A survey by PwC in 2023 found that 49% of global investors consider ESG factors key to their investment decision-making process, a clear indication of ESG’s rising prominence in the […]

A survey by PwC in 2023 found that 49% of global investors consider ESG factors key to their investment decision-making process, a clear indication of ESG’s rising prominence in the financial community [1]. Additionally, 65% of consumers report they are more likely to invest in companies with strong ESG commitments. The increasing integration of ESG considerations into investment strategies highlights the burgeoning recognition of their value not just in fostering a sustainable future, but as crucial determinants of financial resilience and profitability.  

As mentioned above, in our ongoing battle against climate change, the importance of accurately measuring, managing, and reporting greenhouse gas (GHG) emissions has never been more critical. This is where the Greenhouse Gas Protocol (GHG Protocol) comes into play, serving as the most widely used international accounting tool for government and business leaders to understand, quantify, and manage GHG emissions. The GHG Protocol offers a standardized framework for measuring and reporting emissions, providing the foundation for sustainable climate policies and strategies. 

In this article, we will further explore the intricacies of the Greenhouse Gas Protocol by dividing our discussion into key sections in order to give the readers basic overview about this tool. 

What is GHG Protocol? 

The GHG Protocol sets the global standard for measuring and managing greenhouse gas emissions across both private and public sectors, including operations, value chains, and mitigation efforts. Developed through a 20-year collaboration between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG Protocol collaborates with governments, industry groups, NGOs, businesses, and various organizations to implement its frameworks. It is based on the fundamental principles of transparency, completeness, consistency, accuracy, and relevance.  [2]

The GHG Protocol consists of two distinct market-leading standards: the Corporate Accounting and Reporting Standard, designed to help companies measure and report their emissions accurately; and the Scope 2 Guidance for accounting for emissions from electricity purchases. These standards provide a comprehensive and transparent approach to measuring GHG emissions, enabling companies to set targets, track progress, and make sound decisions for reducing their carbon footprint.  

Why is GHG Protocol important? 

In a world where climate change poses an ever-increasing threat to our environment and economy, it is crucial for organizations to manage and mitigate their GHG emissions. The GHG Protocol provides a standardized framework that enables companies to accurately measure and report their emissions, making it easier for them to identify areas where they can reduce their carbon footprint and promote sustainable practices. Additionally, the GHG Protocol helps companies establish a baseline for emissions and set reduction targets, leading to improved efficiency and cost savings. By using the GHG Protocol, organizations can demonstrate their commitment to sustainability and respond to growing stakeholder demands for transparency in ESG performance. 

Who Uses GHG Protocol? 

A diverse array of stakeholders, encompassing businesses, governments, and non-governmental organizations (NGOs), depends on the GHG Protocol’s comprehensive standards and tools. These groups are united by a common goal: to understand and minimize their carbon footprints in an effort to combat the escalating challenges of climate change. The GHG Protocol offers a rigorous framework for accurately measuring greenhouse gas emissions, which is a critical first step in any effective environmental strategy. By adopting these standards, entities are equipped to establish realistic reduction targets and implement concrete, actionable steps that contribute to substantial environmental benefits. This meticulous approach not only aids in mitigating the adverse effects of climate change but also positions these organizations as responsible leaders in environmental stewardship. 

History of GHG Protocol 

The GHG Protocol emerged in the late 1990s when the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) recognized the urgent need for an international standard in corporate GHG accounting and reporting. In response, WRI, in collaboration with major corporate entities like BP and General Motors, published a pivotal report in 1998 titled “Safe Climate, Sound Business.” This report laid out a comprehensive action plan to combat climate change, highlighting the critical need for a standardized framework to measure GHG emissions. 

Concurrently, similar discussions were taking place within the WBCSD. By late 1997, senior managers from WRI had met with WBCSD officials, culminating in an agreement to establish a groundbreaking NGO-business partnership dedicated to creating standardized methods for GHG accounting. To steer this ambitious initiative, WRI and WBCSD formed a core steering group, drawing members from both environmental organizations (including WWF, Pew Center on Global Climate Change, The Energy Research Institute) and the industrial sector (such as Norsk Hydro, Tokyo Electric, Shell). This diverse group was instrumental in guiding the development of a multi-stakeholder standard. 

The inaugural edition of the Corporate Standard was released in 2001 and has since been enhanced with supplementary guidance. These updates offer clear methodologies for companies to accurately measure emissions stemming from electricity and other energy procurement, and to account for emissions across their entire value chains. Additionally, the GHG Protocol has introduced an array of calculation tools designed to assist companies in quantifying their greenhouse gas emissions and evaluating the impact of their climate mitigation efforts. 

The Paris Agreement, ratified under the United Nations Framework Convention on Climate Change (UNFCC) in December 2015, represents a global commitment to limit the rise in global temperatures, adapt to existing climate changes, and progressively amplify these efforts. In line with these objectives, the GHG Protocol is actively developing standards, tools, and online training programs to support countries and cities in monitoring their advancement towards achieving climate goals. 

The Difference Between GHG Protocol and ISO 14064 

As the GHG Protocol expanded its programs, it entered into a partnership with the International Organization for Standardization (ISO) to develop ISO 14064. While similar in purpose, these two standards do have some fundamental differences. 

Feature	GHG Protocol	ISO 14064
Scope	Comprehensive, from corporate to country-level emissions	Focused on organization level GHG inventories
Application	All aspects of emission calculation	Quantifying, monitoring, reporting, and validating/verifying GHG inventories
Flexibility	Broad application	More detailed specifications
Target Audience	Governments, businesses, NGOs, and other organizations	Companies or organizations that require third-party verification
Structure	Two separate standards for organization-level emissions (Corporate Standard) and product level emissions (Product Life Cycle Accounting and Reporting Standard)	One standard for all GHG inventories

Conclusion 

The GHG Protocol is a globally recognized leader in the development of internationally accepted standards for measuring and reporting greenhouse gas emissions. Over the years it has evolved from a collaboration between two organizations to a multi-stakeholder partnership that includes businesses, governments, and NGOs. The GHG Protocol’s comprehensive standards and tools have not only helped these entities accurately measure their carbon footprints but also position themselves as responsible leaders in environmental stewardship.  

Sources: 

[1] https://www.pwc.com/gx/en/services/audit-assurance/corporate-reporting/esg-investor-survey.html 

[2] https://ghgprotocol.org/about-us