Greenhouse Gas Protocol Unveils Standards for Corporate Value Chain and Products

10/05/2011 06:33 pm ET | Updated Dec 05, 2011

This piece was written with Pankaj Bhatia, Director of the GHG Protocol Initiative.

Yesterday, the GHG Protocol launched two new global greenhouse gas accounting standards - for corporate value chains (scope 3) and product life cycle emissions that will empower businesses to better measure, manage, and report their greenhouse gas emissions. For the first time, companies can use a standardized methodology to measure emissions throughout value chains and products.

The GHG Protocol (GHGP) refers to a family of greenhouse gas accounting and reporting standards and guidelines. Each is rigorously developed by global multi-stakeholder partnerships of businesses, NGOs, governments and others, convened by the World Resources Institute and the World Business Council for Sustainable Development. Over 85 percent of 2487 companies who took part in a 2010 Carbon Disclosure Project survey either directly used GHGP or did so through participation in a climate change program. Other notable users include the Climate Registry, Mexico's GHG Program, Brazil's GHG Protocol Program, and UK DEFRA's Voluntary Reporting Guidelines.

The new standards are a response to demand from our partners around the world. In New Zealand, exporters of dairy products were being asked to account for food miles. In Kenya, flower exporters were being asked to report on transportation miles. And in the United States the Wall Street Journal highlighted the difficulties facing a multinational company in claiming progress toward carbon-neutrality without accounting for its supply chain impacts. Demand was growing from both the market and stakeholders for GHG information across a company or product's value chain.

Scope 3 (value chain) emissions are the buried treasure of corporate GHG management. It is where the surprises and biggest reduction opportunities are often found. The new standard provides a treasure map for companies to locate opportunities for emission reductions with significant business benefits.

It has taken three years to develop the two new standards that meet this demand. Close to 2,500 partners worldwide participated, and 60 companies from 17 countries road-tested the standards. The Consumer Goods Forum has endorsed both standards and The Sustainability Consortium has adopted the product standard.

Two characteristics in particular make GHGP both unique and successful: the multi-stakeholder process and rigorous road-testing of the draft standards. Together, these ensure that our standards are both robust and user-friendly. We also partner with leading industry associations such as IPIECA (oil and gas), the WBCSD Sustainable Cement Initiative, and the International Aluminum Institute, on sector-specific calculation tools and guidance.

Not every company or government agency is equipped to apply GHG Protocol standards from day one. So we also help build organizations' measurement and reporting capacity, and provide support for design and implementation of national or local GHG programs, especially in developing countries.

The GHGP has invested in major outreach efforts in China, Brazil, India, Philippines and Mexico. This has required patience and perseverance. In Brazil, for example, officials initially questioned the need to measure corporate-level greenhouse gases, while in China the word "protocol" triggered alarm as it translates in Mandarin into mandatory action. Being responsive to developing country concerns, however, paid off. Initiatives are now underway in all five target countries.

Though these new standards mark a major milestone, we have a lot of important work ahead of us. First, developing sector-specific guidance and training programs to support use of the new standards. Second, developing a new protocol for the agriculture and food products sector, which lacks an internationally consistent method to account for GHG emissions. Third, working on an international GHG accounting standard for cities. Fourth, developing an internationally consistent methodology for GHG accounting of countries' climate mitigation policies.

The GHG Protocol is a means and not an end. The new standards will only be successful if they drive stronger management, and reduction, of emissions. Our hope is that companies will soon routinely factor GHG emissions into all product design and procurement decisions.