The GHG Protocol Explained

The GHG Protocol is the framework almost all corporate emissions reporting rests on, including reporting under the ESRS. Its central idea is simple and its consequences are frequently misunderstood.

The three scopes

Emissions are divided according to how directly a reporting company controls the source, which produces three categories with very different data characteristics.

The ratio in the last column drives everything. A manufacturer that has decarbonised its own operations completely has typically addressed a small fraction of its total footprint, which is why value chain data became unavoidable.

Control, not responsibility

The scopes describe who controls a source rather than who is morally accountable for it, and conflating the two produces confused conclusions.

This is why totalling emissions across companies is not meaningful and why a supply chain’s combined reported figure exceeds its actual emissions. The framework was built for management within a company, not for aggregation across an economy.

Scope 2 has two answers

Purchased electricity can be reported two ways, and they give different numbers for the same consumption in the same building.

The location-based method uses the average emissions intensity of the grid the electricity was drawn from. The market-based method uses the intensity of the electricity the company contracted for, reflecting renewable purchases and certificates.

Both must be reported under the standard, and the gap between them is informative. A large gap indicates a company buying renewable attributes in a grid that remains carbon-intensive, which is a legitimate procurement choice and not the same as consuming clean electricity.

Where product data fits

The relationship between product footprints and corporate inventories runs in one direction, and getting it backwards causes real confusion in programmes trying to serve both.

The reverse operation does not work. A corporate total cannot be divided back into credible per-product figures, because the allocation assumptions required would dominate the result and no downstream customer could rely on it.

Boundaries are a choice with consequences

Before any measurement, a company chooses an organisational boundary determining which entities are included, and the choice affects the figure substantially.

• Equity share — emissions in proportion to ownership stake in each entity.
• Financial control — full emissions of entities the company financially controls.
• Operational control — full emissions of entities whose operating policies it sets.

Operational control is the most commonly chosen and it produces a different answer from equity share for any company with joint ventures. The choice should be stated with the figure, because comparing two companies using different boundaries compares two different questions.

What this means for a passport programme

Passport and corporate reporting work draw on the same supplier relationships and frequently run as separate programmes, which wastes the scarcest resource involved.

Supplier willingness to answer data requests is finite. A company that runs a sustainability survey for Scope 3 and a separate passport data request months later has asked the same suppliers similar questions twice, and the second round gets worse responses than the first.

The practical recommendation is to specify both data needs together before approaching suppliers, even if the two programmes remain separately owned internally. The supplier does not care about your internal ownership boundaries and will judge you on how many times you ask.

Where the ESRS diverges

Reporting under the European Sustainability Reporting Standards builds on the GHG Protocol and does not simply adopt it, which catches out teams assuming one satisfies the other automatically.

The ESRS require disclosure of methodology, data quality and the proportion of the inventory resting on primary data, alongside the quantitative result. A figure that satisfies the Protocol can therefore be insufficient for the ESRS if the supporting disclosure is absent.

That requirement changes what a passport programme is worth to the finance function. Every attribute carrying its own provenance directly improves the data quality disclosure, which is otherwise one of the harder parts of the report to evidence honestly.