The GHG Protocol Explained Simply
Last updated: April 2026
Summary
- The GHG Protocol is the global standard for measuring and reporting greenhouse gas emissions — used by over 90% of Fortune 500 companies
- It defines the three emission scopes (1, 2, 3), organisational boundaries, and 15 Scope 3 categories used worldwide
- AASB S2 requires GHG Protocol methodology — so understanding it is essential for Australian mandatory reporting
What Is the GHG Protocol?
The Greenhouse Gas Protocol (GHG Protocol) is a set of standards for measuring, managing, and reporting greenhouse gas emissions. It was developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), first published in 2001 and updated since.
Think of it as the "accounting standard" for carbon — just as GAAP or IFRS standardise financial reporting, the GHG Protocol standardises emissions reporting. It ensures that when Company A and Company B both say they emit 1,000 tonnes of CO2, they mean the same thing.
The key documents are:
- Corporate Standard (2004, revised 2015): How to set boundaries and measure Scope 1 and 2 emissions
- Scope 2 Guidance (2015): Dual reporting — location-based and market-based methods for purchased electricity
- Corporate Value Chain Standard (2011): How to measure Scope 3 emissions across 15 categories
The Five Principles
Every GHG inventory should follow these five principles:
Relevance
The inventory reflects the entity's actual emissions and serves the decision-making needs of users
Completeness
Account for all emission sources within the boundary. Disclose and justify any exclusions
Consistency
Use consistent methods year to year so trends are meaningful. Document any methodology changes
Transparency
Document all assumptions, methodologies, and data sources so third parties can verify
Accuracy
Reduce bias and uncertainties as far as practicable. Prefer measured data over estimates
Setting Your Organisational Boundary
Before counting emissions, you must define what is in and what is out. The GHG Protocol offers two approaches:
Operational Control (Most Common)
Include 100% of emissions from operations where your company has the authority to introduce and implement operating policies. This is the simplest approach and the most widely used by SMBs.
- If you run a facility, include it — even if you don't own the building
- If a joint venture partner runs a facility, exclude it — even if you own equity
- Leased vehicles and offices you control: include them
Equity Share
Include emissions proportional to your ownership percentage in each operation.
- If you own 60% of a joint venture, include 60% of its emissions
- More complex to calculate but better reflects financial exposure
- Common in extractive industries, financial services, and real estate
For most Australian SMBs: Operational control is the right choice. It is simpler, aligns with managerial responsibility, and is the default assumption under AASB S2. Document your choice and apply it consistently.
The Three Scopes
Once your boundary is set, emissions are categorised into three scopes. This is the GHG Protocol's most important contribution — it ensures clarity about who is responsible for which emissions and prevents double-counting.
- Scope 1 — Direct emissions: From sources you own or control (vehicles, gas heating, refrigerants, on-site combustion)
- Scope 2 — Purchased energy: Indirect emissions from purchased electricity, heat, or steam
- Scope 3 — Value chain: All other indirect emissions across 15 upstream and downstream categories
For a detailed breakdown with Australian examples, see our Scope 1, 2, and 3 guide.
The 15 Scope 3 Categories
The GHG Protocol Corporate Value Chain Standard defines 15 categories of Scope 3 emissions. You report those that are material to your business:
| # | Category | Direction |
|---|---|---|
| 1 | Purchased goods and services | Upstream |
| 2 | Capital goods | Upstream |
| 3 | Fuel- and energy-related activities | Upstream |
| 4 | Upstream transportation and distribution | Upstream |
| 5 | Waste generated in operations | Upstream |
| 6 | Business travel | Upstream |
| 7 | Employee commuting | Upstream |
| 8 | Upstream leased assets | Upstream |
| 9 | Downstream transportation and distribution | Downstream |
| 10 | Processing of sold products | Downstream |
| 11 | Use of sold products | Downstream |
| 12 | End-of-life treatment of sold products | Downstream |
| 13 | Downstream leased assets | Downstream |
| 14 | Franchises | Downstream |
| 15 | Investments | Downstream |
How GHG Protocol Connects to AASB S2
AASB S2 does not reinvent the wheel for emissions measurement — it delegates to the GHG Protocol. Here is how they connect:
| GHG Protocol concept | AASB S2 requirement |
|---|---|
| Scope 1 & 2 (Corporate Standard) | Required from Year 1 |
| Scope 2 dual reporting (location + market) | Both methods required where applicable |
| Scope 3 (Value Chain Standard) | Required from Year 2 (all material categories) |
| Organisational boundary | Must disclose which approach is used |
| Five principles | Underpins AASB S2 disclosure quality requirements |
In short: learn the GHG Protocol and you have learned the methodology AASB S2 requires.
Frequently Asked Questions
What is the GHG Protocol?
Is the GHG Protocol mandatory in Australia?
What is the difference between operational control and equity share?
How does the GHG Protocol relate to AASB S2?
What are the five principles of the GHG Protocol?
GHG Protocol methodology, built in
Emisso follows GHG Protocol Corporate Standard methodology with verified emission factors. Enter your activity data and get a compliant carbon inventory.