The GHG Protocol sets the standard for measuring and reporting greenhouse gas emissions. It plays a critical role in how businesses assess their carbon footprint, risk exposure, and operational strategy. Recent announcements on updates to this framework could affect how investors and asset managers evaluate risks in their portfolios.
What’s New: Technical Working Groups Announced
On September 26, the GHG Protocol introduced new governance bodies to revise its corporate standards, including:
- A Steering Committee
- An Independent Standards Board
- Four Technical Working Groups focused on:
- Corporate Standard
- Scope 2
- Scope 3
- Actions & Market Instruments
These groups, selected from over 1,300 applicants, will drive the updates to emissions reporting standards, potentially altering how businesses are evaluated for performance and compliance.
Why This Matters for Investors
- Risk Evaluation: Investors use emissions data to assess the risk profile of companies. Changes to the GHG Protocol standards may impact how businesses are assessed, influencing investment decisions.
- Compliance: Upcoming revisions may affect how companies meet regulatory requirements, especially for those subject to the EU’s Corporate Sustainability Reporting Directive (CSRD) or California’s climate laws (SB 253 and SB 261).
- Operational Adjustments: Updates to Scope 3 standards could mean deeper tracking of supply chain emissions, affecting supplier assessments and logistics management.
Current Integration with Regulatory Frameworks
While the GHG Protocol doesn’t mandate disclosures itself, its standards are embedded in global regulations:
- ISSB’s IFRS S2 requires emissions measurement based on the GHG Protocol. Countries aligning with this include the UK, Japan, Canada, Australia, and Brazil.
- EU’s CSRD mandates companies disclose Scope 1, 2, and 3 emissions in line with GHG Protocol standards.
- California’s Climate Laws reference the GHG Protocol for required emissions and climate risk disclosures.
Harmony Analytics: Simplifying Compliance and Risk Management
Harmony offers tools to navigate these complexities, capturing corporate compliance data, including penalties related to supply chain issues like labor laws and pollution. We align data presentation with the latest legal requirements, streamlining the process for evaluating risks and ensuring companies meet evolving standards.
Connect with us to see how Harmony can support your strategy in a changing regulatory landscape.