Key Standards for Reducing Greenhouse Gas Emissions by Companies

Three standards are playing a leading role in reducing the emission of greenhouse gas (GHG) by companies:

1. The Greenhouse Gas Protocol;
2. The Science Based Targets initiative (SBTi);
3. The Net-Zero Standard.

In recent years, the adoption of these standards has really gathered pace, driven by factors such as increased awareness, global support, regulatory drivers, and the competitive advantage associated with environmental sustainability.

Let’s delve into each one.

The Greenhouse Gas Protocol (GHG Protocol)

The Greenhouse Gas Protocol (GHG Protocol) is a globally recognized accounting tool for quantifying and managing greenhouse gas emissions.

The GHG Protocol is intended to:

• Assist companies develop a GHG inventory that depicts a true and fair account of their emissions through the use of standardized methodologies and principles;
• Simplify and reduce the costs of compiling a GHG inventory;
• Provide business with data that can be utilized to formulate an efficient strategy for the management and mitigation of GHG emissions; and
• Increase consistency and transparency in GHG accounting and reporting among various companies and GHG programs.

The GHG Protocol provides a standardized methodology for businesses and governments to measure and report their emissions. It plays a crucial role in helping organizations understand their environmental impact and develop strategies for emission reduction.

There are several component parts to the GHG Protocol. The Corporate Accounting and Reporting Standard helps companies measure and report their direct and indirect emissions. This is complemented by Scope Standards, which categorize emissions into three scopes: Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (indirect emissions from the value chain).

The GHG Protocol is applicable to companies, NGOs, government agencies, and universities. It is broadly applicable and widely adopted across the world.

The Science Based Targets Initiative (SBTi)

The Science Based Targets initiative (SBTi) is a global body enabling companies to set ambitious emission reductions targets in line with climate science. This group is focused on halving emissions before 2030 and achieving net-zero emissions before 2050.

The SBTi:

• Defines and promotes best practice in emissions reductions and net-zero targets in line with climate science;
• Provides technical assistance and expert resources to companies who set science-based targets in line with the latest climate science; and
• Brings together a team of experts to provide companies with independent assessment and validation of targets.

One of the SBTi’s main tools is science-based targets, which are intended to provide a clearly-defined pathway and a comprehensive methodology for companies to set ambitious but achievable goals for cutting emissions. Each participating company determines a target based on individual circumstances and the latest climate science. Establishing a science-based target is a major focus for this standard.

SBTi membership is open to participation from organizations across various sectors, such as financial institutions, joint ventures, cooperatives, and state-owned enterprises, particularly in the most emission-intensive sectors. However, oil and gas companies are excepted.

The Net-Zero Standard 

The Net-Zero Standard is the world’s only framework for corporate net-zero target setting in line with climate science. The Net-Zero Standard offers guidance, criteria, and recommendations to support corporates in setting net-zero targets. These targets are then validated by the SBTi.

The concept of achieving net-zero emissions via the Net-Zero Standard has gained global attention and adoption. The Net Zero Tracker indicates 90% of the global economy is committed to reaching net-zero, up from 16% in only a few years. 2022 research into the Fortune Global 500 found that 38% of companies have a net zero target, up from 25% a year ago.

Under this standard, reaching net-zero is a major focus. Note that the Net-Zero Standard also encourages companies to go beyond science-based abatement targets and extend their efforts to mitigate emissions throughout their value chains.

The intended audience for this standard is corporates with more than 500 employees. Additionally, there is a tailored route for SMEs to set net-zero targets and a dedicated standard for financial institutions that is being prepared.

Comparison of 3 Key Standards for Reducing GHG Emissions

The GHG Protocol, SBTi and Net-Zero Standard share some similarities whilst having important differences:

To sum up, standards such as the Science-Based Targets initiative (SBTi), The Net-Zero Standard, and the Greenhouse Gas Protocol Corporate Standard are very helpful in assisting businesses to reduce greenhouse gas emissions. Each standard contributes in a slightly different way.