Updates to the GHG Protocol

January 24, 2025
Written by  
Nick Greenwood
Climate Innovation Lead
Climate Innovation Lead

We look at the GHG Protocol’s revision to its suite of corporate standards. As we enter into a new year, can the GHG Protocol make carbon accounting more consistent and comparable while retaining broad applicability?

A bumpy ride ahead

2024 was a difficult year for the climate. It was the warmest on record, and the first that the average global temperature exceeded 1.5°C above its pre-industrial level. It was also the biggest election year in human history ”. Over half of the world’s population went to the polls, and many countries elected governments with limited climate ambition or outright scepticism.

This dissonance is likely to influence how companies approach sustainability efforts in 2025. Political headwinds are creating regulatory and policy uncertainty and difficult mood music, which may lead more companies to downplay (”greenhushing”) or row back on ambitious commitments. Yet, at the same time, the latest WEF Global Risk Report underlines the extent to which environmental risks pose an ever increasing threat to companies’ performance.

Figure 1. Global risks ranked by severity over the short and long term (WEF Global Risks Report 2024-25)

While some firms may feel the need to water down or step back from decarbonisation targets (and U.S. SEC rules seem unlikely to see light of day), we expect the global regulatory commitment to climate disclosure, and emissions reporting in particular, to remain firm with more jurisdictions set to adopt IFRS sustainability disclosure standards this year.

2025 will also be an important year for some of the key target setting standards. The SBTi is planning to release a major update to its Corporate Net Zero Standard by the end of the year (see our November newsletter for a detailed discussion). The ISO is also intending to launch its own international standard on net zero at COP30 in November.

Revision to the GHG Protocol standards

More fundamentally, the GHG Protocol is in the midst of a comprehensive update to its suite of corporate standards. These are used by the lion’s share of companies to measure, calculate and report on their emissions - the lifeblood of global corporate decarbonisation efforts.

Figure 2. GHG Protocol as the foundation for corporate climate action (GHG Protocol)

The update encompasses the Corporate Standard, Scope 3 Standard and Calculation Guidance, as well as the Scope 2 Guidance. The GHG Protocol is also mulling over a new standard and accompanying guidance on the topic of impacts of action and markets instruments. This will look to address some of the challenges companies face in demonstrating impact from their climate action under current inventory reporting (see last month’s newsletter for a detailed discussion).

It’s been a minute since some of these standards were last updated. The Corporate Standard is over 20 years old. Since its release, emissions disclosure has become mainstream (23,200 companies disclosed emissions via CDP in 2023 vs. less than 5,000 in 2014).

With regulation mandating use of GHG Protocol standards and capital allocation now at stake, the GHG Protocol and its standards have, unsurprisingly, come under increased scrutiny.

The update process is a five-year endeavour and has been accompanied by a beefing up of the GHG Protocol’s own governance arrangements. Initial consultations on existing standards took place between November 2022 and March 2023. According to a recent update, the GHG Protocol is envisaging releasing final revised standards in 2027 - a delay on previous ambitions.

Figure 3. Key milestones in GHG Protocol revision process (GHG Protocol)

What to expect from the GHG Protocol update

The GHG Protocol expects the revision process to result in minor changes, as opposed to a major overhaul. A key goal is to enhance alignment and harmonisation with regulatory and voluntary disclosure and target setting regimes. However, those familiar with carbon accounting can attest that the devil is often in the detail.

The main challenge is finding an appropriate balance in increasing the level of granularity and specificity in the standards to make companies’ inventories more consistent and comparable while maintaining a degree of flexibility and breadth to ensure the standards are widely applicable to a large number of use cases.

At present, the corporate suite offers a mix of standards and guidance, blurring the lines between the two.

Figure 4. Key trade-offs in GHG Protocol revision (GHG Protocol)

What to watch out for in the corporate standard update

In 2025, the revision process will be driven by technical working groups, which are responsible for developing and refining the different ideas raised in the consultations. The GHG Protocol Secretariat has drawn up a list of topics for these groups to consider.

For the Corporate Standard this includes things like reviewing:

  • Organisational boundaries: including whether to maintain or prioritise the three consolidation approaches, as well as improving harmonisation with financial accounting.
  • Operational boundaries: whether to require scope 3 reporting and whether this should apply to all companies or be differentiated based on criteria (such as size and sector).
  • Base year recalculation: including selection of base years, significance thresholds, recalculation policies, and differences between structural and methodological changes.
  • Data and calculation methodologies: including the possibility of additional disclosures around data quality and uncertainty, as well as guidelines for selecting appropriate emission factors.

The minutes from the initial working group meetings give a sense of direction of travel on some of these topics. For example, on:

  • Operational boundaries: a key change will be the inclusion of a requirement to report on scope 3 emissions in the Corporate Standard. At present, scope 3 is optional under the Corporate Standard and is only required when applying the Scope 3 Standard. The goal would be to improve alignment with reporting standards and regulation requiring scope 3 disclosure. Companies that only produce a scope 1 and 2 footprint might not be compliant with the Corporate Standard in the future.The GHG Protocol also looks minded to introduce a significance criteria when determining which scope 3 emissions to include. At present, all scope 3 emissions must be included but with full flexibility for firms to determine justifiable exclusions. The GHG Protocol is considering introducing a cumulative 5% exclusion threshold relative to total scope 3 emissions.
  • If introduced, this change could significantly limit companies’ discretion over what to include in their scope 3 footprint, though some differentiation may be considered for smaller firms.
  • Organisational boundaries: a key aspect that’s likely to change is the GHG Protocol’s approach to consolidation using financial control, which is used by about one-quarter of firms for their emissions reporting. Due to increasing divergence with financial reporting frameworks (IFRS, U.S. GAAP), the GHG Protocol looks set to ditch its own definition and require companies to apply the same consolidation model as used in their financial statements.

These are just some examples of the emerging consensus from working groups. Others are being held in parallel for the scope 2, scope 3, and market-based standards. As these working groups progress, a clearer picture should come into view of what the future standards will look like. We’ll keep you posted.

The Minimum Line

The stately progress of the GHG Protocol revision means that we are unlikely to see a new version of the standards until 2027. We would expect a transitional period to allow for adoption so the new standards might not come into effect until the latter part of the decade.

While the GHG Protocol is clearly doing a comprehensive job, this feels slow given the urgency of the climate crisis and the fact that some +150,000 companies will fall under emissions disclosure requirements - based on GHG Protocol standards - over that period.

In this regard, while we do expect aspects of the global sustainability agenda to be affected by political headwinds, we believe that a baseline consensus has now been established around the need for climate disclosure, including emissions reporting. Continuing to refine and improve emissions inventories is one way in which sustainability professionals can keep making progress in an inclement environment.

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