The GHG Protocol’s Phase 1 Scope 3 Revision outlines proposed updates to improve data quality, boundary setting, and investment emissions reporting. Key changes include tiered data-quality disclosures, a 95% reporting threshold for required Scope 3 emissions, updated treatment of investments (Category 15), and a proposed new optional Category 16 for facilitated activities.
What is the GHG Protocol Scope 3 revision?
The GHG Protocol has released its first overview of progress on the revision of the Scope 3 Standard and Guidance. The topics that have been addressed in this initial stage revolve around
- data quality and related topics,
- the revision of Scope 3 inventory boundary settings,
- updates to Category 15 investments, and
- a proposed new optional Category 16.
These proposals are shared as a working draft for transparency, with a separate draft expected to be released for public consultation at a later date.
Proposed changes (Phase 1)
The GHG Protocol has grouped the revisions into three different groups:
- Group A – Data quality and related topics,
- Group B – Boundary setting, and
- Group C – Investment (Category 15).
For each individual proposed change, the document provides information on the current approach in place in the current standard, a summary to the proposed change, the proposed text revision of the standard and guidance, any options that are being considered as part of the revision, any pending revisions and the rationale to the proposed changes.
These can be found in detail in Scope 3 Standard Revisions Phase 1 Progress Update.
Below is NUS’ summary of the main points.
Group A – Data quality and related topics
- Disaggregated data quality tiers:
Scope 3 emissions data is to be disaggregated by data type into tiers determined by that standard. - Verification disclosure:
Reporting companies are to disclose the level of verification of their data as either: “Fully verified”, “Partially verified”, or “Not verified”. - Emission factors guidance + improvement targets:
Guidance on use of emission factors is to be provided, as well as requiring the reporting companies to set targets regarding data specificity and data quality improvements. - Supplier-specific emissions allocation:
Limiting the allocation of supplier specific emissions data at the corporate level to only companies that are seen as “homogeneous”. Definitions are to be provided to complete this proposed revision.
Group B – Boundary setting
- 95% conformance threshold:
Reporting companies must report at least 95% of the total Scope 3 required emissions in order to remain in conformance with the standard. - Annual recalculation:
All required Scope 3 emissions are to be calculated annually to ensure that the excluded emissions fall within the 5% exclusion threshold. - Required vs optional disclosures:
Reporting of Scope 3 emissions is to be disaggregated into required Scope 3 emissions vs optional Scope 3 emissions. These boundaries are yet to be determined. - Justify exclusions:
Companies are to disclose and justify the exclusion of any required Scope 3 emissions. The justification of exclusion is not required for optional Scope 3 emissions. - New optional Category 16 (facilitated activities)
This new category would capture facilitated activities and emissions – “emissions generated by third-party activities from which the reporting company earns direct, transactional income but never buys, sells, or owns the activity”.
Group C – Investment (Category 15)
- Narrower definitions:
Definitions to narrow the activities included in this category to only investments, with other financial activities and services being better suited to the new category 16. - Category 15 treated as required:
Category 15 is to be seen as required emissions, as well as reporting on investee’s Scope 1, 2 and 3 emissions. - Method updates aligned to industry:
The calculation methods for this category have been updated to align with industry standards such as PCAF.
What are the next stages?
The proposed changes are to be considered as a Working Draft under development and were released for transparency in order to give stakeholders insight into the potential changes and discussions on the topic. A separate draft will be developed and released for a future public consultation, in the same way as was done for the Scope 2 Guidance. The public consultation release date has not yet been announced.
How NUS Can Help
NUS supports industrial and commercial organisations with quantifying Scope 1, 2 and 3 emissions and aligning with leading standards and frameworks, including GHG Protocol, SBTi, CDP, B Corp and RE100.
If you would like to discuss how these proposed changes may affect your organisation, email contact@nusconsulting.co.uk (UK & Ireland) or contact NUS online.