GHG Protocol and UK SRS: Greenhouse Gas Accounting Foundation

The GHG Protocol framework

The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, published by the World Resources Institute and World Business Council for Sustainable Development in 2004, provides the global methodology for corporate carbon accounting 2.

It establishes the foundational concepts of operational boundaries, organisational boundaries, and the three scopes of emissions that underpin virtually all corporate climate disclosure frameworks.

UK SRS S2 explicitly builds on GHG Protocol methodology for emissions quantification and reporting 1.

Companies must follow GHG Protocol approaches for defining organisational boundaries, categorising emissions, and applying quantification methodologies — making understanding of the GHG Protocol essential for UK SRS compliance.

The framework operates on five key principles: relevance (capture all sources that matter to decision-making), completeness (include all relevant sources), consistency (use methodologies that allow meaningful comparisons), transparency (disclose assumptions and methodologies), and accuracy (reduce bias and uncertainties) 2.

Scope 1, 2, 3: the three categories explained

The GHG Protocol categorises emissions into three scopes based on whether they are direct or indirect, and where they occur in the company's value chain 2.

This categorisation helps companies understand their complete carbon footprint and prioritise reduction efforts.

Scope 1 emissions are direct emissions from sources that are owned or controlled by the company — fuel combustion in company boilers, company-owned vehicles, industrial processes, and fugitive emissions from equipment 2.

These are typically the most straightforward to measure and manage.

Scope 2 emissions are indirect emissions from the generation of purchased energy consumed by the company — primarily electricity, but also steam, heat, or cooling 4.

The 2015 Scope 2 Guidance introduced dual reporting: location-based (average grid emissions) and market-based (reflecting energy purchasing choices) methods.

Scope 3 emissions include all other indirect emissions that occur in the company's value chain, categorised into 15 specific categories from purchased goods and services to investments and downstream transportation 3.

These often represent 70-90% of total emissions but are the most challenging to quantify accurately.

How UK SRS integrates GHG Protocol methodology

The FCA has proposed making UK SRS S2 disclosure mandatory from 2027, though as at August 2026 the FCA has not published a Policy Statement and no date is confirmed 6.

This includes organisational boundary definitions, emission factor applications, and the scope categorisation framework.

For organisational boundaries, companies must follow either the equity share or control approach as defined in the GHG Protocol, consistently applied across all scopes 2.

Most UK companies use the operational control approach, which includes 100% of emissions from operations they control regardless of ownership percentage.

UK SRS S2 requires separate disclosure of Scope 1, 2 and 3 emissions.

For Scope 2 it requires the location-based method; market-based reporting is permitted, not required, and only needs disclosing where relevant contractual instruments exist 1.

Companies must also disclose significant changes in emissions and explain methodological changes between reporting periods, following GHG Protocol transparency principles.

The GHG Protocol revision: what's changing

The GHG Protocol is undergoing its first major revision since 2004.

GHG Protocol and ISO are now consolidating their standards into a single, co-branded corporate standard: a consultation draft is estimated for Q2 2027, with the revised standard itself estimated for Q4 2028 — both are quarter-precision estimates, not confirmed dates 5.

The revision addresses technological changes, methodological improvements, and integration with newer frameworks like science-based targets and nature-related disclosures.

Key areas under review include updated emission factors for emerging technologies, improved Scope 3 quantification methodologies, integration with digital reporting systems, and alignment with the IFRS sustainability standards and other global frameworks 5.

The revision also addresses challenges companies face with data availability and estimation approaches for Scope 3 categories.

For UK companies, the timing matters: the FCA has proposed mandatory UK SRS S2 disclosure from 2027, though as at August 2026 this is not yet confirmed, while the revised GHG Protocol standard is not expected until around 2028 — the two timelines no longer line up as they once did.

Companies may need to adapt their methodologies as both frameworks evolve, potentially requiring systems that can accommodate both current and updated approaches during the transition period.

Implementation guidance for UK companies

UK companies preparing for UK SRS S2 compliance should establish GHG Protocol-aligned emissions accounting systems covering all three scopes, even where Scope 3 disclosure follows comply-or-explain initially 6.

Building comprehensive baseline data enables faster progression to full disclosure and demonstrates commitment to climate transparency.

For Scope 1 and 2 emissions, companies should implement direct measurement where possible, using consumption data and appropriate emission factors 2.

For Scope 2, the location-based calculation is what UK SRS S2 requires.

A market-based calculation is optional under UK SRS — useful where the company holds renewable energy contracts or other contractual instruments, and required for dual reporting under the GHG Protocol Scope 2 Guidance, but not a UK SRS obligation.

GHG-Protocol-aligned carbon management software automates these calculations.

Scope 3 preparation should focus on the most relevant categories for the business, typically purchased goods and services, business travel, and employee commuting as starting points 3.

Companies should develop supplier engagement strategies to improve data quality over time, moving from spend-based estimates to activity-based calculations where feasible.

• Establish organisational boundary definitions following GHG Protocol control or equity approaches
• Implement data collection systems for direct energy consumption and fuel use (Scope 1)
• Set up location-based Scope 2 reporting as the UK SRS requirement, adding market-based reporting only where contractual instruments make it relevant (optional under UK SRS, though dual reporting is GHG Protocol Scope 2 Guidance practice)
• Prioritise material Scope 3 categories and develop supplier data collection processes
• Create documentation systems that support GHG Protocol transparency requirements
• Monitor GHG Protocol revision updates and UK SRS technical guidance for methodology changes

Companies should also prepare for the methodological transparency that UK SRS requires, documenting calculation approaches, emission factors used, estimation methods, and assumptions made 1.

This documentation supports both compliance and credible climate disclosures that meet investor information needs.