Greenhouse Gas Protocol Reporting Considerations

While the new climate and sustainability standards and regulations are driving change in the reporting landscape, it is also important to recognize the potential business value of monitoring a company’s GHG emissions. Such monitoring may allow companies to identify business and financial risks that arise from their operations and provide management with insight into how to effectively manage those risks.

Companies within the scope of the E.U. Corporate Sustainability Reporting Directive (CSRD) are required to report on GHG emissions in accordance with the European Sustainability Reporting Standards (ESRS) or equivalent standards to be determined. The reporting timeline for the CSRD varies depending on the structure of the company, and a directive that postpones by two years the application of certain requirements under the CSRD by large entities that have not yet begun reporting and by listed small and medium-sized entities was published in the Official Journal of the European Union on April 16, 2025. However, some entities have already begun to report. For more information about the CSRD, see Deloitte’s January 9, 2023; August 17, 2023 (updated February 23, 2024); and March 7, 2025, Heads Up newsletters.

Various companies will need to comply with the International Sustainability Standards Board’s (ISSB’s) recently issued IFRS S1 and IFRS S2, which require disclosures such as information about GHG emissions and sustainability- and climate-related opportunities and risks, subject to jurisdictional adoption. IFRS S2 specifically requires reporting of GHG emissions measured in accordance with the GHG Protocol. IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024, subject to individual jurisdictional mandates. For more information about IFRS S1 and IFRS S2, see Deloitte’s June 30, 2023, Heads Up. For a list of jurisdictions that are taking steps to adopt or use IFRS S1 and IFRS S2, see Deloitte’s Adoption of IFRS Sustainability Disclosure Standards by Jurisdiction (commonly referred to as the “ISSB Adoption Tracker”).

In the United States, the SEC issued a final rule on climate-related disclosures on March 6, 2024. Among the final rule’s disclosure provisions is a requirement for registrants to report GHG emissions in a manner similar to that prescribed by the GHG Protocol. However, on April 4, 2024, the SEC voluntarily stayed the effective date of the final rule pending judicial review by the Eighth Circuit Court of Appeals of petitions challenging it. On March 27, 2025, the SEC voted to withdraw its legal defense of the final rule. On April 24, 2025, the court issued an order pausing the case and instructed the SEC to provide a status report within 90 days indicating whether it intends to review or reconsider the rule. For more information about the final rule, see Deloitte’s March 15, 2024 (updated April 8, 2024), Heads Up.

Three bills signed into law in California — SB-253, SB-261, and AB-1305 — require both public and private U.S. companies doing business in California to provide certain climate-related and GHG emission disclosures. Portions of Sections 38532 and 38533 of the California Health and Safety Code that were established upon the passage of SB-253 and SB-261 were amended by SB-219. The California Air Resources Board must adopt regulations to codify the requirements in SB-253 by July 1, 2025, and to codify the requirements in SB-261 by January 1, 2026. The effective date of AB-1305 is January 1, 2024. For more information about SB-253, SB-261, and AB-1305, see Deloitte’s October 10, 2023 (updated December 19, 2023), Heads Up. For more information about the amendments in SB-219, see Deloitte’s October 1, 2024, Heads Up.

For a comparison of significant sustainability-related reporting requirements issued by the SEC and the state of California in the United States, the European Union via the CSRD, and the ISSB within the IFRS Foundation, see Deloitte’s May 13, 2025, Sustainability Spotlight.

Figure I of the Scope 3 Technical Guidance, which is reproduced below, illustrates a reporting company’s value chain and the classification of GHG emissions into Scope 1, Scope 2, and the 15 categories of Scope 3.

Applicable climate and sustainability standards and regulations may prescribe organizational boundaries that differ from those delineated in the GHG Protocol. Therefore, if a company is reporting on emissions in accordance with a specific standard or regulation, it would need to carefully consider the organizational boundary requirements of that standard or regulation.

If a company is reporting on emissions in accordance with the GHG Protocol rather than a specific standard or regulation, it may choose one of three approaches to identify its organizational boundary. However, once the company selects an approach, it must apply that approach consistently across the organization. The three approaches are outlined below.

A company may need to use judgment to identify subsidiaries, investments, and assets within its organizational boundary. Once a company identifies its organizational boundary, it will be required to identify the activities and sources of emissions, including how emissions are categorized (i.e., Scope 1, Scope 2, or Scope 3) — also known as an operational boundary.

The GHG Protocol was initially developed over two decades ago to achieve multiple objectives, one of which, as stated in the Corporate Standard, is “[t]o provide business with information that can be used to build an effective strategy to manage and reduce GHG emissions.” Since that time, the regulatory landscape has evolved to reflect the capital markets’ heightened demand for disclosures about companies’ GHG emissions, resulting in an increased focus on transparency, consistency, and standardization. Such evolution has shifted how the GHG Protocol is being applied by companies to suit their purposes.

As business models evolve and transform, some companies may find that the current guidance in the GHG Protocol on accounting for emissions does not clearly address their circumstances. For example, since the GHG Protocol was developed before the introduction of circular business models (i.e., reduce and reuse), companies operating under such models must use greater judgment to apply the guidance. In such instances, companies are encouraged to provide clear and robust disclosures to ensure that users of their GHG emission reports can understand the judgments, inputs, and assumptions on which their GHG emission calculations are based.

Companies may use renewable energy credits to offset their Scope 2 emissions. Given the prevalence of renewable energy credits in the marketplace, companies may have the opportunity to completely offset their reported Scope 2 emissions and meet GHG emission targets even though they may still generate a significant amount of Scope 2 emissions.

The WRI and WBCSD have released a webinar recording discussing their findings on Scopes 1 and 3, as well as a summary of findings on Scope 2. Key themes and points raised by stakeholders are summarized in the figure below.

On the basis of the feedback provided to the WRI and WBCSD, a significant number of revisions to the GHG Protocol are expected. The update process is being overseen by the GHG Protocol organization’s newly established Steering Committee (SC) and Independent Standards Board (ISB). Five technical working groups (TWGs) have been established to develop the proposed updates, which will be subject to approval by the ISB. Companies are encouraged to carefully monitor the activities of the GHG Protocol organization to stay informed of any developments related to implementation guidance and revisions.