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The Greenhouse Gas Protocol's Corporate Standard — Plain and Simple

For anyone taking inventory on corporate emissions and trying to step up climate action.

As a newcomer to the professional field of sustainability, I've spent a lot of time researching the methods and processes used to mitigate climate change. My position as an analyst at Carbon A List, puts me in a unique position where I essentially "get paid to learn." And part of my learning included participating in the Greenhouse Gas Protocol's (GHG-P) Three-Day Corporate Standards Training. In this blog, I give a digestible summary of the training and the Corporate Standard processes for those calculating and reporting greenhouse gas emissions on a corporate level.

A note to the reader: The Corporate Standard and this blog are extensive, for it is a summary of a three-day course and a 100-plus page guidance document. I've done my best to summarize it plainly and simply, but more research and investigation are needed to fully comprehend the Corporate Standard's uses and relevance to minimizing global warming. I hope to provide more information with additional blog posts in the future.

But first, who is the GHG-P?

The Greenhouse Gas Protocol (GHG-P) was created in 1998 by the World Resources Institute and the World Business Council for Sustainable Development to develop standard guidelines and tools for accounting, reporting, and reducing global greenhouse gas (GHG) emissions. They provide numerous protocols that offer universal guidance for regions, corporations, cross-sector and sector-specific methods for collecting and reporting emissions data. With that said, referencing this protocol is a great place to start for companies who want to understand their emissions and want to establish attainable emissions reductions.

The Corporate Standard

The GHG-P's Corporate Standard outlines the pathways for computing and reporting greenhouse gas emission inventories across corporate supply chains relating to scopes one and two. For clarity, scope one includes direct emissions from owned assets and main activities (e.g., facilities, company vehicles, etc.). Scope two considers indirect emissions from purchased energy (e.g., electricity, heating, cooling, etc.). Scope three emissions occur in upstream and downstream operations (e.g., raw inputs or the use and end of use of a product), but are not explored in this standard — for information on this process, see the GHG-P's Value Chain (Scope 3) Standard.

View the figure below to see a visual display of the activities, emissions, and emissions classifications by scope.

An overview of GHG Protocol scopes and emissions across the value chain from the GHG-P website.

The Corporate Standard (which I refer to as The Standard) outlines a handful of principles that I will reference as I explain the process and the requirements. The Standard reiterates these principles and their importance so that those taking inventory and reporting emissions do so in a way that upholds relevance, completeness, consistency, transparency, and accuracy. See the figure below for a brief review of these principles and their application during the process.

Excerpt from GHG-P Corporate Standard

Setting Boundaries: Organizational and Operational

To begin your accounting, you first must set boundaries. These boundaries will define the facilities and activities associated with the parent company and those relevant and required in the emissions report as directed.

The Organizational Boundary

The GHG-P distinguishes boundaries by the organization. This is the network of subsidiaries, facilities, or associated and affiliated companies within a parent company's production. A corporation will determine the limits of its organizational boundary using, what The Standard calls the "consolidation approach". The consolidation approach includes two sub-approaches: equity share and control. Using these sub-approaches, a corporation is better able to define the activities within its production and properly take inventory of its emissions data.

When a company uses equity share, it determines whether it has full or partial economic interest/responsibility for its extended units.

When a company uses the control approach, it determines whether they have full or partial control over another facility's financial and operational control. over another facility's operations and production policies.

The Operational Boundary

Once the organizational boundary is determined, it's time to conduct further classification by determining the operational boundary. The operational boundary uses the organizational boundary to determine whether the parent company must take full or partial ownership of the emissions produced by a facility. The GHG-P explains this further with the following example:

Organization X is a parent company that has full ownership and financial control of operations A and B, but only a 30% non operated interest and no financial control in operation C. Setting Organizational Boundary: X would decide whether to account for GHG emissions by equity share or financial control. If the choice is equity share, X would include A and B, as well as 30% of C's emissions. If the approach chosen is financial control, X would count only A and B's emissions as relevant and subject to consolidation. Once this has been decided, the organizational boundary has been defined. Setting Operational Boundary: Once the organizational boundary is set, X then needs to decide, on the basis of its business goals, whether to account only for scope 1 and scope 2, or whether to include relevant scope 3 categories for its operations. Operations A, B and C (if the equity approach is selected) account for the GHG emissions in the scopes chosen by X, i.e., they apply the corporate policy in drawing up their operational boundaries.

Once the emissions of the facilities within its boundary are determined, The Standard requires that emissions are classified further by scopes — scopes one, direct, or two, indirect emissions. Some additional examples of scope one emissions are those that the corporation owns equity or exercises control within their main activities. Scope two emissions are those associated indirectly, such as purchased energy. The Standard instructs that scope two emissions must be further classified by market- and location-based emissions. Location-based emissions are determined by the corporation's average energy consumption based on grid use (e.g., grid average emissions data). Market-based emissions are associated with the corporation's energy purchases (e.g., energy purchased from utility providers). Lastly, scope three includes all other emissions, but these emissions go beyond what is required in the Corporate Standard — for more information, refer to the Value Chain (Scope 3) Standard guidance document.

The Standard explains that the organizational and operational boundaries are defined by the corporation to minimize the likelihood of double-counted emissions. For instance, if companies and/or facilities associated with the parent company conduct their own GHG calculations and reports, their emissions will count in ways that are specific to their boundary. To reference the example given by the GHG-P above, what the parent company, Organization X, may classify as a scope three emissions, may be considered scope one emissions for Company A, in the event Company A calculates and reports emissions in a separate report.

Tracking, Identifying, and Calculating Emissions

Now that the organizational and operational boundaries are defined, it is time to conduct further inventory by tracking, identifying, and calculating emissions.


According to The Standard, tracking occurs once a base year is established. The base year is a point at which emissions data, and emissions data for the following years, are available and complete. The corporation will use this base year as a starting point for tracking emissions over time.

However, while a corporation is tracking emissions, corporate activity (e.g., merges, divestments, growth/decline in operations) will cause emissions data to fluctuate. To properly internalize these changes, the base year should be recalculated for the selected year in order to maintain its relevance and accuracy for the reporting period. However, recalculation is only necessary when the "significance threshold" is reached. This is when the transfer of emissions equals or exceeds a corporate-set degree of change determined by the corporation. An example in the training was a condition where a corporation sets a significance threshold equal to five percent — indicating that any transfer of emissions equaling or exceeding five percent warrant recalculation of base year emissions.

For more detail, The Standard states that the following changes require base year recalculation: structural changes (e.g., merges, acquisitions, and/or divestments of facilities and activities), adjustments to emission calculation methodology, and/or significant emissions errors that equal or go beyond the significance threshold. In contrast, changes caused by organic growth/decline and outsourced/insourced activities calculated in another scope do not require base year recalculation. View the figure below gives for a visual representation of such conditions and calculations:

An example of a base year recalculation from the Corporate Standard guidance document.

If significant changes occur in the middle of the year, The Standard expresses that emissions data for the entire base year and the current year must be recalculated. If complete data for the calculation is not available, recalculation can occur the following year when comprehensive data is available.

Identifying and Calculating Emissions

After setting the base year and the conditions for recalculations, identifying and calculating emissions occur. This is done by using the GHG-P's Five-Step Process:

  1. Identifying sources of emissions.
  2. Selecting calculation approach(es).
  3. Collecting data and choosing emissions factors.
  4. Applying calculation tools.
  5. Rolling up data to the corporate level.

Step one, identifying emission sources. The emission sources outlined in The Standard include stationary combustion (e.g., boilers and heaters), mobile combustion (e.g., transportation fleets), physical and chemical production processes (e.g., those included in scopes one and two), and fugitive emissions (e.g., intentional and unintentional emissions from leaks, cooling towers, etc.).

Step two, choosing the right calculation approach. There are several approaches for this step. One approach uses direct measurements from equipment that measures emissions, though this equipment isn't always available or cost-effective. Another measures inputs and outputs using the stoichiometric approach. Last is the most common, the estimation approach. To estimate emissions data multiply the activity data (e.g., scope one: fuel use records or scope two: electricity consumption records) by the relevant emissions factor using sector-specific calculation tools, step three.

After performing the equation, the product equals the estimated tonnes of corporate emissions. The solution to the formula gives the estimated tonnes of greenhouse gas emissions. If applying the equation to GHGs other than CO2, use the value specific to the GHGs Global Warming Potential (GWP). See the diagram below for a visual representation of the estimation approach for methane.

A visual representation of the calculation process from the Corporate Standard Training.

The calculations for scope two emissions require a little more work. If supplier-specific data is available, then both market-based and location-based data are needed. If the information is unavailable, only location-based data is required. According to The Standard, location-based data should come from regional or sub-national emissions factor data. National emissions factors, such as those published by the Environmental Protection Agency, can also satisfy this requirement.

In order of preference, market-based data should come from electricity attributed by certificates or equivalent instruments, supplier/utility emission rates, contracts for electricity, a residual mix of sub-national or national emission rates, or other grid-average emissions factors at the sub-national or national level. You will most likely select these sector-specific tools as you complete step four.

The final and fifth step is to roll up data to the corporate level. There are multiple approaches, and the difference between the approaches comes down to when and who conducts the emissions calculations. In the centralized approach, facilities report site-level activity data (via spreadsheets, databases, and/or forms) along with emissions factors. Then, at the corporate level, the product of the estimated tonnes and the Global Warming Potentials (GWPs) are performed and added together. In the decentralized approach, each unit reports emissions at the site level; and at the corporate level, the total is the sum of the values.

When deciding whether to use the centralized or decentralized approach, it's important to factor in the presence or absence of resources and training at the site level. This will greatly affect the accuracy and efficiency of reporting. In some cases, it may be helpful to use a hybrid approach; in that case, you can decide when and where the approaches are most appropriate.


At this point, the emissions sources are identified and calculated. Now, the data gets added to the report. The report can inform stakeholders who ask for it, such as the Carbon Disclosure Project (CDP), or shareholders of a company who would view it in a sustainability report. The information included in the report comes down to the intended use and audience, as this will affect the identification and calculation of emissions and the methods for addressing uncertainty.

There are different industry sectors and companies at various stages in their emissions reductions journey. The GHG-P Corporate Standard only acts as a guide to corporate emissions and accounting. It is not a program. However, the steps explained thus far provide a solid foundation for identifying and quantifying emissions data and serve as a good starting point. It may be helpful to review examples of emissions data reports and their uses by reviewing the CDP's A-List. This list contains corporations that have conducted similar inventories as directed by the program, and some reference the GHG-P Corporate Standard.

What's Next?

As the demand for transparency of a corporate's greenhouse gas emissions increases, corporations must respond, and the Greenhouse Gas Protocol's Corporate Standard provides a standard approach to doing so. The Greenhouse Gas Protocol's Corporate Standard also allows corporations to set emission reduction goals once they do so.

Yet, how a corporation presents its data can vary by need and audience; this negatively impacts one of the overarching goals, transparency. As I learn more about The Standard and how corporate's report their emissions data, I hope to investigate the benefits and outcomes of these methods and the corporations that use them.



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