What is GHG Protocol?

EcoVision
3 days ago
2 min read

The Greenhouse Gas (GHG) Protocol is the world’s most widely used standard for measuring and reporting greenhouse gas emissions. It defines how organisations should classify, calculate, and disclose their emissions across:

Scope 1 – direct emissions from owned/controlled sources
Scope 2 – indirect emissions from purchased electricity/heat/steam
Scope 3 – all other value‑chain emissions (e.g., suppliers, logistics, waste, travel)

In the 1990s, companies and governments were increasingly discussing climate change, but there was no standard way to measure or report carbon emissions. Different organisations used different methods, making data inconsistent and impossible to compare.

To fix this, two leading bodies stepped in:

World Resources Institute (WRI) – a global environmental think tank
World Business Council for Sustainable Development (WBCSD) – a CEO‑led coalition of major companies

They partnered to create a universal “carbon accounting” framework.

Work began in 1998, involving companies, NGOs, governments, and academics.
The first edition of the GHG Protocol Corporate Standard was released in 2001.

This was the first global guideline that defined Scope 1, Scope 2 and Scope 3 — a structure still used today.

It became the de‑facto global standard because it was:

practical,
transparent,
built with business input.

GHG protocol acts like the “accounting system” for carbon emissions, similar to how IFRS or GAAP works for financial statements.

Why does GHG protocol matter for ESG disclosure?

1. Creates consistency and comparability GHG Protocol gives companies a common framework so investors, regulators, and stakeholders can compare emissions data across firms and industries.

2. Required by most major ESG reporting standards It is embedded directly or indirectly in:

ISSB/IFRS S2
HKEX Climate Reporting
CSRD/ ESRS
TCFD
SBTi target‑setting

Without GHG Protocol, companies cannot meet these disclosure requirements.

3. Improves credibility of ESG data Using a recognised methodology reduces the risk of greenwashing by forcing companies to:

define boundaries,
disclose assumptions,
track activity data,
and provide audit‑ready numbers.

4. Drives value‑chain engagement Scope 3 accounting forces companies to understand supplier emissions, transportation, procurement choices, waste, and product end‑of‑life — making ESG more operational and strategic.

5. Influences investment decisions Investors rely on GHG‑aligned disclosures to assess:

transition risk,
decarbonisation performance,
and climate‑related financial impacts.

Today, the GHG Protocol is used by over 90% of Fortune 500 companies reporting emissions. It’s also the foundation for organisations setting net‑zero and science‑based targets.

A major update to the standard is currently under consultation (2024–2025) to improve:

Scope 3 consistency
market‑based vs location‑based accounting
data quality rules
treatment of carbon credits

This reflects increasing regulatory pressure and investor expectations for more accurate, audit‑ready climate disclosures.

One‑sentence summary The GHG Protocol is the global rulebook for carbon accounting, and it is foundational to credible, comparable, and regulator‑aligned ESG disclosure reporting.

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