GHG Protocol Is Updating Its Scope 3 Standard — Here's What Manufacturers Need to Change Before It's Final

The carbon accounting rulebook your company has been relying on since 2011 is getting its first major rewrite and the changes go much deeper than a formatting update.

On 31 March 2026, the GHG Protocol published its Phase 1 Progress Update on the revision of its Corporate Value Chain (Scope 3) Accounting and Reporting Standard. This document, developed by a 65-member Technical Working Group representing over 20 countries and 6 continents, is the first public output of a revision process that has been running since 2024, across 42 TWG meetings held between September 2024 and the end of 2025. The final revised standard is targeted for late 2027, with a full public consultation draft expected in a subsequent step in line with the Standard Development Plan.

Before going further: everything in this blog reflects draft proposals from the Phase 1 Progress Update. The GHG Protocol has stated clearly that all revisions remain subject to change and should not be treated as final or relied upon as compliance advice. That said, the direction is unambiguous — and manufacturers who wait for the final text before preparing will find themselves significantly behind.

This blog breaks down what is actually changing, what it means for your Scope 3 inventory, and where to focus your effort now.

The Scope 3 Standard was published in 2011. In the 15 years since, mandatory climate disclosure has become law in the EU, California, and multiple ISSB-aligned jurisdictions. Science-based targets now govern tens of thousands of companies globally. Supply chain emissions have moved from voluntary footnotes to legally required line items.

The standard has not kept pace. Gaps in the existing framework — around data quality, exclusion boundaries, supplier allocation, and verification — have allowed companies to report Scope 3 inventories that are technically compliant but practically uninformative. The Phase 1 revision is a direct response to that reality.

The revision is structured into three series. Series A addresses data quality and related topics, including allocation methods and reporting requirements. Series B addresses inventory boundary-setting. Series C addresses classification and reporting requirements for investments under Category 15. Each series contains multiple specific revisions, and each was voted on by the Technical Working Group — with support levels ranging from 80% to 100% across the proposals. These are not fringe positions. They reflect strong consensus among global sustainability experts, governments, universities, and companies across sectors.

Under the current standard, companies report total Scope 3 emissions by category and describe the data types they used in qualitative terms. There is no requirement to show how much of a category's reported figure comes from specific, supplier-level data versus spend-based estimates versus industry averages.

The proposed revision changes that. Companies would be required to disaggregate reported Scope 3 emissions into distinct tiers based on the type of data used to calculate each figure. The classification details are still being finalised — two options are under consideration — but both approaches require separating emissions derived from specific activity data from those built on spend-based or secondary proxy methods. Both options also include an "Unclassified" tier, which companies may use if they are unable or unwilling to disaggregate, to mitigate feasibility concerns.

The stated goal is to increase transparency, improve comparability between companies, and create a direct incentive for businesses to move away from broad estimates toward primary supplier data. Importantly, the proposed revision does not require companies to use any particular data type. It requires them to be transparent about which type they used. The exposure that creates — showing publicly what proportion of your Scope 3 inventory rests on spend-based proxies — is itself the incentive to improve.

This proposal received 80% TWG support. It is very likely to survive into the final standard in some form.

Currently, verification of Scope 3 emissions is entirely optional. The 2011 standard recommends disclosing verification information but does not require it even for companies that do verify their data.

The proposed revision introduces a requirement that applies specifically to companies that do carry out verification. If a company verifies any part of its Scope 3 inventory, it must now disclose which portions were verified using one of three standardised labels: Fully verified, Partially verified, or Not verified.

Companies that do not verify at all are not required to state that they have not — the proposed requirement is triggered only by the decision to verify. The intent is to give readers and auditors clear, consistent information about the integrity of reported data and to prevent ambiguity about what has and has not been independently reviewed.

This proposed revision received 87% TWG support.

Three linked proposals address how companies should manage emission factor quality and set goals for improving their data over time.

These three revisions are framed as recommendations, not requirements. But they reflect the direction the standard is heading. Companies that establish measurable data quality baselines now will be better positioned when these expectations become more prescriptive.

This is the most operationally disruptive of the Series A changes for manufacturers with complex supply chains.

Currently, the Scope 3 Standard allows companies to collect aggregated corporate-level emissions data from a supplier and allocate a share of that figure to the specific goods or services they purchased. This practice — using a supplier's total corporate footprint divided by revenue or production volume to estimate per-unit emissions — is widespread in Category 1 inventories.

The proposed revision restricts that approach. Corporate-level allocation would only be permitted for homogeneous suppliers — meaning suppliers whose operations, facilities, and product types have relatively uniform emissions intensity throughout. For diversified, non-homogeneous suppliers — those whose GHG intensity varies meaningfully across different business units, facilities, or product lines — corporate-level data allocation would no longer be acceptable.

For a diversified supplier, the revised hierarchy would require moving down to activity-level, production line-level, or facility-level data before corporate-level aggregation could be used. The proposed revision explicitly permits corporate-level allocation for non-attributable overhead costs (e.g., corporate overhead operations, R&D, facility lighting) regardless of supplier type — the restriction applies to attributable production-related data.

This revision received 91% TWG support.

This is the most structurally significant single change in the entire revision.

The 2011 standard requires companies to account for all Scope 3 emissions and justify any exclusions, but sets no quantified threshold. Companies have been able to exclude categories with qualitative justifications — describing categories as not applicable, insignificant, or difficult to calculate — without ever putting a number on what was being left out.

The proposed revision sets a hard minimum: companies must account for and report at least 95% of total required Scope 3 emissions. Exclusions are capped at 5% of total required Scope 3. "Required Scope 3" refers to emissions from the mandatory portions of Categories 1 through 15. The new optional Category 16 is excluded from this calculation.

This revision received 87% TWG support.

The 95% rule creates an immediate practical challenge: to prove that your exclusions fall within the 5% cap, you first have to measure them. Revision B2 makes this explicit as a requirement.

Companies must quantify 100% of total required Scope 3 emissions annually to validate that any exclusions fall within the threshold. The standard permits using any calculation method to do so, including hotspot analysis — a high-level estimation approach that uses spend-based proxies, industry averages, or other accessible methods to estimate the relative magnitude of emission sources.

The logic is that a hotspot analysis gives companies a workable path to compliance without requiring full, detailed calculation of every minor category. But it does require every category to receive some form of quantification, even if only a rough estimate.

What this means in practice: If you currently exclude a category from your Scope 3 inventory with a qualitative statement that it is not material, you will need to replace that statement with a number. Even a rough estimate, based on hotspot methods, will be required to justify the exclusion. For many manufacturers, this will reveal that some previously excluded categories are larger than assumed.

Three supporting revisions tighten how exclusions are disclosed. Required Scope 3 emissions that are excluded must be quantitatively disclosed and justified. Optional Scope 3 emissions that are excluded do not require justification. A new de minimis clause permits genuinely negligible sources — such as emissions from paper clips and staples, per the document's own example — to be excluded without full quantification, provided the cumulative total of all exclusions still falls within the 5% cap.

Standardised disclosure notation is also proposed. Companies would be required to use "not applicable" or "NA" for categories where no Scope 3 emissions are reasonably expected, and "excluded" or "X" for categories excluded within the 5% threshold.

This proposal received 100% TWG support — unanimous.

Under the 2011 standard, required and optional Scope 3 emissions can be reported together in a single total. The proposed revision requires them to be disaggregated and disclosed separately. This matters because optional emissions — including much of the new Category 16 — do not have a 95% inclusion requirement, and mixing them with required emissions creates comparability problems between companies and across reporting periods.

This revision also received 100% TWG support.

The existing 15-category Scope 3 framework does not cleanly accommodate activities where a company earns direct, transactional income from third-party activities it does not buy, sell, or own — for example, brokerage operations, licensing arrangements, and certain financial services.

The proposed revision introduces a new Category 16 to cover these facilitated emissions. The majority of subcategories within Category 16 are optional. However, one subcategory is proposed as required specifically for oil and gas distributors. Manufacturers with significant licensing revenues or services revenue streams attached to physical products should assess whether any of their activities could fall within this category's scope.

The more significant near-term implication of Category 16 is the structural clarification it brings to Category 15. Insurance-associated activities, underwriting, and issuance — previously ambiguously housed in Category 15 — would be reclassified into optional Category 16 subcategories, leaving Category 15 focused more narrowly on investments and financed emissions.

The most important single message from the Series C revisions for non-financial manufacturers is this: Category 15 is no longer only for financial institutions.

The proposed revisions clarify that all companies with investments must account for Category 15 emissions — not just investment managers, banks, and asset owners. If your company holds equity stakes, joint ventures, or other investment positions, those financed emissions now fall within the required Scope 3 boundary.

The boundary for what must be included in Category 15 has also been proposed to expand: investee Scope 1, Scope 2, and Scope 3 emissions would all be required within the reporting boundary, not just Scope 1 and 2. And the 5% exclusion threshold applies to Category 15, meaning that investment emissions cannot simply be excluded without quantification if they constitute more than 5% of total required Scope 3.

An updated calculation method (Revision C10) also proposes that equity proportionality now include both equity and debt in the denominator — aligning with external frameworks like PCAF and changing how financed emissions are attributed between equity holders and debt holders.

The public consultation draft is the next significant milestone. It will be the first version of the text open for formal stakeholder feedback, and it will likely clarify the classification rules for data disaggregation that remain unresolved in the Phase 1 document.

The GHG Protocol Scope 3 revision is not a bureaucratic tidying exercise. It is a systematic effort to make Scope 3 reporting serve the same functions that financial reporting serves — auditability, comparability, and decision-usefulness. The 95% threshold, the disaggregation requirement, the restriction on corporate-level supplier data, the Category 15 broadening: each of these changes moves the standard in the same direction, toward an inventory that can be independently verified, compared across companies, and trusted as a basis for target-setting and investment decisions.

For manufacturers, the operational implication is straightforward: the era of qualitative Scope 3 disclosure is ending. What replaces it requires better supplier data, more rigorous boundary decisions, and systems capable of tracking data quality across the entire value chain.

The public consultation draft will be the first version open for formal stakeholder input. The final standard is expected late 2027. The window to build the infrastructure — supplier relationships, data systems, internal processes — that makes that transition manageable is now.