The GHG Protocol is the global standard for companies and organizations to measure and manage their Greenhouse Gas emissions. Created in 1998, it is the most widely known and used standard for organizations in their reporting. While it is not mandatory in many geographies, governments and industry associations are increasingly developing policies which require specific standards for GHG reporting, including the GHG Protocol.
What is the Greenhouse Gas Protocol?
The GHG Protocol is the global standard for companies and organisations to measure and manage their Greenhouse Gas (GHG) emissions. It provides accounting and reporting standards, sectoral guidelines, calculation tools and training resources for businesses and local and national governments. It has established a comprehensive, global, standardised framework for measuring and managing emissions from the private and public sectors, value chains, products, cities and policies to reduce greenhouse gas emissions. The standard covers accounting and reporting for the six greenhouse gases covered by the Kyoto Protocol and the United Nations Framework Convention on Climate Change, for various specific sources and sectors.
The GHG Protocol Standard distinguishes between 3 areas to which emissions can be allocated. These include an organisation’s direct emissions, described in Scope 1, and indirect emissions in Scope 2 and Scope 3. The GHG Protocol requires its users to report their organisation’s Scope 1 and 2 emissions, while Scope 3 reporting is voluntary but recommended.
Who created the GHG Protocol and when was it established?
The GHG Protocol was developed in collaboration between the World Business Council and the World Resources Institute through a multi-stakeholder process that began in 1998 and involved members of environmental groups (such as WWF, Pew Centre on Global Climate Change, The Energy Research Institute) and industry (such as Norsk Hydro, Tokyo Electric, Shell) to guide the development of the standards. The goal of the initiative is to develop internationally recognised greenhouse gas (GHG) accounting and reporting standards for companies and to promote their widespread use.
The GHG Protocol Initiative comprises two separate but related standards:
- GHG Protocol Corporate Accounting and Reporting Standard (this document, which provides step-by-step guidance for companies on quantifying and reporting their GHG emissions).
- GHG Protocol for Project Accounting (a guide for quantifying reductions from GHG mitigation projects).
The Paris Agreement, adopted under the United Nations Framework Convention on Climate Change (UNFCC) in December 2015, commits all participating countries to limit global temperature increases rise, adapt to changes that have already occurred, and increase efforts regularly over time. The GHG Protocol develops standards, tools and online training to help countries and cities track progress towards their climate goals.
Does CDP follow GHG Protocol?
The Carbon Disclosure Project (CDP) is a non-profit organisation that operates the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. In 2016, 92% of Fortune 500 companies responding to the Carbon Disclosure Project used the GHG Protocol directly or indirectly through a programme based on it. It provides the accounting platform for virtually every corporate GHG reporting programme worldwide. While not explicitly mandated by CDP, the GHG Protocol provides coherent and comprehensive reporting standards.
Is the GHG Protocol mandatory?
In some countries, GHG emissions reporting is required by law. Depending on the type of policy, the GHG Protocol may or may not be the most appropriate framework. The European Union, for example, requires large companies to report on their environmental and social impacts under the Non-Financial Reporting Directive. As this also includes information on human rights, corruption, diversity, other environmental impacts, etc., the GHG Protocol is not sufficient to provide a holistic assessment.
However, in April 2022, the US Securities and Exchange Commission (SEC) proposed new rules for climate change disclosure that are strongly inspired by the TCFD – Task Force on Climate Disclosure. Among other disclosures that are now mandatory, domestic and international companies registered with SEC must measure and disclose greenhouse gas (GHG) emissions according to the GHG Protocol methodology.
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