations to identify their emissions sources, set reduction targets, and monitor progress. Today, it remains a cornerstone of global climate action, widely regarded as the gold standard for greenhouse gas accounting and reporting.

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. For example, 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. 

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. 

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. 

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).

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 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 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 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. 

<table style="border: 1px solid black; border-collapse: collapse;">
  <tr style="background-color:#F2F2F2;">
    <th style="border: 1px solid black; padding:5px;">Scope</th>
    <th style="border: 1px solid black; padding:5px;">Definition</th>
  </tr>
  <tr>
    <td style="background-color:#FFFFFF; border: 1px solid black; padding:5px; text-align: center;"><a href="https://greenly.earth/en-us/blog/company-guide/what-are-scope-1-emissions">Scope 1</a></td>
    <td style="background-color:#FFFFFF; border: 1px solid black;">Direct emissions from business operations</td>
  </tr>
  <tr>
    <td style="background-color:#FAFAFA; border: 1px solid black; padding:5px; text-align: center;"><a href="https://greenly.earth/en-us/blog/company-guide/what-are-scope-2-emissions">Scope 2</a></td>
    <td style="background-color:#FAFAFA; border: 1px solid black;">Power plant emissions from business energy requirements: their purchased electricity, steam, heat, and cooling</td>
  </tr>
  <tr>
    <td style="background-color:#FFFFFF; border: 1px solid black; padding:5px; text-align: center;"><a href="https://greenly.earth/en-us/blog/company-guide/what-are-scope-3-emissions">Scope 3</a></td>
    <td style="background-color:#FFFFFF; border: 1px solid black;">Indirect emissions from upstream (supply chain) and downstream (consumer and waste stream emissions) for products and services</td>
  </tr>
</table>

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. 

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 minimising 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. 

Cities are another major source of carbon emissions because they generate 75% of all global emissions. Cities across the world are seeking 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. 

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.

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. 

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. 

Life Cycle Analysis (LCA) 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. 

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. 

<table border="1" cellspacing="0" cellpadding="5">
  <thead>
    <tr>
      <th>Standard</th>
      <th>Purpose</th>
      <th>Scope</th>
      <th>Applicability</th>
      <th>Key Features</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Corporate Standard</td>
      <td>Provides a standardized framework to measure and manage greenhouse gas emissions.</td>
      <td>Scope 1 and Scope 2 emissions.</td>
      <td>Applicable to companies and organizations across various sectors.</td>
      <td>Establishes guidelines for accounting and reporting GHG emissions.</td>
    </tr>
    <tr>
      <td>Scope 3 Standard</td>
      <td>Offers guidance on accounting and reporting indirect emissions.</td>
      <td>Scope 3 emissions.</td>
      <td>Designed for companies aiming to assess their entire value chain emissions.</td>
      <td>Helps identify and manage emissions beyond direct operations.</td>
    </tr>
    <tr>
      <td>Project Protocol</td>
      <td>Guides the quantification and reporting of GHG reductions from specific projects.</td>
      <td>Project-level emissions.</td>
      <td>Suitable for organizations undertaking GHG reduction projects.</td>
      <td>Focuses on project-based emission reductions and removals.</td>
    </tr>
    <tr>
      <td>Product Standard</td>
      <td>Assists in measuring the GHG emissions of products throughout their life cycle.</td>
      <td>Product life cycle emissions.</td>
      <td>Relevant for companies producing goods and services.</td>
      <td>Emphasizes life cycle assessment of products.</td>
    </tr>
    <tr>
      <td>Policy and Action Standard</td>
      <td>Provides a framework to estimate the GHG effects of policies and actions.</td>
      <td>Policy and action impacts.</td>
      <td>Intended for governments and organizations implementing climate policies.</td>
      <td>Aids in evaluating the effectiveness of climate policies.</td>
    </tr>
    <tr>
      <td>Scope 2 Guidance</td>
      <td>Offers detailed guidance on accounting for emissions from purchased electricity.</td>
      <td>Scope 2 emissions.</td>
      <td>Applicable to organizations purchasing electricity, heat, steam, or cooling.</td>
      <td>Clarifies methods for accounting and reporting Scope 2 emissions.</td>
    </tr>
    <tr>
      <td>Land Sector and Removals Guidance</td>
      <td>Provides guidance on accounting for emissions and removals from land use and related activities.</td>
      <td>Land sector emissions and removals.</td>
      <td>Relevant for organizations involved in land management, forestry, and agriculture.</td>
      <td>Addresses accounting for biogenic carbon and land-use change.</td>
    </tr>
  </tbody>
</table>



Why is the Greenhouse Gas Protocol useful to companies?

The Greenhouse Gas (GHG) Protocol offers a comprehensive framework for companies to measure, manage, and report their greenhouse gas emissions. By providing standardised guidelines, it enables organisations to:

Enhance Transparency: Consistent reporting builds trust with stakeholders, including investors, customers, and regulators.

Identify Reduction Opportunities: Detailed emissions inventories help pinpoint areas for improvement and cost savings.

Ensure Regulatory Compliance: Aligning with international standards facilitates adherence to current and future environmental regulations.

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.

Among the various standards provided by the GHG Protocol, the Corporate Standard and the Value Chain (Scope 3) Standard are particularly beneficial for companies:

Corporate Standard: Assists companies in preparing a comprehensive GHG emissions inventory, covering direct (Scope 1) and indirect (Scope 2) emissions. 

Value Chain (Scope 3) Standard: Guides organisations in accounting for emissions throughout their value chain, addressing both upstream and downstream activities. 

Notably, for many companies, a significant portion of GHG emissions - often around 80% - originates from their value chain. The Value Chain Standard aids in identifying and mitigating these emissions effectively.

Furthermore, the GHG Protocol aligns with rigorous Environmental, Social, and Governance (ESG) frameworks, such as the Science Based Targets initiative (SBTi) and the Global Reporting Initiative (GRI), facilitating comprehensive sustainability reporting.

Initially developed for the private sector, the GHG Protocol has expanded to collaborate with the public sector, providing foundational guidelines for climate risk reporting mandates like the EU's Sustainable Finance Disclosure Regulation (SFDR) and the UK's Sustainability Disclosure Requirements (SDR).

By adopting the GHG Protocol, companies can effectively manage their environmental impact, comply with regulatory requirements, and demonstrate a commitment to sustainability.

<table border="1" cellspacing="0" cellpadding="5">
  <thead>
    <tr>
      <th>Benefit</th>
      <th>Detail</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Standardization</td>
      <td>
        - Provides a globally recognized framework for measuring and reporting greenhouse gas emissions.<br>
        - Ensures consistency and comparability across industries and geographies.<br>
        - Facilitates adherence to international sustainability standards and regulations.
      </td>
    </tr>
    <tr>
      <td>Transparency</td>
      <td>
        - Builds trust with stakeholders through clear and credible emissions reporting.<br>
        - Supports corporate accountability and environmental stewardship.<br>
        - Enhances brand reputation by demonstrating commitment to sustainability.
      </td>
    </tr>
    <tr>
      <td>Emissions Management</td>
      <td>
        - Helps companies identify major emission sources within operations and value chains.<br>
        - Provides actionable insights for reducing emissions and improving efficiency.<br>
        - Supports the achievement of science-based targets and net-zero ambitions.
      </td>
    </tr>
    <tr>
      <td>Regulatory Compliance</td>
      <td>
        - Aligns with key ESG frameworks like the SBTi, GRI, and SASB.<br>
        - Lays the foundation for meeting government-mandated climate disclosure requirements.<br>
        - Prepares companies for future regulatory changes in emissions reporting.
      </td>
    </tr>
    <tr>
      <td>Market Opportunities</td>
      <td>
        - Opens access to carbon markets and offset programs.<br>
        - Provides data to support green product labeling and marketing.<br>
        - Strengthens competitive positioning in sustainability-conscious markets.
      </td>
    </tr>
    <tr>
      <td>Collaboration</td>
      <td>
        - Encourages cross-sector collaboration on emissions reduction initiatives.<br>
        - Supports partnerships between private and public sectors to tackle climate change.<br>
        - Promotes shared accountability in value chain emissions.
      </td>
    </tr>
  </tbody>
</table>


How can companies implement GHG Protocol Standards? 

The first step for any company is to determine which GHG Protocol standard best aligns with its goals and operations. For example:

Corporate Standard: Ideal for organisations starting their emissions journey, focusing on operational emissions (Scope 1 and 2).

Value Chain (Scope 3) Standard: Essential for companies with significant upstream or downstream emissions.

Product Standard: Relevant for businesses assessing the carbon footprint of their products.

Example: Unilever uses the Value Chain Standard to evaluate emissions across its supply chain, identifying hotspots like raw material sourcing and logistics.

Once the appropriate standard is selected, companies should:

Carbon assessment, definition

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