Environmental Impact Data

Series

06. GHG Protocol & Emissions Accounting

Part 6 of 12

Overview. The Greenhouse Gas (GHG) Protocol provides the globally recognized framework for measuring and reporting emissions. It underpins CSRD, ESRS, ISSB, and countless voluntary schemes. Understanding organizational boundaries, Scope 1–3 categorization, and calculation methods is essential for credible sustainability reporting.

1) Structure of the GHG Protocol

  • Corporate Standard: Organizational boundary setting, Scope 1–3 accounting, consolidation methods.
  • Project Protocol: Emission reductions or removals from projects (CDM, offset projects, etc.).
  • Product Life Cycle (PAS 2050/ISO 14067): Cradle-to-grave product carbon footprinting.
  • Scope 3 Standard: Guidance for value chain (upstream + downstream) accounting.

2) Organizational Boundaries

Two main consolidation approaches define which entities and which activities to include:

  • Equity share: Account for emissions proportional to ownership share.
  • Control (financial/operational): Account 100% of emissions from operations under control.

3) Scope Definitions

  • Scope 1 (Direct): Emissions from owned/controlled sources (fuel combustion, process emissions, company vehicles).
  • Scope 2 (Indirect, energy): Purchased electricity, steam, heating, cooling. Market-based vs location-based accounting required.
  • Scope 3 (Value chain): 15 categories upstream (e.g., purchased goods, capital goods, logistics, waste) + downstream (e.g., use of sold products, end-of-life, investments).

4) Calculation Methods

  • Activity data × Emission factor: Fuel used × CO2e factor; kWh electricity × grid factor.
  • Direct measurement: Continuous emission monitoring systems (CEMS) for major sources.
  • Modeling/estimating: Engineering estimates, stoichiometric factors for process emissions.
  • Supplier/secondary data: Spend-based estimates when primary activity data is missing.

5) Practical Challenges

  • Data availability: Supplier data gaps for Scope 3; reliance on averages.
  • Double counting risk: Especially across Scope 3 categories or with joint ventures.
  • Emission factors: Quality, representativeness, and documentation of chosen databases (IPCC, IEA, DEFRA, EPA, local factors).
  • Boundary consistency: Must align with financial consolidation for comparability and assurance.

6) Example – Steel Manufacturer

  • Scope 1: Coke ovens and blast furnaces → process + combustion emissions.
  • Scope 2: Purchased electricity for rolling and finishing lines.
  • Scope 3: Upstream: iron ore & coal mining, transport. Downstream: emissions from customers using steel in construction/automotive.

7) Example – Logistics Company

  • Scope 1: Diesel in owned trucks.
  • Scope 2: Office electricity and warehouses.
  • Scope 3: Contracted carriers, business travel, employee commuting, customer product use emissions.

8) Assurance & Reporting Considerations

  • Audit trail: Documentation of methods, assumptions, and data sources is critical.
  • Base year & restatement policy: Define clear rules for acquisitions, divestments, methodological changes.
  • Intensity vs absolute: Use both absolute emissions and normalized metrics (tCO2e/unit output, tCO2e/revenue).
Key takeaways.
  1. GHG Protocol is the foundation for global standards (CSRD, ISSB, SEC, voluntary programs).
  2. Accurate boundary setting and Scope 1–3 mapping are critical for consistency.
  3. Emission factors, data quality, and documentation determine credibility and assurance readiness.
  4. Use practical case examples to explain Scope 1–3 to internal and external stakeholders.

Note: GHG Protocol is being updated (2024–2025) to refine Scope 2 market-based rules and Scope 3 guidance. Organizations should monitor revisions for compliance readiness.