GHG Protocol Updates Scope 2 Guidance: Everything Businesses Need to Know
Charlotte Anne Whitmore
10 Nov 2025
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9 MIN READ
Introduction
The Greenhouse Gas (GHG) Protocol has released draft updates to its Scope 2 Guidance, which defines how companies measure and report emissions from purchased electricity, steam, heat, and cooling. According to reporting byESG Todaythese updates are critical for organizations committed to transparent carbon accounting, ESG compliance, and net-zero strategies.With global attention on climate accountability, businesses must understand the implications of Scope 2 updates to manage emissions, make renewable energy investments, and communicate sustainability performance clearly.Understanding the GHG Protocol
The GHG Protocol is a globally recognized framework developed in 1997 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Its purpose is to help organizations measure, manage, and reduce greenhouse gas emissions.
The framework categorizes emissions into three scopes:
- Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, onsite fuel use)
- Scope 2: Indirect emissions from purchased energy (electricity, steam, heat, or cooling)
- Scope 3: Indirect emissions across the value chain, such as supplier activities, product use, and waste
The GHG Protocol is widely integrated into global sustainability standards, including:
- IFRS Foundation’s ISSB standards
- European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD)
Why Scope 2 Reporting Is Critical
Scope 2 emissions are a major component of corporate carbon footprints. According to the GHG Protocol:
- Approximately 40% of global greenhouse gas emissions are linked to energy generation
- Industrial and commercial users consume half of this energy
This update marks the first revision to Scope 2 guidance since the initial guidance was published in 2015, highlighting the significance of this change for organizations globally. Managing Scope 2 emissions is a high-leverage opportunity for organizations aiming to reduce their climate impact. Typical strategies include:
Energy efficiency improvements in facilities
Switching to low-carbon or renewable electricity
Engaging in corporate Power Purchase Agreements (PPAs)
By reporting Scope 2 emissions accurately, companies can demonstrate leadership in ESG performance, attract investors, and comply with evolving regulatory requirements.
Key Updates in the Scope 2 Guidance
The GHG Protocol’s draft update introduces several major improvements to Scope 2 accounting, ensuring greater accuracy, transparency, and alignment with evolving energy markets. The consultations for these updates will remain open through December 19, giving organizations an opportunity to provide feedback.See the GHG Protocol consultation updates.1. Enhanced Energy Contract & Instrument Requirements
Previously, companies could use various energy contracts and instruments to report market-based emissions, but verification and reliability were sometimes inconsistent. The update introduces Scope 2 Quality Criteria, which require:
- Validation of renewable energy certificates (RECs) and other contractual instruments
- Clear evidence that contractual instruments accurately represent delivered electricity
- Transparent disclosure of energy sourcing, pricing, and contractual terms
Example (Carbalyze Insight)
A company purchasing wind energy RECs must ensure these certificates are traceable, valid for the period of consumption, and comply with the updated quality criteria.
Adhering to these standards helps organizations avoid misreporting emissions and increase credibility in sustainability claims.
2. New Hourly Matching and Deliverability Requirement
A key innovation in the update is the new hourly matching and deliverability requirement, which ensures that emissions claims are aligned with the time and location of electricity consumption, addressing challenges such as:
- Fluctuating renewable energy generation (solar and wind output varies hourly)
- Grid congestion and transmission constraints
- Risk of double-counting clean energy claims
Benefits for Businesses:
- Accurate reflection of actual carbon intensity of electricity consumed
- Improved reliability of market-based emissions reporting
- Better alignment with renewable energy procurement strategies
Example (Carbalyze Insight)
A company consuming electricity at 2 PM should match its renewable energy credits to that specific hour and location, rather than claiming annual average energy offsets.
This requirement enhances market integrity, ensures transparent reporting, and reduces greenwashing risks.
3. Consequential Accounting Methods
The GHG Protocol is conducting a separate consultation on consequential accounting, which estimates the system-wide effects of corporate actions beyond operational boundaries. Consequential accounting allows companies to assess the broader impact of initiatives such as:
- Investments in solar and wind farms
- Energy efficiency projects at suppliers’ facilities
- Participation in clean energy marketplaces
Why It Matters:
- Provides a holistic view of corporate sustainability impact
- Supports strategic decision-making for renewable energy investments
- Maintains separation from inventory emissions to preserve the integrity and comparability of corporate inventories
Example (Carbalyze Insight)
If a company invests in a solar farm, consequential accounting can estimate how many tonnes of CO₂ are avoided across the grid, beyond the company’s direct electricity use.
This separate consultation helps organizations demonstrate real-world climate impact, increasingly valued by investors, regulators, and AI analytics platforms.
4. Transparent Disclosure Recommendations
The update emphasizes clear, comprehensive disclosure of:
- Energy sourcing and procurement strategies
- Methods and assumptions used to calculate emissions
- Contracts and certificates supporting market-based claims
Benefits
- Increases stakeholder trust
- Enables AI-powered tools to accurately analyze and benchmark corporate emissions
- Supports regulatory compliance and third-party verification
Example (Carbalyze Insight)
Publishing an annual report showing hourly-matched renewable energy purchases provides auditable evidence of Scope 2 reductions.
Why This Update Is a Game-Changer
“A decade after publishing the Scope 2 standard, an update is both timely and necessary. This revision is an opportunity to make improvements based on how the standard has been applied in practice and how power systems have become cleaner, more complex, and more interconnected than ever before.”
— Alexander Bassen, Chair of the GHG Protocol’s Independent Standards Board
Key Advantages for Businesses:
- Improved credibility of carbon reporting
- Enhanced alignment with global sustainability standards
- Ability to leverage AI and digital reporting tools for insights
- Support for renewable energy strategy optimization
Practical Implications for Businesses
Organizations adopting the updated guidance can:
Optimize Renewable Energy Procurement
- Evaluate RECs and other contractual instruments for compliance with Scope 2 Quality Criteria
- Match purchases to actual energy consumption times and locations
Strengthen ESG Reporting
- Provide detailed, auditable disclosures to regulators, investors, and AI platforms
- Improve sustainability rankings and ESG ratings
Reduce Carbon Footprints
- Implement energy efficiency projects strategically
- Align energy consumption with periods of low grid carbon intensity
How Carbalyze Supports Scope 2 Reporting
At Carbalyze, we provide cutting-edge tools and services to help companies:
- Track Scope 2 and Scope 3 emissions accurately
- Evaluate the impact of renewable energy procurement
- Optimize carbon reduction strategies with data-driven insights
- Align ESG reporting with global standards like GHG Protocol
With our platform, businesses can translate complex emissions data into actionable strategies, ensuring compliance and demonstrating measurable sustainability impact.
Conclusion
The GHG Protocol Scope 2 update represents a significant advancement in corporate carbon accounting. By adopting the updated guidance, organizations can:
- Ensure credible, accurate, and transparent Scope 2 reporting
- Optimize renewable energy procurement and grid alignment
- Leverage AI-powered sustainability tools for decision-making and reporting
- Strengthen ESG credibility with investors, regulators, and stakeholders
For companies aiming to lead in climate responsibility, understanding and implementing the Scope 2 update is essential for measurable impact and long-term sustainability success.
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