Briefing: What the Greenhouse Gases Protocol?

Briefing: what is the Greenhouse Gas Protocol?

The Greenhouse Gas Protocol is the international accounting framework used to measure, manage, and report greenhouse gas emissions. It is a joint initiative of the World Resources Institute and the World Business Council for Sustainable Development (WBCSD), and it is the reference most corporate emissions figures in the world are built on — including those underpinning CDP disclosure, science-based targets, and, increasingly, statutory reporting.

Its purpose is narrow and useful: to make emissions figures from different companies, sectors, and countries mean the same thing. Without a common set of rules on what to count, where the boundary sits, and how to convert gases into a single unit, two companies of identical size can publish wildly different numbers while both being technically honest.

The standards family

The Protocol is not one document. It is a set of standards, each answering a different question, plus sector guidance and calculation tools built on top of them.

• Corporate Accounting and Reporting Standard — the foundation. Defines organizational and operational boundaries and the Scope 1, 2, and 3 structure for a company-level inventory.
• Corporate Value Chain (Scope 3) Standard — the fifteen upstream and downstream categories that make up indirect value chain emissions.
• Product Life Cycle Accounting and Reporting Standard — cradle-to-grave emissions attributable to a single product or service.
• Scope 2 Guidance — introduced the dual reporting requirement: location-based and market-based figures must both be disclosed.
• Project Protocol — quantifying reductions from a specific project, used in offset and intervention accounting.
• GHG Protocol for Cities and Mitigation Goal Standard — the public sector counterparts for city inventories and national or subnational targets.

The five accounting principles

Every judgement call in an inventory — and there are many — is meant to be resolved against these five principles. They are the part of the Protocol most often skipped and most often the reason an inventory fails review.

1. 1Relevance — the inventory reflects the emissions of the company and serves the decision-making needs of its users, internal and external.
2. 2Completeness — all sources within the chosen boundary are accounted for; any exclusion is disclosed and justified.
3. 3Consistency — methodologies allow meaningful comparison over time; any change in method, boundary, or data is documented.
4. 4Transparency — assumptions, calculation methods, and data sources are disclosed clearly enough for a third party to follow them.
5. 5Accuracy — quantification is neither systematically over nor under actual emissions, with uncertainty reduced as far as is practicable.

Setting the boundary

Before a single figure is collected, two boundary decisions have to be made. Getting these wrong is the most common structural error in a first inventory, and it invalidates year-on-year comparison later.

Organizational boundary

• Equity share approach — the company accounts for emissions according to its share of equity in an operation.
• Financial control — the company accounts for 100 percent of emissions from operations over which it has financial control.
• Operational control — the company accounts for 100 percent of emissions from operations where it has authority to introduce and implement operating policies. This is the most commonly chosen approach.

Operational boundary

Once the organizational boundary is fixed, emissions inside it are classified as direct or indirect, and sorted into the three scopes below.

The three scopes

The fifteen Scope 3 categories

Scope 3 is where most of the emissions and most of the difficulty sit. The Protocol splits it into eight upstream and seven downstream categories. A company is expected to screen all fifteen, then report those that are relevant and material, disclosing and justifying any exclusion.

Upstream

1. 1Purchased goods and services
2. 2Capital goods
3. 3Fuel- and energy-related activities not already in Scope 1 or 2
4. 4Upstream transportation and distribution
5. 5Waste generated in operations
6. 6Business travel
7. 7Employee commuting
8. 8Upstream leased assets

Downstream

1. 9Downstream transportation and distribution
2. 10Processing of sold products
3. 11Use of sold products
4. 12End-of-life treatment of sold products
5. 13Downstream leased assets
6. 14Franchises
7. 15Investments

Base year, recalculation, and global warming potentials

An inventory is only useful if this year can be compared with last year. Two mechanisms make that possible.

• Base year — a reference year against which progress is tracked. The Protocol requires a documented base year recalculation policy, triggered by structural changes such as acquisitions, divestments, outsourcing, or methodology changes that exceed a stated significance threshold.
• Global warming potentials — the factors converting each gas into carbon dioxide equivalent over a 100-year horizon. These are revised with each IPCC assessment report, so the AR version used must be stated. A figure calculated on AR4 factors is not directly comparable with one on AR6.
• Data quality and uncertainty — where activity data is unavailable, spend-based or average-data methods may be used, but the method and its limitations should be disclosed rather than buried.

How the Protocol relates to ISO 14064-1

These two are complements, not competitors, and both are frequently required at once.

• The GHG Protocol is the accounting methodology — it tells you how to build the inventory and what the scopes contain.
• ISO 14064-1 is the specification an inventory can be certified against, using the categories of direct and indirect emissions rather than the scope numbering.
• ISO 14064-3 governs the validation and verification of the resulting assertion, and ISO 14065 the bodies that perform it.

In practice an inventory is often prepared under the GHG Protocol and reported in a form that also satisfies ISO 14064-1, then verified under ISO 14064-3 so the figures carry third-party assurance.

What the Protocol does not do

The Protocol provides a framework, not a mandate. It does not set reduction targets, does not tell a company what its emissions ought to be, and does not verify anything — assurance comes from a separate standard and an accredited body. Nor does it determine materiality thresholds for you; those judgements sit with the reporting company and are exactly what a reviewer will question.

Why it matters commercially

A GHG inventory built to the Protocol is now a precondition for a growing list of commercial activities: responding to a CDP request, submitting a target to the Science Based Targets initiative, meeting CSRD and ESRS E1 reporting requirements in Europe, satisfying IFRS S2 climate disclosure, and answering the supplier questionnaires large enterprises increasingly attach to procurement.

More directly, the inventory is what makes reduction possible. Until the emissions are quantified by source, decisions about where to invest are guesswork — and in most companies the answer turns out to be somewhere in the value chain rather than on the site.