The GHG Protocol is the world's most widely used greenhouse gas accounting standard. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it defines the framework that virtually all sustainability reporting standards — including ESRS, VSME, ISSB, and CDP — rely on for emissions measurement.
The Three Scopes
The GHG Protocol divides a company's emissions into three scopes based on ownership and control:
| Scope | Source | Examples | Data difficulty |
|---|---|---|---|
| Scope 1 — Direct | Emissions from sources you own or control | Company vehicles, on-site boilers, manufacturing furnaces, refrigerant leaks | Low — fuel bills, fleet data |
| Scope 2 — Indirect (energy) | Emissions from purchased electricity, heat, or steam | Office electricity, factory power, district heating | Low — utility bills |
| Scope 3 — Value chain | All other indirect emissions in your value chain | Purchased goods, business travel, employee commuting, use of sold products, waste disposal | High — requires supply chain data |
Scope 1 in Practice
Scope 1 covers emissions from your own operations. For most SMEs, this includes:
- Fuel burned in company-owned vehicles (diesel, petrol, LNG)
- Natural gas used for heating offices or warehouses
- Process emissions from manufacturing (e.g., chemical reactions, welding)
- Fugitive emissions from refrigeration and air conditioning (F-gases)
Scope 1 = Activity data (litres of fuel, m³ of gas) × Emission factor (kgCO₂e per unit). Emission factors are published annually by DEFRA (UK), EPA (US), and national agencies.
Scope 2 in Practice
Scope 2 covers purchased energy. There are two methods:
- Location-based: Uses the average emission factor for the national or regional electricity grid
- Market-based: Uses the specific factor from your electricity contract (e.g., green tariff = lower factor)
ESRS E1 and VSME both require dual reporting — disclose both the location-based and market-based figures.
Scope 3 — The Hard One
Scope 3 typically represents 70–90% of a company's total carbon footprint but is the hardest to measure because the data sits outside your organisation. The GHG Protocol defines 15 categories:
- Upstream: purchased goods & services, capital goods, fuel & energy, transport, waste, business travel, employee commuting, leased assets
- Downstream: transport & distribution, processing of sold products, use of products, end-of-life, leased assets, franchises, investments
The VSME standard acknowledges that full Scope 3 measurement is disproportionately burdensome for SMEs. It allows companies to start with estimation-based approaches and focus on the most significant Scope 3 categories rather than all 15.
Getting Started with GHG Reporting
- Start with Scope 1 and 2 — the data is readily available from fuel and utility bills
- Use national emission factors (DEFRA, IEA, Fingrid for Finland)
- For Scope 3, identify your top 3 categories by spend and estimate from there
- Set a base year and track year-over-year changes
- Use a structured tool (like ExecutESG's GHG calculator) to automate factor lookups