What is the GHG Protocol

The GHG Protocol is the most widely used international standard for measuring, managing and reporting greenhouse gas (GHG) emissions from corporate operations and value chains. Developed jointly by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides the accounting framework that underpins virtually every major emissions disclosure regime in use today, from the CSRD in the European Union to the SEC climate rule in the United States and the ISSB Standards (IFRS S1 and S2).

How the GHG Protocol works in practice

The framework organizes a company’s emissions into three scopes:

• Scope 1 covers direct emissions from sources the company owns or controls, such as fuel burned in company vehicles or on-site boilers.
• Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating or cooling consumed by the company.
• Scope 3 covers all other indirect emissions that occur across the value chain, both upstream (purchased goods, business travel, employee commuting) and downstream (use of sold products, end-of-life treatment).

Scope 3 is subdivided into 15 categories. In most sectors, it represents the largest share of total emissions, often above 70 percent, yet it is also the hardest to quantify because it relies on data from suppliers, logistics providers and customers.

Consider a mid-size consumer goods manufacturer. Scope 1 would include the natural gas burned in its factory. Scope 2 would include the electricity purchased from the local grid to run that factory. Scope 3 would include the emissions embedded in raw materials sourced from third-party suppliers (Category 1), the freight logistics handled by a contracted carrier (Category 4), and the emissions generated when consumers use and eventually dispose of the finished product (Categories 11 and 12). The GHG Protocol tells the company exactly how to draw those boundaries, which emission factors to apply, and how to aggregate the numbers into a single inventory that an auditor or regulator can verify.

The main documents

The GHG Protocol is not a single document. It is a suite of standards and guidance, each covering a different use case:

• Corporate Standard (revised edition, 2004) provides the core accounting and reporting principles for company-level inventories.
• Scope 2 Guidance (2015) introduces the dual-reporting requirement of a location-based method and a market-based method for purchased energy.
• Corporate Value Chain (Scope 3) Standard (2011) sets out how to account for the 15 upstream and downstream categories.
• Product Life Cycle Standard addresses emissions at the individual product level.
• GHG Protocol for Cities adapts the framework for municipal and sub-national governments.

As of 2024, WRI and WBCSD launched a process to update and strengthen several of these standards, with revised drafts expected in the coming years. Companies preparing inventories today should monitor that revision process, because changes to Scope 3 calculation methods and to the market-based approach for Scope 2 are under discussion.

How the GHG Protocol applies in Brazil

Brazil adopted the GHG Protocol methodology through the Brazilian GHG Protocol Program (Programa Brasileiro GHG Protocol), coordinated by the Center for Sustainability Studies at Fundação Getulio Vargas (FGVces). The programme maintains a public emissions registry where participating companies publish annual inventories following the same Scope 1, 2 and 3 structure. Participation is voluntary for most companies, but the registry has become the de facto standard for corporate emissions disclosure in the country.

On the regulatory side, certain Brazilian states and agencies reference the GHG Protocol methodology in their own climate programmes. The São Paulo state programme (PROCLIMA), for example, uses GHG Protocol categories as the basis for its reporting requirements. Companies operating in Brazil, or sourcing from Brazilian suppliers, will almost always encounter the GHG Protocol framework when requesting emissions data from local partners.

For international professionals dealing with Brazilian operations, a practical point: Brazilian electricity grid emission factors (used for Scope 2 calculations) are published annually by the Ministry of Science, Technology and Innovation (MCTI). These factors reflect the country’s hydro-dominated energy matrix and tend to be lower than those in fossil-heavy grids, but they can fluctuate significantly in drought years when thermal generation increases.

The most common mistake

The most frequent error companies make with the GHG Protocol is treating Scope 2 as a simple calculation. Many organizations report only the location-based figure (grid average emission factor multiplied by consumption) and ignore the market-based method, or vice versa. The Scope 2 Guidance explicitly requires companies to report both. The location-based method reflects the average emissions intensity of the grid where consumption occurs. The market-based method reflects the specific energy contracts the company holds, such as renewable energy certificates (RECs) or power purchase agreements (PPAs). Reporting only one number can either overstate or understate a company’s actual exposure, and auditors increasingly flag single-method reporting as a nonconformity.

A related confusion is the assumption that purchasing RECs automatically reduces Scope 2 emissions to zero. Under the market-based method, RECs can bring the reported figure down, but the location-based figure remains unchanged. Both numbers appear in a compliant inventory, and investors reading the report will see both.

Why it matters beyond compliance

The GHG Protocol is not just an accounting exercise. It structures how companies identify emission hotspots, set reduction targets (including those validated by the Science Based Targets initiative, which requires GHG Protocol methodology), and track progress over time. Without a consistent inventory boundary and methodology, year-over-year comparisons become meaningless, and targets become impossible to verify. For investors, procurement teams and regulators, the GHG Protocol inventory is the baseline document: if the inventory is unreliable, everything built on top of it (carbon credits, transition plans, climate risk assessments) is unreliable too.

Primary sources: GHG Protocol Corporate Standard, revised edition (WRI/WBCSD, 2004); GHG Protocol Scope 2 Guidance (WRI/WBCSD, 2015); GHG Protocol Corporate Value Chain (Scope 3) Standard (WRI/WBCSD, 2011); Brazilian GHG Protocol Programme (FGVces, 2008); Grid emission factors for the Brazilian National Interconnected System (MCTI, 2026).