The Greenhouse Gas (GHG) Protocol is the world’s most widely used framework for measuring and managing greenhouse gas emissions. Developed jointly by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides the standards, guidance, and tools that businesses, governments, and organizations use to understand, quantify, and manage climate impacts.

This guide explains what the GHG Protocol is, how it works, and why it matters for companies preparing to report under CSRD and other sustainability frameworks.

What the GHG Protocol covers

The GHG Protocol has published several standards and guidance documents covering different aspects of GHG accounting:

• The Corporate Standard: The foundational standard for company-level GHG inventories, covering Scope 1, 2, and 3 emissions
• The Corporate Value Chain (Scope 3) Standard: Detailed guidance on measuring and reporting Scope 3 emissions across 15 categories
• The Project Protocol: For quantifying GHG reductions from projects (e.g., offsetting)
• The Land Sector and Removals Guidance: For land use, land-use change, and forestry

The three scopes of emissions

The GHG Protocol’s most important contribution is the three-scope framework for categorizing emissions:

Scope 1: Direct emissions

Emissions from sources that a company owns or controls directly. This includes combustion in company-owned boilers, furnaces, and vehicles, as well as process emissions from manufacturing.

Scope 2: Indirect emissions from energy

Emissions associated with the generation of purchased or acquired electricity, heat, steam, or cooling consumed by a company. Scope 2 can be reported on a location-based basis (using average grid emission factors) or a market-based basis (using contractual instruments like renewable energy certificates).

Scope 3: Value chain emissions

All other indirect emissions that occur in a company’s value chain, both upstream (e.g., purchased goods, business travel) and downstream (e.g., use of sold products, end-of-life treatment). Scope 3 typically represents the largest share of a company’s total footprint — often over 70%.

The 15 Scope 3 categories

The GHG Protocol defines 15 categories for Scope 3 emissions, covering the full upstream and downstream value chain. Understanding which categories are most material for your business is the first step to a credible Scope 3 inventory.

Why the GHG Protocol matters for CSRD

The European Sustainability Reporting Standards (ESRS) are explicitly aligned with the GHG Protocol. ESRS E1 — the CSRD standard on climate — references GHG Protocol methodology for Scope 1, 2, and 3 reporting. This means that if your GHG inventory follows the GHG Protocol, you’re building on the right foundation for CSRD compliance.

The GHG Protocol’s principles of relevance, completeness, consistency, transparency, and accuracy also align directly with the ESRS requirements for quality sustainability information.

Calculation methods under the GHG Protocol

The GHG Protocol supports several calculation methods for Scope 3:

• Spend-based: Multiplying spend by an industry-average emission factor — the simplest approach for initial inventories
• Average-data: Using physical activity data (e.g., tonnes of material purchased) with industry-average emission factors
• Hybrid: Combining average-data for most categories with supplier-specific data for the most material ones
• Supplier-specific: Using actual product-level emission data provided by suppliers — the most accurate approach

For an introduction to carbon accounting, see our guide to carbon accounting. For guidance on the financial side of sustainability, see our article on the role of carbon accounting in sustainable finance.

Why a hybrid approach is often best suited for mid-market companies

Most mid-market companies don’t have the resources to collect supplier-specific data for all Scope 3 categories. A hybrid approach — using spend-based estimates for lower-impact categories and progressively introducing activity-based or supplier-specific data for the most material ones — is the GHG Protocol’s recommended pathway for companies building their Scope 3 capability over time.

Coolset and GHG Protocol

Coolset’s carbon accounting methodology is certified by TÜV Rheinland as conformant with the GHG Protocol Corporate Standard and the GHG Protocol Corporate Value Chain (Scope 3) Standard. This means Coolset customers can trust that their GHG inventories meet the requirements of both the GHG Protocol and ESRS E1 under CSRD.

To see Coolset’s GHG Protocol-certified carbon accounting in action, book a demo.