In the race to reduce greenhouse gas (GHG) emissions, the Greenhouse Gas Protocol has set some of the ground rules to follow. Around the world, its standards are most commonly used for carbon accounting in CDP and other ESG frameworks.
Whether or not you’ve heard of the GHG Protocol, you can probably guess that GHG emissions reduction is meaningless without standards for measurement.
The GHG protocol was developed in the late nineties, when global efforts to address climate change started to emerge. Today, it offers some of the most widely accepted standards for measuring and reporting GHG emissions.
Its guidelines are used by governments, cities, companies, and organizations to translate their activities into quantifiable inventories of CO2 and other GHG emissions data.
Interested to learn more about how exactly the GHG Protocol works? Read on for the full details of the GHG protocol: its definition, key features, and specialized standards to understand how entities around the world report their emissions.
The Greenhouse Gas (GHG) Protocol is the main global standard for public and private sector entities to measure GHG emissions. Its standards apply to operations, value chains, and climate change mitigation actions.
The purpose of this is two fold: It helps us track and monitor GHG emissions for individual entities and supports greenhouse gas emissions reduction by helping companies identify the most effective ways to reduce their climate impact.
The GHG Protocol was established in 1998 to address the need for an international standard corporations could use to account and report GHG emissions. It published its first Corporate Standard in 2001.
The GHG Protocol guidelines arose from a collaborative effort by governments, industry associations, NGOs, and corporations and partners with the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).
The most well-known system the GHG Protocol has established for GHG emissions measurement is with its Scope 1, 2, and 3 emissions categories. But this only covers one part of its work.
In addition to these Scopes, it has standards for a wide variety of situations and use cases as described below. Over time, its standards are periodically updated and the GHG Protocol has developed tools and training for better carbon emissions calculation.
Since the Paris Agreement was signed in 2015, the GHG Protocol has broadened to create standards and tools for governments and cities to track climate action.
Recently, the GHG Protocol launched its Partnership for Carbon Accounting Financials (PCAF) initiative in 2019. Its aim is to develop a global standard for the financial industry to report GHG emissions from investments.
Climate change is a problem with clear variables. We know GHG emissions cause climate change, and we know the specific activities that cause them.
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 GHG Protocol 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 GHG emissions. It regularly updates its standards and adds new ones for specific use cases.
In essence, the GHG 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.
One of the ways the GHG Protocol helps organizations make climate action progress is by pinpointing their GHG emissions priorities both in their own organizations and their value chains. This way, companies can gain clarity on the most impactful actions they can take to address climate change.
92% of Fortune 500 companies responded to the CDP questionnaire with GHG emissions measurements that applied GHG Protocol standards in 2016.
The GHG Corporate Standard and Value Chain Standards are the two most useful standards corporations can use.
The Corporate Standard helps companies measure and keep GHG inventories of their operations, while the Value Chain Standard helps them undergo carbon accounting across their value chain.
Roughly 80% of GHG emissions for most companies comes from their value chain. The Value Chain Standard by the GHG Protocol supports companies in reducing these emissions.
It also helps them adhere to the recommendations for some of the most rigorous ESG frameworks like the Science Based Targets initiative.
Even though the GHG Protocol started as a tool for the private sector, now it works with the public sector, too. These days, the two sectors are working hand in hand to reduce emissions in line with the 2015 Paris Agreement.
Climate risk reporting mandates, such as those in the EU (SFDR) and the UK (Corporate Climate Disclosure Rule), could also be adopted elsewhere in the future. The GHG Protocol provides the foundational guidelines for meeting these requirements.
When measuring and tracking GHG emissions, companies have to delineate the scope of emissions they refer to in their reports.
The GHG Protocol devised a system of scope-based classification to subdivide the direct and indirect sources of GHG emissions for businesses. The GHG Protocol is most well-known for these GHG emissions scopes. The three main scopes it established are as follows:
Scope 1: Direct emissions from business operations.
Scope 2: Power plant emissions from business energy requirements: their purchased electricity, steam, heat, and cooling.
Scope 3: Indirect emissions from upstream (supply chain) and downstream (consumer and waste stream emissions) for products and services.
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 progress across industries, and understanding GHG emissions accounting gaps.
The Greenhouse Gas (GHG) Protocol has developed a wide range of standards for organizations 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: GHG emissions reduction projects, reaching long-term emissions reduction targets, reporting corporate-level emissions, and reporting the emissions of communities in cities or other regional districts.
The Corporate Accounting and Reporting Standard defines the steps and recommendations for companies to prepare a GHG inventory. In 2017, the Carbon Majors Report found that 71% of global emissions since 1988 came from just 100 companies worldwide.
Of course, these companies are mostly energy companies supplying the world’s fuel to run its operations. Reducing dependence on fossil fuels across all business operations is a critical way for corporations to address climate change.
The high level data of a corporate GHG inventory serves as a stepping stone to help corporations strategically reduce GHG emissions. It supports standardization and transparency across industries to reduce emissions accounting gaps.
The GHG Corporate Accounting and Reporting Standard provides the guidance for GHG accounting principles, inventory scopes, GHG emissions sources, setting a base year, and periodically tracking and monitoring emissions.
Apart from corporations, this standard is used by NGOs, government agencies, and universities.
Cities are another major source of carbon emissions, because they generate 75% of all global emissions. Cities are also well-positioned to reduce their carbon emissions, thanks to the support they have from the public and the risks they face from sea level rise, extreme temperatures, and intense 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 entire countries can use this standard to measure and GHG emissions consistently.
The standard supports benchmarking across regions. It also highlights the importance of cities for reducing GHG emissions worldwide.
While many of the standards the GHG Protocol has created focus on consistent GHG measurement, the mitigation standard goes one step further to train countries and cities how 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 helps countries analyze the progress different decarbonization policies and actions will enable them to make. It also helps them report to international organizations.
Corporate Scope 3 emissions are where the bulk (80%) of corporate emissions fall. Yet, tracking and monitoring these indirect emissions has proven difficult for many organizations. To simplify the process, the GHG Protocol developed its Value Chain Standard.
Value chain emissions include those resulting from the production, transportation, or use of a corporation’s products and services. In other words, value chain 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.
More global climate reporting standards are recommending businesses declare their Scope 3 emissions such as CDP and the Task Force on Climate-Related Carbon Disclosures (TCFD).
The GHG Protocol Corporate Value Chain (Scope 3) Standard guides companies to assess their value chain emissions for 15 different categories of value chain emissions.
Both companies and organizations 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 standardized 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 to achieve better results.
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 to have a lower carbon footprint. Oftentimes reducing GHG emissions by changing the design of a product has the benefit of lowering costs and inefficiencies associated with its production.
Companies and organizations 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 Project Accounting Standard supplies project creators of all types–corporations, organizations, companies, countries, and cities 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 mitigation projects include reforestation projects, renewable energy projects, and projects to reduce ocean acidification.
Greenly specializes in helping companies apply the different GHG Protocol standards through our carbon accounting platform. With our platform your organization can easily measure, track, and reduce your carbon emissions. Request a demo to learn more about our four-step process.