The Greenhouse Gas Protocol is undergoing its most significant revision since the introduction of the Scope 2 Guidance in 2015. Proposed updates to the Corporate Standard and Scope 2 rules will reshape how organisations define boundaries, report exclusions, account for electricity, and substantiate renewable energy claims

While final standards are unlikely before 2027, the direction of travel is clear. Companies that wait for certainty, risk being unprepared — operationally, strategically, and reputationally.

At the same time, critical voices including contributors to the technical development of the proposals, have highlighted weaknesses and potential challenges.

Yet the debate is not just technical. It goes to the heart of what impact we should expect as a result of corporate climate action.  This article outlines: the key proposed changes; the structural problems they attempt to address — and may still leave unresolved; the actions all companies should now take to future-proof their GHG reporting.

1. Corporate Standard: Fewer Options, More Discipline

Organisational boundaries: control becomes central

The proposed Corporate Standard revisions would:

• Eliminate the equity share approach as an option (except for emissions from investees not under control that must be reported under scope 3, category 15)
• Require consolidation based on control (financial or operational)
• Align financial control more closely with financial accounting principles
• Introduce clearer definitions of operational control.

The implication is clear: boundary selection will become less flexible and more auditable.

For many organisations, this will require:

• A systematic review of joint ventures, leased assets, and contractual arrangements
• Reassessment of how “operational control” is interpreted in practice
• Better documentation of why certain entities or assets are included or excluded

Quantitative exclusion thresholds

The proposals introduce explicit exclusion thresholds:

• 1% for Scope 1
• 1% for Scope 2
• 5% for Scope 3

This shifts exclusions from judgement-based to quantitatively justified. Companies will need to estimate total emissions robustly enough to prove exclusions remain below thresholds.

This means the era of “immaterial by assumption” is ending.

2. Scope 2: The End of “Easy Zero”?

The most consequential changes sit within Scope 2 accounting.

Location-based method: precision and hierarchy

The proposed hierarchy prioritises:

1. Spatially granular factors first, then temporally granular factors
2. Consumption-based factors over production-based
3. Only “accessible” (public, credible, free) emission factors

This will push companies toward more geographically precise accounting and potentially hourly granularity over time.

It also raises comparability risks, not to mention a significant administrative burden for companies.

Market-Based Method: Accuracy, Impact, and Fairness Under Scrutiny

The current market-based method (MBM) has long been criticised. The proposed changes attempt to address some weaknesses — but not all.

The problems with the current system

1. Accuracy problem
• The “island problem” (buying certificates from grids that are not connected to the place)
• The “timing problem” (matching night consumption with solar certificates)
2. Impact problem
• Evidence suggests many REC/GOO purchases do not drive additional renewable capacity
3. Fairness problem
• Publicly supported renewables may be “appropriated” through certificate claims

In short: accounting zero does not necessarily mean causing zero.

Proposed Scope 2 Revisions: A Partial Fix?

The GHG Protocol proposals would require:

• Time and location matching of contractual instruments
• Deliverability within the same market boundary
• Pro-rata allocation of Standard Supply Service (SSS)
• Use of residual mix (or fossil-based factors where unavailable)

However, critics argue they still fail to solve deeper structural problems

• Companies cannot claim to have “used” a specific generator from a shared grid pool
• Time-matching may still allow non-additional purchases
• No clear additionality requirement
• Risk of misleading investors (e.g. contracting coal power but reporting zero via certificates)

One proposed solution from academic commentary is either:

• Introduce a causality/additionality requirement, or
• Explicitly state that MBM reflects purchase of attributes — not physical electricity use

This debate is not settled — and much may yet change before the proposals are finalised.

3. What All Companies Should Do Now

Regardless of final wording, there several actions are “no-regret” moves.

1. Review Organisational Boundaries

Prepare for stricter scrutiny and expanded disclosure requirements

2. Quantify and Justify Exclusions

Build systems that make exclusions transparent, traceable, and defensible.

3. Audit Electricity Procurement Data

Gather data and information as evidence of contract types, deliverability, time matching, vintage etc at sufficient granularity.

4. Reassess Reliance on Unbundled RECs and lack of time matching data

Boards should understand the transition risk embedded in current “zero” claims.

5. Strengthen Quality Criteria for Contractual Instruments

Develop clear internal rules covering factors including: market boundary alignment; time matching; treatment of residual mix.

6. Prepare Systems for Granular Data

Design reporting systems that can store: hourly or load-profile data; grid region identifiers; contract attributes etc.

7. Improve Transparency to Investors

Consider voluntarily reporting on the types of electricity contracts and the intent of the company’s renewables procurement strategy.  

4. The Bigger Shift: From Claims to Credibility

The revisions to the GHG Protocol reflect a broader market evolution:

• From flexibility → to comparability
• From marketing claims → to audit-ready evidence
• From symbolic procurement → to demonstrable impact

Companies that treat Scope 2 as a compliance exercise may find themselves exposed — technically, reputationally, and legally.

Those that act now — strengthening governance, data systems, and procurement strategy — will not only be prepared for whatever the final outcome of the proposed changes are in 2027. They will be better positioned to demonstrate a credible role in the energy transition.  For specific advice on the potential impacts of these changes for your company, please contact us.