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<\/a><\/p>\nGHG Protocol was established in 1997 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) to develop comprehensive global standardized frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions. GHG Protocol\u2019s standards have been integrated and referenced in major global sustainability reporting frameworks including the IFRS Foundation\u2019s ISSB standards and the European Sustainability Reporting Standards (ESRS) underlying the CSRD regulation.<\/p>\n
Scope 3 emissions, such as those originating in the supply chain, or in the use and disposal of products sold, typically account for the vast majority of most companies\u2019 carbon footprint, but are often the most challenging to measure and report, as they occur outside of companies\u2019 direct control. GHG Protocol released its initial Scope 3 Standard in 2011. The current standard includes 15 Scope 3 categories, such as Purchased Goods and Services (Category 1), Upstream Transportation and Distribution (Category 4), and Investments (Category 15).<\/p>\n
The GHG Protocol initiated a process to revise the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, with the new document aimed at providing insights into the proposed revisions under discussion and development by the Technical Working Group (TWGs), with a complete draft standard for public consultation expected to be forthcoming. The document highlights proposals in areas including data quality, boundary setting for Scope 3 inventories and Scope 3 categories, and reporting requirements for investments (Category 15).<\/p>\n
The new document outlines several data quality-related proposals aimed at bolstering the integrity and usability of Scope 3 emissions data and support best practices in GHG accounting. These include a new proposed requirement to disaggregate reported Scope 3 emissions into distinct tiers based on data type for each category, in order to help support improved transparency, consistency, relevance, and greater comparability, in light of the current varying levels of disclosure regarding data inputs.<\/p>\n
A key proposed update is a new requirement for companies to report at least 95% of total required scope 3 emissions in order to be in conformance with the Scope 3 Standard, compared to the current standard which doesn\u2019t quantify the requirement, but says instead that \u201ccompanies shall account for all scope 3 emissions and disclose and justify any exclusions.\u201d In the rationale for the change, the document stated that the \u201crequirement ensures that all major activities attributable to a reporting company\u2019s business (by emission magnitude) are included in said company\u2019s corporate scope 3 inventory,\u201d while the allowed exclusion of minor sources of up to 5% \u201cpermits companies to focus calculation resources on those scope 3 emission sources which account for the largest fraction of emissions.\u201d<\/p>\n
Additionally, the document outlines a proposal to create a new \u201cCategory 16,\u201d that would encompass other value chain activities, such as facilitated emissions, or those generated by third-party activities in which the company earns direct, transactional income but never buys, sells, or owns the activity, or for licensing activities. The document proposes that most Category 16 reporting would be optional.<\/p>\n
Another key proposed change would update the classification and reporting requirements for investments under Category 15. First, the proposed standard would clarify that Category 15 applies to all companies, and not just to investment managers. The changes would also narrow the activities included in Category 15, with financed emissions to continue to be included, but other financial services such as insurance and underwriting reclassified to a new optional category under Category 16.<\/p>\n
The document forms part of a process underway by the GHG Protocol to update its suite of standards. The GHG Protocol recently also released consultations on proposed changes to its Scope 2<\/a> Guidance, which covers emissions from purchased or acquired electricity, steam, heat and cooling.<\/p>\n