The GHG Protocol and the 3 scopes
On This Page (8 sections)
The Greenhouse Gas Protocol (GHG Protocol) is the set of standards that companies use to measure and report their greenhouse gas emissions. The World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) started it in 1998. IFRS S2 requires companies to measure their emissions with the GHG Protocol Corporate Standard, so Malaysian companies that report under the NSRF use it too.
The main documents
| Document | Year | What it covers |
|---|---|---|
| Corporate Standard | 2001, revised 2004 | How to build a company inventory: boundaries, scopes, base year, quality and reporting. |
| Scope 2 Guidance | 2015 | How to count emissions from purchased electricity, steam, heating and cooling. |
| Corporate Value Chain (Scope 3) Standard | 2011 | How to count the 15 categories of value chain emissions. |
| Product Standard | 2011 | How to count the life cycle emissions of a single product. You do not need it for a company inventory. |
The Corporate Standard covers 7 gases: CO₂, methane, nitrous oxide, HFCs, PFCs, sulphur hexafluoride and nitrogen trifluoride. Nitrogen trifluoride became a required gas in 2013.
The 3 scopes
The scopes sort emissions by who controls the source. This prevents one company from counting the same tonne twice.
| Scope | Definition | Examples |
|---|---|---|
| Scope 1 | Direct emissions from sources that you own or control | Diesel in company lorries, gas in boilers, generator fuel, refrigerant leaks, process emissions |
| Scope 2 | Indirect emissions from the energy that you buy | Grid electricity for offices and factories, purchased chilled water or steam |
| Scope 3 | All other indirect emissions in your value chain | Raw materials, freight, flights, staff commuting, waste, use of sold products |
Scope 2 emissions physically happen at the power station, but you cause them when you use the electricity. That is why they belong to your inventory.
Two ways to count Scope 2
The Scope 2 Guidance asks for two figures:
- The location-based method uses the average emission factor of the grid where you use the electricity.
- The market-based method uses the factors from the contracts that you hold, for example renewable energy certificates or a green tariff. If you hold no contracts, it uses a residual mix factor.
IFRS S2 requires the location-based figure. It also asks for information about any contracts that help users understand your Scope 2, so many companies report both.
The 15 Scope 3 categories
| Upstream | Downstream |
|---|---|
| 1. Purchased goods and services | 9. Downstream transportation and distribution |
| 2. Capital goods | 10. Processing of sold products |
| 3. Fuel- and energy-related activities not in Scope 1 or 2 | 11. Use of sold products |
| 4. Upstream transportation and distribution | 12. End-of-life treatment of sold products |
| 5. Waste generated in operations | 13. Downstream leased assets |
| 6. Business travel | 14. Franchises |
| 7. Employee commuting | 15. Investments |
| 8. Upstream leased assets |
The Corporate Standard makes Scope 3 optional. IFRS S2 does not: a company must consider all 15 categories and report those that are relevant, after a first-year relief. Bursa Malaysia already asks listed companies for at least business travel and employee commuting. Banks, insurers and asset managers report category 15 as financed emissions.
Organisational boundaries
Before you count by scope, you decide which parts of your group the inventory covers. The Corporate Standard gives 3 approaches:
- Equity share: you count your percentage share of each operation's emissions.
- Financial control: you count 100% of the operations whose financial and operating policies you direct, and 0% of the others.
- Operational control: you count 100% of the operations where you set the operating policies, and 0% of the others.
Step 2: Set your organisational boundaries explains how to choose.
Changes on the way
In July 2026, the GHG Protocol and the International Organization for Standardization (ISO) said they will combine their corporate standards into one. The new standard will replace the Corporate Standard, the Scope 2 Guidance, the Scope 3 Standard and ISO 14064-1. A draft is planned for public consultation in the second quarter of 2027, and the final standard for the fourth quarter of 2028.
One topic under review is the market-based method for Scope 2. The working group proposes to compare clean electricity purchases with use hour by hour. The details are not final. Until the new standard is published, the current documents apply.
The GHG Protocol in Carbon GPT
In Carbon GPT, each measure that you add belongs to a scope and, for Scope 3, to a category. The Measures guide shows how. For worked examples of each scope, read our blog post Scope 1, 2 and 3 emissions explained.
Sources
- GHG Protocol: About WRI and WBCSD
- GHG Protocol Corporate Standard
- GHG Protocol Scope 2 Guidance
- GHG Protocol Corporate Value Chain (Scope 3) Standard
- GHG Protocol: Nitrogen trifluoride now required (2013)
- GHG Protocol: Standard development updates (July 2026)
- GHG Protocol: Scope 2 market-based method update (October 2026)
- IFRS S2 Climate-related Disclosures
