Background

The Greenhouse Gas Protocol provides the world’s most commonly used accounting standards for greenhouse gases for companies.
The GHG Protocol’s standards and guidelines enable companies to measure, manage and report greenhouse gas emissions from their operations and value chain.

In the year 2016, a minimum of 92% of Fortune 500 companies that responded to CDP used the GHG Protocol directly or indirectly through a program based on the GHG Protocol.

The initiative to develop the GHG Protocol came from the World Resources Institute (WRI), an environmental think tank, and the World Business Council for Sustainable Development (WBCSD), a business association on sustainable development. This was triggered by discussions in the 1990s in these organisations and in cooperating companies, for example British Petroleum and General Motors, on how companies should deal with their greenhouse gas emissions and how they should record and report them in a standardised way.

Standards

Standard programmes for various actors have been set up under the umbrella of the GHG Protocol: The corporate standard was followed by, among other things, standards for greenhouse gas inventories of local authorities, supplemented by standards for climate protection projects, for life cycle-based product emissions and for national and regional climate protection targets and, linked to this, for estimating the climate impact of political measures.The GHG Protocol, similar to the principles of orderly accounting, is based on basic principles of relevance, completeness, consistency, transparency and accuracy It covers the greenhouse gases regulated under the Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3)

Accounting limits

When introducing the standard, the accounting period and organisational boundaries must first be defined. For related entities, such as subsidiaries or joint ventures, entities may set boundaries based on either ownership (equity share approach) or control (control approach). Under the equity share approach, greenhouse gas emissions are attributed to the organization according to the share held by the organization, whereas under the control approach, full emissions are attributed if the organization exercises control, otherwise none. For the public sector, only the control approach is relevant. For local authorities, their geographical boundaries are relevant.

Within the organisational boundaries, the emission sources are identified that are under corporate control when the service is provided. In the case of companies, these can be, for example, the vehicle fleet, gas heaters, refrigerators or company-owned power plants. The greenhouse gases emitted from these sources constitute the direct emissions. All other emissions from sources outside the borders are called indirect emissions. Emissions from internal sources can be measured or, more commonly, estimated based on consumption and emission factors.

Scopes

GHG Protocol standards, similar to comparable standards, further distinguish three scopes to which emissions can be assigned:

Scope 1

All direct emissions, i.e. from sources within the boundaries

Scope 2

Indirect emissions from electricity, steam, heating and cooling generated and purchased outside the company

Scope 3

All other indirect emissions, including those resulting from the production, transport of purchased goods or the distribution and use of the company’s own products or the disposal of waste; this also includes emissions resulting from business travel