GHG Protocol

What it means

The GHG Protocol is the international standard for measuring and reporting corporate greenhouse gas emissions, developed by the World Resources Institute and the World Business Council for Sustainable Development. It divides emissions into scopes 1, 2 and 3 and is the most widely used basis for calculating a carbon footprint.

Scope 1 covers direct emissions from owned sources such as boilers and company cars. Scope 2 covers indirect emissions from purchased electricity, heat or steam. Scope 3 covers all other emissions in the value chain, from purchased materials and transport to the use and disposal of products sold.

The European ESRS standards for reporting under the CSRD build on the GHG Protocol, as do many climate target frameworks and ratings. Companies that calculate emissions with it obtain comparable results usable for different purposes.

How it works in practice

The calculation starts by setting organisational boundaries, meaning which companies and sites are included, and collecting data on fuel and energy use. Consumption is converted with emission factors into tonnes of CO2 equivalent, and for scope 2 both location-based and market-based figures, reflecting green energy contracts, are reported.

Scope 3 is the hardest because it requires supplier data and estimates across 15 categories. Companies start with the most significant categories, such as purchased goods and transport, and gradually improve accuracy from spend-based estimates to actual data.

Results are used to set emission reduction targets, to report to customers and banks and for calculations under CBAM. Documenting data sources and methodology is important so an auditor can verify the calculation and it can be repeated every year.

What to watch out for

Offsetting emissions by buying credits or funding projects is not reported as an emissions reduction in a GHG inventory but separately. Claims of carbon neutrality based solely on offsets are increasingly tightly regulated in the EU and may be considered misleading.

Changes in company structure, such as acquiring or selling a division, or a change in methodology distort comparisons over time. The GHG Protocol therefore recommends recalculating the base year so it is clear whether emissions really fell or only the boundaries changed.