As businesses worldwide intensify their efforts to combat climate change, accurately measuring and managing greenhouse gas (GHG) emissions has become a critical responsibility. Organizations are increasingly held accountable by stakeholders, regulators, and consumers to disclose their carbon footprints and implement effective reduction strategies. Failure to do so can lead to reputational damage, financial risks, and regulatory penalties.
The Greenhouse Gas (GHG) Protocol provides the global framework for measuring emissions, helping organizations establish credible reduction strategies. It offers standardized methodologies to ensure consistency, transparency, and comparability across industries and regions.
The protocol classifies emissions into three scopes: Scope 1, Scope 2, and Scope 3. Each scope represents a different aspect of an organization’s carbon footprint, from direct on-site emissions to indirect emissions generated throughout the value chain. Understanding these scopes and their impact is essential for effective carbon management, corporate sustainability reporting, and achieving long-term net-zero goals. By integrating GHG accounting into business strategy, companies can improve efficiency, reduce costs, and contribute meaningfully to global climate action.
The GHG Protocol and Its Importance
The GHG Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), is the most widely used standard for measuring and reporting greenhouse gas emissions. It provides comprehensive methodologies to help organizations account for direct and indirect emissions throughout their operations and value chains.
The GHG Protocol defines three categories of emissions:
Reference: Green House Gas Protocol
Scope 1 emissions originate from sources that an organization owns or controls. These emissions occur from fuel combustion and other direct activities. Examples include:
Reducing Scope 1 Emissions
Organizations can minimize Scope 1 emissions by adopting cleaner energy sources, improving fuel efficiency, and investing in low-carbon technologies.
Scope 2 emissions stem from the generation of electricity, steam, heating, and cooling that an organization purchases and consumes. These emissions occur off-site at the power plants supplying the energy but are attributed to the organization due to its usage.
Reducing Scope 2 Emissions
Organizations can mitigate Scope 2 emissions by:
Scope 3 emissions encompass all other indirect emissions that occur in an organization’s value chain. These emissions are not directly controlled by the company but result from its activities. Scope 3 is often the largest portion of an organization’s carbon footprint and includes 15 categories classified into upstream and downstream activities.
Reference: Green House Gas Protocol
15 Categories of Scope 3 Emissions
Upstream Emissions (Before Products Reach the Organization)
Downstream Emissions (After Products Leave the Organization)
9. Downstream transportation and distribution: Emissions from delivering sold products to end users, including retail, storage, and logistics.
10. Processing of sold products: Emissions from the transformation of sold goods into other products.
11. Use of sold products: Emissions generated when consumers use a company’s products (e.g., fuel combustion in vehicles, energy use in appliances).
12. End-of-life treatment of sold products: Emissions from disposal, recycling, or incineration of sold goods.
13. Downstream leased assets: Emissions from assets leased out to other businesses or customers.
14. Franchises: Emissions from franchise operations not owned by the company.
15. Investments: Emissions associated with investments, such as portfolio companies and managed assets.
Managing Scope 3 Emissions
Scope 3 emissions require extensive collaboration across the supply chain. Organizations can reduce their impact by:
Why Is Emission Calculation Important?
Accurately measuring Scope 1, 2, and 3 emissions allows organizations to:
Calculating and managing emissions under the GHG Protocol’s Scope 1, 2, and 3 framework is a fundamental step toward sustainability. Organizations must take a holistic approach by addressing direct emissions, energy-related emissions, and complex value chain emissions. By implementing robust measurement and reduction strategies, businesses can contribute meaningfully to global climate action while enhancing long-term resilience and efficiency.