Greenhouse Gas (GHG) Protocol: EU guide for business reporting

The Greenhouse Gas Protocol is the global gold standard for measuring and managing greenhouse gas emissions. For companies across the EU preparing carbon reports or shaping a climate strategy, it’s the bedrock of credible, consistent accounting.

In this article, you’ll:

• discover what the GHG Protocol is and why it matters
• understand the three emissions scopes—including how challenging Scope 3 can be
• explore the standards, tools, and training it offers
• see how it aligns with EU requirements like CSRD
• learn how upcoming revisions and industry dynamics could shape your strategy

By the end, you’ll have a clear, practical roadmap for applying the GHG Protocol to make informed decisions, unlock strategic insights, and stay ahead of evolving regulatory and stakeholder expectations.

What is the Greenhouse Gas Protocol?

Origins and purpose

The Greenhouse Gas Protocol (GHG Protocol) was launched in 1998 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It offers a globally recognised framework for measuring and managing greenhouse gas emissions across entire organisations, value chains, and cities.

Today, over 90% of Fortune 500 companies that report emissions use the GHG Protocol. It provides the accounting backbone for initiatives like the Science Based Targets initiative (SBTi) and the Carbon Disclosure Project (CDP).

Who uses it

The Protocol is used by:

• companies required to disclose under regulations like the Corporate Sustainability Reporting Directive (CSRD)
• climate consultants and sustainability teams
• cities, governments, and NGOs
• financial institutions and asset managers evaluating portfolio emissions

It’s a cornerstone of climate action planning for compliance and voluntary sustainability strategies.

Scope 1, 2 and 3 explained

Scope 1: Direct emissions

Scope 1 covers all direct greenhouse gas emissions from sources owned or controlled by the company. Examples include:

• fuel combustion in boilers, furnaces, and vehicles
• refrigerant leaks
• onsite industrial processes

Why it matters: These are most companies’ most measurable and controllable emissions.

Scope 2: Indirect energy

Scope 2 includes indirect emissions from purchased electricity, heat, or steam consumption.

The GHG Protocol distinguishes two ways to report Scope 2 emissions:

• location-based: uses average emissions from the electricity grid
• market-based: uses supplier-specific or contractual data (e.g. green electricity contracts)

Tip: EU companies aiming for net-zero often prioritise market-based reporting to show renewable energy usage.

Scope 3: Value chain emissions

Scope 3 includes all other indirect emissions in a company’s upstream and downstream value chain. There are 15 categories, such as:

• purchased goods and services
• business travel
• employee commuting
• use and end-of-life of sold products

Challenges of Scope 3

Scope 3 can represent over 70% of a company’s total emissions. However, data collection is complex and relies on estimates or supplier disclosures.

Double-counting and best practices

Scope 3 often overlaps across different companies, especially in shared supply chains. The GHG Protocol encourages transparency and data quality improvements over time.

Standards and guidance of the Protocol

Corporate accounting and reporting standards

The GHG Protocol Corporate Standard provides the foundation for organisational-level carbon accounting. It sets the rules for defining boundaries, choosing methodologies, and calculating emissions across all scopes.

Scope 2 guidance updates

In 2015, the Protocol introduced Scope 2 Guidance, requiring companies to report market- and location-based emissions. This added clarity but also introduced complexity.

Upcoming updates are expected to refine rules for supplier-specific claims and certificates.

Scope 3 standard and planned revisions

The GHG Protocol Scope 3 Standard outlines categorising and calculating value-chain emissions. Due to increased scrutiny, it’s undergoing major revisions, especially regarding:

• double-counting risks
• supplier engagement
• data hierarchy
• capital goods and financed emissions

A draft is expected in 2025, with final guidance by 2026.

Alignment with the EU regulatory context

CSRD, CSDDD and GHG Protocol

The Corporate Sustainability Reporting Directive (CSRD) mandates detailed non-financial reporting for thousands of EU companies. It requires disclosure of Scope 1, 2, and 3 emissions—precisely what the GHG Protocol provides.

The Corporate Sustainability Due Diligence Directive (CSDDD) also requires businesses to identify and act on climate-related risks in their supply chains.

EU policy developments and business thresholds

From 2024, large EU companies must report in accordance with the European Sustainability Reporting Standards (ESRS), which are harmonised with the GHG Protocol and SBTi frameworks.

Companies with over 250 employees, €40M turnover, or listed status must comply.

Evolution, future updates and stakeholder influence

Current revisions underway

In response to growing demand and evolving policy landscapes, the GHG Protocol is updating:

• Corporate Standard
• Scope 2 and Scope 3 Guidance
• sector-specific approaches

Public consultations are running throughout 2024.

Anticipated changes by 2026

Expect:

• more explicit rules on renewable energy certificates
• enhanced Scope 3 data quality requirements
• improved guidance for SMEs and digital tools

How EU companies can apply the Protocol

Building a compliant carbon inventory

Start by mapping your organisational and operational boundaries. Then, identify emission sources per scope. If primary data isn’t available, use default emission factors.

Carbon management software like Tapio can accelerate this process.

Prioritising emissions and action plans

Don’t wait for perfect data. Focus on:

• high-impact emission categories (e.g. purchased goods, transportation)
• high-control levers (e.g. energy use, travel policies)

From there, define a reduction plan and a yearly update cycle.

Integrating into the climate strategy and SBTi

For science-based targets or net-zero goals, GHG Protocol alignment is essential. Ensure:

• emissions are tracked over time
• reductions are based on absolute figures, not just intensity
• carbon contributions (not offsets) are disclosed

Conclusion

The Greenhouse Gas Protocol is more than a reporting standard—it’s a powerful tool for structuring your decarbonisation journey. For EU-based companies, it offers the credibility, consistency, and compatibility needed to align with CSRD, CSDDD, and stakeholder expectations.

By understanding the three scopes, using available tools, and engaging with upcoming changes, your business can stay ahead of regulation, reduce emissions, and build trust.

The most critical step? Starting. You don’t need perfect data. But you do need a process. And the GHG Protocol provides just that.

FAQs

What is the difference between Scope 2 market-based and location-based reporting?

Location-based reporting uses the average emissions from your country’s electricity grid. Market-based reporting uses your actual supplier or contract data (e.g. green energy). Both are required under the GHG Protocol.

How can EU companies align the GHG Protocol with CSRD?

By reporting Scope 1, 2, and 3 emissions using the Protocol’s structure, EU companies meet key ESRS climate disclosure requirements under CSRD.

Is it okay to start reporting Scope 3 with estimates?

Yes. It’s encouraged to start with estimates and improve them over time. Transparency about data quality is key.

Are there free tools for building a GHG inventory?

Yes. The GHG Protocol offers Excel tools and guidance. Platforms like Tapio also support compliant, user-friendly data collection.

When will the GHG Protocol revisions be finalised?

New standards and guidance are expected by 2026, with draft versions available in 2025.