GHG Protocol Carbon Accounting

The GHG Protocol Corporate Accounting and Reporting Standard, published by the World Resources Institute and the World Business Council for Sustainable Development, is the accounting methodology that underpins virtually every mandatory and voluntary climate disclosure requirement in existence. The EU CSRD's ESRS E1 standard explicitly requires GHG Protocol methodology for Scope 1, 2, and 3 reporting. The TCFD framework, mandatory for large UK-listed companies and financial institutions, requires a GHG Protocol-aligned inventory as the factual basis for climate risk analysis. The SBTi will not accept a science-based target without a compliant inventory. CDP disclosures, the EU Taxonomy climate mitigation criteria, and CBAM embedded carbon calculations all trace back to the same foundation.

The three-scope structure captures fundamentally different emission sources. Scope 1 covers all direct GHG emissions from sources owned or controlled by the reporting company — combustion in boilers, furnaces, and vehicles; process emissions from chemical production; fugitive emissions from refrigerants and pipelines. Scope 2 covers indirect emissions from purchased electricity, steam, heat, or cooling, calculated using either the location-based method (average grid emission factors) or the market-based method (supplier-specific or contractual factors including renewable energy certificates). Scope 3 is the most complex, comprising fifteen categories of value-chain emissions — from purchased goods and services (Category 1, typically the largest for product-centric companies) to downstream use-of-sold-products and end-of-life treatment (Categories 11 and 12). The GHG Protocol's Scope 3 Standard and associated calculation guidance provide spend-based, activity-based, and supplier-specific methods for each category.

For most companies, Scope 3 represents over 70% of total emissions but historically received the least rigorous treatment. Regulatory pressure is changing this: CSRD requires disclosure of all material Scope 3 categories, and the EU Commission's ESRS E1 implementation guidance requires companies to explain their methodology for each reported Scope 3 category and justify any omissions. Sustalium structures the GHG inventory at the category level, lets you mix calculation methods within a single report, and generates the methodology narrative required by CSRD and CDP alongside the numerical inventory.