Key Points
- The GHG Protocol defines three scopes of emissions that form the basis for climate reporting under ESRS E1 and most other disclosure frameworks.
- ESRS E1 requires in-scope companies to report Scope 1, Scope 2, and Scope 3 emissions using GHG Protocol methodology.
- A revised third edition of the Corporate Standard is expected for public consultation in mid-2026, with final publication targeted for end of 2027.
- The Land Sector and Removals Standard (published January 2026) takes effect on 1 January 2027 and covers agriculture and CO2 removal technologies.
What is GHG Protocol?
The GHG Protocol splits an organisation's greenhouse gas footprint into three scopes. Scope 1 covers direct emissions from sources the company owns or controls (combustion in boilers, company vehicles, industrial processes, fugitive releases). Scope 2 covers indirect emissions from purchased electricity, heat, steam, or cooling. Scope 3 captures everything else in the value chain: upstream activities such as purchased goods and business travel, and downstream activities such as product use and end-of-life treatment. The Corporate Standard (2004) sets the accounting rules for Scope 1 and Scope 2. The separate Corporate Value Chain (Scope 3) Standard (2011) extends those rules to the 15 categories of indirect emissions.
For auditors working on CSRD engagements, the GHG Protocol is not optional background reading. ESRS E1 paragraph 44 requires undertakings to report gross Scope 1, Scope 2, and Scope 3 emissions, and the calculation methodology follows GHG Protocol definitions. Scope 2 must be disclosed using both the location-based method (grid-average emission factors) and the market-based method (contractual instruments such as energy attribute certificates). The assurance provider evaluates whether the entity applied these methods correctly and whether the emission factors are traceable to a recognised source.
Worked example: Rossi Alimentari S.p.A.
Client: Italian food production company, FY2025, revenue €67M, IFRS reporter, first-time CSRD reporter with climate change assessed as material under its double materiality assessment.
Step 1 — Identify organisational boundaries
Rossi applies the operational control approach per GHG Protocol Corporate Standard Chapter 3. The company operates two production facilities in Emilia-Romagna and one packaging plant in Puglia, all under operational control. A 40%-owned joint venture operating a cold-storage warehouse in Milan falls outside the boundary because Rossi does not hold operational control.
Step 2 — Calculate Scope 1 emissions
Rossi's Scope 1 sources include natural gas combustion at all three facilities (8,400 tonnes CO2e) and a fleet of 22 refrigerated delivery vehicles (1,850 tonnes CO2e). Fugitive emissions from industrial refrigeration units using R-404A refrigerant add 620 tonnes CO2e. Total Scope 1: 10,870 tonnes CO2e.
Step 3 — Calculate Scope 2 emissions using both methods
Location-based Scope 2 uses the Italian grid-average emission factor (0.257 kg CO2e/kWh per ISPRA 2024 data) applied to total purchased electricity of 14,200 MWh, producing 3,649 tonnes CO2e. Market-based Scope 2 reflects Rossi's purchase of Guarantees of Origin covering 9,000 MWh of renewable electricity, reducing the market-based figure to 1,336 tonnes CO2e for the remaining 5,200 MWh of grid electricity.
Step 4 — Estimate Scope 3 emissions for material categories
Rossi identifies four material Scope 3 categories: purchased goods and services (Category 1), upstream transportation (Category 4), use of sold products (Category 11), and end-of-life treatment (Category 12). Category 1 dominates at an estimated €41M in agricultural raw materials, producing approximately 38,000 tonnes CO2e using spend-based emission factors. The total Scope 3 estimate is 47,200 tonnes CO2e with a stated uncertainty band of plus or minus 30%.
Conclusion: Rossi's GHG inventory (Scope 1: 10,870t; Scope 2 location-based: 3,649t; Scope 3: 47,200t) is defensible because each scope follows GHG Protocol methodology with emission factors traceable to published sources, and both Scope 2 methods are reported as ESRS E1 requires.
Why it matters in practice
Teams frequently report only one Scope 2 figure (typically market-based) and omit the location-based calculation. ESRS E1 paragraph 48 requires both methods to be disclosed separately. The GHG Protocol Scope 2 Guidance (2015) likewise treats dual reporting as its core requirement. Omitting one method leaves a gap that an assurance provider should flag as an incomplete disclosure.
Scope 3 screening is often performed without documenting why certain categories were assessed as immaterial. The GHG Protocol Corporate Value Chain Standard (Chapter 7) requires companies to justify exclusions. When the assurance provider cannot trace the screening rationale, the completeness of the reported Scope 3 figure becomes unverifiable.
GHG Protocol vs. ISO 14064-1
| Dimension | GHG Protocol Corporate Standard | ISO 14064-1:2018 |
|---|---|---|
| Developer | World Resources Institute / WBCSD (multi-stakeholder, open access) | ISO (national standards bodies, standard available for purchase) |
| Scope categorisation | Three named scopes (1, 2, 3) with defined boundaries | Six categories of direct and indirect emissions without the Scope 1/2/3 labels |
| Regulatory integration | Referenced directly by ESRS E1, SEC climate rules, CDP questionnaires, and California SB 253 | Accepted by many national regulators but less frequently hard-wired into disclosure rules |
| Cost | Freely available online | Paid standard (purchase required) |
| Scope 2 dual reporting | Required (location-based and market-based) | Not specified in the same dual-method structure |
The distinction matters because an entity reporting under ESRS E1 must follow GHG Protocol methodology for its Scope 1, Scope 2, and Scope 3 disclosures. ISO 14064-1 may serve as a complementary verification framework (particularly for entities seeking ISO certification), but it does not substitute for GHG Protocol compliance when the ESRS is the governing standard.
Related terms
Frequently asked questions
Is the GHG Protocol mandatory under the CSRD?
The GHG Protocol itself is not legally binding. The CSRD mandates reporting under ESRS, and ESRS E1 paragraphs 44-55 require Scope 1, Scope 2, and Scope 3 emissions to be calculated following GHG Protocol definitions and methodology. In practice, any CSRD reporter disclosing climate data applies the GHG Protocol indirectly through ESRS E1.
What is the difference between location-based and market-based Scope 2?
The location-based method uses grid-average emission factors for the region where electricity is consumed. The market-based method reflects contractual instruments (Guarantees of Origin, power purchase agreements, renewable energy certificates, supplier-specific emission factors) that the entity has procured. ESRS E1 paragraph 48 requires both figures. The GHG Protocol Scope 2 Guidance (2015) provides the detailed rules for qualifying and applying each instrument.
When will the revised GHG Protocol Corporate Standard be published?
The GHG Protocol released a Phase 1 progress update in December 2025. A full draft of the revised third edition is scheduled for public consultation in mid-2026, with final publication expected by end of 2027. The revision covers updates to the Corporate Standard, Scope 2 Guidance, Scope 3 Standard, and a new Actions and Market Instruments standard.