GHG Protocol - Sustainability Impact Metrics

The Greenhouse Gas (GHG) protocol

The GHG Protocol is an international accounting tool for quantifying, managing and reporting greenhouse gas (GHG) emissions. It is a set of standards for organizations in the private as well as the public sector. It is applied by thousands of companies all over the world.
The standard is defined in three documents:

the GHG Protocol Corporate Standard revised
the GHG Protocol Scope 2 Guidance
the GHG Protocol Corporate Value Chain (Scope 3) Standard

Scope 1 emissions are direct emissions from a production facility and offices, plus transport by company owned passenger cars and trucks
Scope 2 emissions are indirect emissions from purchased electricity
Scope 3 emissions is from a list of purchased materials, products, and transport, as given in Table 8.2.

The GHG Protocol organization (WRI and WBCSD) also developed a guidance for LCA, the Product Life Cycle Accounting Reporting Standard, based on PAS 2050 and the LCA Handbook of the JRC (a comprehensive guidance based on the ISO 14040 and 14044). Basically it is all the same, but GHG Protocol has the language of business people and financial accountants. However, this LCA guide is not widely used.
From the GHG Protocol:
quote “The Corporate Value Chain (Scope 3) Standard accounts for emissions at the corporate level, while the Product Standard accounts for emissions at the individual product level. The Corporate Value Chain (Scope 3) Standard helps companies identify GHG reduction opportunities, track performance, and engage suppliers at a corporate level, while the Product Standard helps a company meet the same objectives at a product level. Together with the GHG Protocol Corporate Standard, the three standards provide a comprehensive approach to value chain GHG measurement and management” unquote

Content

Approximately 60% of the Fortune 500 companies use the GHG Protocol (derived from the CDP listing), so it is well accepted. But let’s be realistic: despite this high percentage of companies, the impact on reducing greenhouse gas emissions on global level is still extremely small. One of the reasons is that most of the companies apply only the “low hanging fruit” of Guarantees of Origin (GOs) or Renewable Energy Certificates (RECs), or other carbon offsets, to reduce their administrative emissions in the accounting system. Such tricks are just window dressing. For a detailed explanation, see the webpage on GOs and RECs.

Category	Category description	Minimum boundary
1. Purchased goods and services	• Extraction, production, and transportation of goods and services purchased or acquired by the reporting company in the reporting year, not otherwise included in Categories 2 – 8	• All upstream (cradle-to-gate) emissions of purchased goods and services
2. Capital goods	• Extraction, production, and transport- ation of capital goods purchased or acquired by the reporting company in the reporting year	• All upstream (cradle-to-gate) emissions of purchased capital goods
3. Fuel- and energy- related activities (not included in scope 1 or scope 2)	• Extraction, production, and transportation of fuels and energy purchased or acquired by the reporting company in the reporting year, not already accounted for in scope 1 or scope 2, including: a. Upstream emissions of purchased fuels (extraction, production, and transportation of fuels consumed by the reporting company) b. Upstream emissions of purchased electricity (extraction, production, and transportation of fuels consumed in the generation of electricity, steam, heating, and cooling consumed by the reporting company) c. Transmission and distribution (T&D) losses (generation of electricity, steam, heating and cooling that is consumed (i.e., lost) in a T&D system) – reported by end user d. Generation of purchased electricity that is sold to end users (generation of electricity, steam, heating, and cooling that is purchased by the reporting company and sold to end users) – reported by utility company or energy retailer only	a. For upstream emissions of purchased fuels: All upstream (cradle-to-gate) emissions of purchased fuels (from raw material extraction up to the point of, but excluding combustion) b. For upstream emissions of purchased electricity: All upstream (cradle-to-gate) emissions of purchased fuels (from raw material extraction up to the point of, but excluding, combustion by a power generator) c. For T&D losses: All upstream (cradle-to-gate) emissions of energy consumed in a T&D system, including emissions from combustion d. For generation of purchased electricity that is sold to end users: Emissions from the generation of purchased energy
4. Upstream transportation and distribution	• Transportation and distribution of products purchased by the reporting company in the reporting year between a company’s tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by the reporting company) • Transportation and distribution services purchased by the reporting company in the reporting year, including inbound logistics, outbound logistics (e.g., of sold products), and transportation and distribution between a company’s own facilities (in vehicles and facilities not owned or controlled by the reporting company)	• The scope 1 and scope 2 emissions of transportation and distribution providers that occur during use of vehicles and facilities (e.g., from energy use) • Optional: The life cycle emissions associated with manufacturing vehicles, facilities, or infrastructure
5. Waste generated in operations	• Disposal and treatment of waste generated in the reporting company’s operations in the reporting year (in facilities not owned or controlled by the reporting company)	• The scope 1 and scope 2 emissions of waste management suppliers that occur during disposal or treatment • Optional: Emissions from transportation of waste
6. Business travel	• Transportation of employees for business-related activities during the reporting year (in vehicles not owned or operated by the reporting company)	• The scope 1 and scope 2 emissions of transportation carriers that occur during use of vehicles (e.g., from energy use) • Optional: The life cycle emissions associated with manufacturing vehicles or infrastructure
7. Employee commuting	• Transportation of employees between their homes and their worksites during the reporting year (in vehicles not owned or operated by the reporting company)	• The scope 1 and scope 2 emissions of employees and transportation providers that occur during use of vehicles (e.g., from energy use) • Optional: Emissions from employee teleworking
8. Upstream leased assets	• Operation of assets leased by the reporting company (lessee) in the reporting year and not included in scope 1 and scope 2 – reported by lessee	• The scope 1 and scope 2 emissions of lessors that occur during the reporting company’s operation of leased assets (e.g., from energy use) • Optional: The life cycle emissions associated with manufacturing or constructing leased assets
9. Downstream transportation and distribution	• Transportation and distribution of products sold by the reporting company in the reporting year between the reporting company’s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company)	• The scope 1 and scope 2 emissions of transportation providers, distributors, and retailers that occur during use of vehicles and facilities (e.g., from energy use) • Optional: The life cycle emissions associated with manufacturing vehicles, facilities, or infrastructure
10. Processing of sold products	• Processing of intermediate products sold in the reporting year by downstream companies (e.g., manufacturers)	• The scope 1 and scope 2 emissions of downstream companies that occur during processing (e.g., from energy use)
11. Use of sold products	• End use of goods and services sold by the reporting company in the reporting year	• The direct use-phase emissions of sold products over their expected lifetime (i.e., the scope 1 and scope 2 emissions of end users that occur from the use of: products that directly consume energy (fuels or electricity) during use; fuels and feedstocks; and GHGs and products that contain or form GHGs that are emitted during use) • Optional: The indirect use-phase emissions of sold products over their expected lifetime (i.e., emissions from the use of products that indirectly consume energy (fuels or electricity) during use)
12. End-of-life treatment of sold products	• Waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life	• The scope 1 and scope 2 emissions of waste management companies that occur during disposal or treatment of sold products
13. Downstream leased assets	• Operation of assets owned by the reporting company (lessor) and leased to other entities in the reporting year, not included in scope 1 and scope 2 – reported by lessor	• The scope 1 and scope 2 emissions of lessees that occur during operation of leased assets (e.g., from energy use). • Optional: The life cycle emissions associated with manufacturing or constructing leased assets
14. Franchises	• Operation of franchises in the reporting year, not included in scope 1 and scope 2 – reported by franchisor	• The scope 1 and scope 2 emissions of franchisees that occur during operation of franchises (e.g., from energy use) • Optional: The life cycle emissions associated with manufacturing or constructing franchises
15. Investments	• Operation of investments (including equity and debt investments and project finance) in the reporting year, not included in scope 1 or scope 2	• See the description of category 15 (Investments) in section 5.5 for the required and optional boundaries

Table 8.2. The 15 Categories of Scope 3 (Source: Table 5.4 from the Scope 3 Standard)

References

GHG Protocol Corporate Accounting and Reporting Standard Revised (2004)

GHG Protocol Scope 2 Guidance (2015)

GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011)