Scope 1 Emissions

The Relevance of the Greenhouse Gas Protocol

The Greenhouse Gas Protocol (GHGP) serves as the foundation for corporate emissions accounting and reporting. Established through a collaboration between the World Resources Institute and the World Business Council for Sustainable Development, the GHGP provides a comprehensive framework for quantifying and managing greenhouse gas (GHG) emissions. The GHGPis widely adopted across industries due to its standardized methodologies, which enable consistency, comparability, and transparency in corporate emissions reporting.

Governments and regulatory bodies, such as the European Union (EU) and the U.S. Securities and Exchange Commission (SEC), increasingly require companies to disclose their emissions as part of climate-related financial reporting. This has amplified the importance of robust emissions measurement and verification processes to ensure compliance with global sustainability goals and investor expectations¹.

Scope 1 Emissions: Definition and Sources

Scope 1 emissions refer to direct GHG emissions from sources that are owned or controlled by an organization. These emissions are typically categorized into the following primary sources:

1. Stationary Combustion: Emissions from the combustion of fuels in stationary equipment such as boilers, furnaces, and generators.
2. Mobile Combustion: Emissions from company-owned or leased vehicles and transportation fleets powered by internal combustion engines.
3. Process Emissions: Emissions resulting from industrial activities and chemical reactions, such as cement production, steel manufacturing, and refining processes.
4. Fugitive Emissions: intentional and unintentional releases of gases from equipment leaks, refrigerant losses, and other un contained emission sources².

Scope 1 Emission Measurement and Calculation

As a company reports GHG emissions, it’s important to choose their base year, or a reference point against which an organization’s emissions are compared. Although most companies choose a single year as the base year, the GHGP allows for alternative base years such as an average of emissions over several consecutive years in order to account for unusual fluctuations that misrepresent emissions under normal conditions. Furthermore, the base year can be recalculated if a change in circumstances, such as a merger, would compromise comparability. After a base year is established, emissions are identified and calculated in the following five steps²:

Step 1: Identify GHG Emission Sources

Organizations must conduct a thorough assessment of their operations to identify all relevant sources of Scope 1 emissions. This includes evaluating fuel usage, industrial processes, transportation activities, and fugitive emission points.

Step 2: Select a Calculation Approach

Companies may employ two primary calculation methodologies:

• Direct Measurement Approach: Using continuous emission monitoring systems (CEMS) to measure actual GHG concentrations. This approach is less common.    
• Emission Factor Approach: Multiplying activity data (e.g., fuel consumption) by     standardized emission factors derived from sources such as the Intergovernmental Panel on Climate Change (IPCC) and the U.S. Environmental Protection Agency (EPA).

Step 3: Collect Data and Choose Emission Factors

Activity data should be collected from reliable sources such as utility bills, fuel purchase records, and equipment logs. The selection of appropriate emission factors is critical for ensuring accuracy and must align with industry standards and regulatory guidelines.

Step 4: Apply Calculation Tools

Organizations can leverage GHGP calculation tools, industry-specific emission calculators, or proprietary software solutions to standardize data processing and minimize errors in emissions quantification. In many cases, more than one tool is used to calculate GHG emissions depending on the source and nature of the emissions.

Step 5: Roll-up Data to Corporate Level

Once emissions are calculated at the facility level, they must be aggregated to the corporate level, ensuring alignment with the chosen reporting boundaries. Reporting boundaries for Scope emissions is critical for transparency, consistency, and comparability. Companies may select from three different approaches in reporting Scope 1 emissions: the operational control approach, which includes all emissions from operations it managed on a day-to-day basis; the financial control approach, which reports all emissions from projects where the company directs financial and policy decisions; and the equity share approach, that allocates emissions based on the equity ownership of the company in an operation.

Relevant Guidance on Reporting

As climate disclosure regulations continue to evolve globally, companies are increasingly required to align their reporting practices with established frameworks that incorporate the GHGP. Several jurisdictions have enacted or proposed standards that mandate the disclosure ofScope 1 and Scope 2 emissions, occasionally alongside Scope 3 emissions. These frameworks not only promote consistency and comparability in emissions data but also reinforce the GHGP as the benchmark methodology for quantifying and reporting greenhouse gas emissions. The following section highlights key regulatory initiatives that rely on the GHGP to shape corporate climate disclosures.

• European Sustainability Reporting Standards (ESRS): In 2021, the European Commission     tasked the European Financial Reporting and Advisory Group to draft a set of rules to standardize ESG reporting. The final standard references the GHGP for calculating GHG emissions and requires the reporting of Scope 1 and 2 emissions. The ESRS reporting requirements continue to be phased in and will eventually scope in thousands of non-EU based companies³.  
• SEC Climate Disclosure Rule: In March 2024, the U.S. Securities and Exchange Commission (SEC) finalized its long-anticipated climate disclosure rule, aimed at enhancing and standardizing climate-related disclosures for public companies. The rule requires large accelerated filers to report their Scope 1 and 2 GHG emissions and references the     Greenhouse Gas Protocol as the foundational methodology for calculating those emissions. However, due to ongoing legal challenges, the SEC has announced that it will pause enforcement of the rule while litigation proceeds. Despite the uncertainty, the rule still signals a shift toward aligning U.S. financial disclosures with international ESG standards⁴.
• California Climate Corporate Data Accountability Act: Signed into law in 2023, California’s Senate Bill 253 mandates large corporations operating in the state to publicly disclose their GHG emissions starting in 2026. The law requires reporting of Scope 1, 2, and eventually Scope 3 emissions, and it designates the Greenhouse Gas Protocol as the required standard for measurement and reporting. As one of the most ambitious climate disclosure laws in the U.S., it is expected to influence national policy and affect hundreds of companies doing business in California, regardless of where they are headquartered.

Conclusion

As global climate regulations tighten and stakeholder expectations grow, accurate and transparent reporting of Scope 1 emissions has become a critical component of corporate sustainability as a baseline. The GHGP remains the gold standard for emissions accounting, offering a consistent and widely accepted methodology for organizations across sectors. From stationary combustion to fugitive emissions, the ability to identify, quantify, and report direct GHG emissions is essential not only for regulatory compliance but also for strategic climate action. As frameworks like the ESRS, SEC ClimateDisclosure Rule, and California’s climate legislation increasingly adopt GHGP standards, companies must build robust internal systems to track emissions, apply reliable calculation methods, and prepare for evolving disclosure mandates. These efforts support greater consistency in emissions data and facilitate alignment with emerging regulatory expectations.

References

1. GHG About US

2. GHG Protocol Corporate Standard

3. European Sustainability Reporting Standards

4. SEC Final Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors

Direct Emissions from Mobile Combustion Sources – U.S. EPA