GHG Protocol Scope 3 Revision: What Business Leaders Should Prepare for Now
In Brief
The most widely adopted framework for measuring and reporting greenhouse gas emissions, the GHG Protocol, is entering the final stages of its most significant series of updates since its formation. The Scope 3 component — covering indirect emissions across the value chain, often representing more than 70% of a company's carbon footprint — is the subject of a first working document published on 31 March 2026 (“Phase 1 Progress Update”). Proposed changes are organized into three core areas: data quality, boundary setting, and investment-related emissions. Several proposed revisions would have a material impact on how companies prepare their Scope 3 emissions, including:
- Requiring companies to report 95% of required Scope 3 emissions.
- Mandatory disaggregation of emissions by data type (e.g., spend-based, supplier-specific, etc.).
- Separate reporting of required and optional emissions.
- Creation of a new Scope 3 Category 16 for other value chain activities including facilitated emissions.
Our read: The direction is clear even if the details may still evolve. Companies should not wait for the final standard to begin preparing. The practical challenge will be to improve data quality, documentation, and governance without allowing emissions measurement to slow decarbonization actions. Organizations that start stress-testing their Scope 3 inventories now will be better positioned for regulatory reporting, investor scrutiny, and eventual assurance expectations.
Whilst this publication is not yet up for formal consultation and the standard has not been finalized, this is an opportunity for companies to review and improve their past GHG accounting practices. The revisions signal a clear shift - Scope 3 accounting is entering a new level of rigor, transparency, and scrutiny.
Context: Understanding the Landscape
The GHG Protocol — the world's reference framework for carbon accounting
The GHG Protocol (Greenhouse Gas Protocol) is the most widely adopted international standard for measuring and managing greenhouse gas emissions. It was created in 1998 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) to provide organizations with a clear and credible accounting framework to quantify emissions. It classifies emissions into three scopes—Scope-1 (direct emissions), Scope-2 (indirect emissions from purchased energy), and Scope-3 (other indirect emissions across the value chain). Today, the GHG Protocol is widely used by companies, governments, and financial institutions for carbon footprint assessments, sustainability reporting, climate target setting, and compliance with regulatory and voluntary frameworks such as CSRD, ISSB standards, and the Science Based Targets initiative (SBTi).
To address value chain emissions in more detail, the Scope 3 Standard was released in 2011, significantly expanding organizations’ ability to account for upstream and downstream impacts. 15 years after the first publication, the GHG Protocol is approaching the final stages of the most significant updates to this standard to date.
Source: GHG Protocol
Why a revision, and why now?
Since the Scope 3 Standard was first published in 2011, expectations have evolved significantly within both mandatory (CSRD, ISSB, SB 253) and voluntary (SBTi and CDP) reporting. Practical application of the standard has revealed persistent grey areas: inconsistent calculation methods, variable reporting boundaries, and difficulty in auditing data. The revision aims to close these gaps and align the GHG Protocol with ISO standards, paving the way for international harmonization.
Where things stand
The 31 March 2026 document is a working draft that is subject to change. It was developed by a technical working group of 65 experts from more than 20 countries, organized into three thematic sub-groups. ISO members joined these workstreams in Q1 2026. SE Advisory Services participates in this group as a recognized expert, drawing on 20 years of experience in environmental accounting.
Key dates to track: In July 2026, the GHG Protocol announced that its Corporate Standard, Scope 2 Guidance, Scope 3 Standard, and Actions and Market Instruments (AMI) workstream will be consolidated into a single harmonized corporate GHG accounting standard developed in partnership with the International Organization for Standardization (ISO). A consolidated draft is expected to be released for public consultation in Q2 2027, with the final standard scheduled for publication in Q4 2028. Related workstreams continue to inform development of the revised standard, including:
- Corporate Standard revision;
- Scope 2 Guidance revision;
- Scope 3 Standard revision;
- Actions and Market Instruments workstream.
What the Draft Signals
Data quality becomes visible and comparable (Mandatory)
Companies will be required to disaggregate their Scope 3 emissions by data type for each category — primary data collected directly from suppliers, activity-based secondary data, or spend-based estimates. The calculation method becomes as transparent as the result itself. This disaggregation may be satisfied through an annex table supplementing the main disclosure. Two classification options are still under consideration by the GHGP. An "Unclassified" tier will be available for companies unable or unwilling to disaggregate, mitigating feasibility concerns.
This disaggregation requirement is already embedded in the latest SBTi submission process.
Verification status becomes a disclosure requirement (Mandatory)
Third-party assurance remains voluntary, but companies will be required to explicitly state whether their emissions are fully, partially, or not verified. Terminology aligns with formal ISO assurance principles.
This requirement mirrors existing CDP, CSRD, GRI, SBTi reporting expectations.
Boundary completeness shifts from qualitative to quantitative (Mandatory)
At least 95% of mandatory Scope 3 emissions must be included in the inventory. Exclusions are allowed but must be capped at 5% of total required emissions and must be quantified — companies are required to assess 100% of their required Scope 3 emissions annually to validate that any exclusions fall within that threshold. Hotspot analysis is formally recognized as a valid quantification method for this purpose, but must be documented and defensible.
This rule reinforces existing CDP and SBTi expectations around justified exclusions.
De minimis emissions — those reasonably expected to be insignificant or negligible — may be excluded but are explicitly brought within the 5%.
One specific relief clause is maintained outside the 5% cap: manufacturers and producers of intermediate products with genuinely unknown or incalculable end uses may continue to exclude downstream categories 9 through 12 for those specific products. This carve-out is particularly relevant for industrial, chemical, and materials sectors.
Supplier allocation tightens (Mandatory)
Allocating emissions from suppliers at a corporate level has become increasingly common practice amongst reporters – collecting Scope 1-3 data from suppliers and applying this to a company’s own footprint. Allocation will remain a necessary practice, but rules are tightening around the approach. Corporate-level emission intensity factors will only be permitted for operationally “homogeneous” suppliers — those with relatively uniform emissions throughout their operations.
For diversified suppliers, this approach will no longer be compliant. The practical consequence is significant: for many companies, Category 1 shifts from a calculation exercise to a data collection program, as facility- or product-level data becomes required for any supplier whose business spans materially different activities
The formal definition of "homogeneous" has not yet been finalized by the TWG. Where exactly the line falls between homogeneous and diversified remains an open question until the public consultation draft.
Category 15 expands to cover financed emissions (Mandatory)
The revised standard makes it clear that Category 15 applies to all companies with investment activity and covers investees’ scope 1, 2, and 3 emissions. The category is simultaneously narrowed — insurance, underwriting, and other financial services are moved out of Category 15 and reclassified to the new Category 16, but will still be considered optional.
Attribution methods align with PCAF and SBTi Financial Institutions Net-Zero Standard. The equity proportionality calculation now includes both equity and debt in the denominator, aligning with industry standards and ensuring equal-weighting of accountability between equity and debt holders. The 5% exclusion threshold applies to Category 15 emissions, with a specific justified exclusion clause for financial instruments where calculation methods or data are genuinely unavailable.
Consolidation guidance is being aligned with the proposed removal of the equity share approach from the Corporate Standard revision. Organizations currently using equity share consolidation should assess the knock-on effects on their financed emissions calculations.
A new Category 16 captures facilitated activities (Mandatory)
Facilitated emissions have previously represented a grey area within GHG Protocol standards, with no globally aligned approach for quantifying emissions from capital market activities. A separate initiative, PCAF (Partnership for Carbon Accounting Financials) has previously developed standards to address this gap in reporting methodologies.
GHG Protocol have now proposed the introduction of a new category to account for these facilitated emissions – examples include brokerage models, licensing, digital platforms, certain financial services, etc.
Most subcategories within Category 16 are optional, but reporting shall be a requirement for oil and gas distributors.
Even where optional within GHG Protocol, materiality under CSRD or investor expectations may make disclosure de facto mandatory for certain business models — particularly platform-based, digital, and intermediary companies.
Required and optional emissions must be reported separately (Mandatory)
Under the previous standard, companies could include optional emissions, such as indirect use-phase emissions, within a single reported figure. Under the proposed revisions, companies must now disaggregate and report required Scope 3 emissions separately from optional ones.
The 95% inclusion threshold applies exclusively to required emissions; optional emissions are not subject to it. Where optional emissions are deemed relevant — based on the company's potential to influence reductions — companies are recommended to include and disclose them, even if not strictly required.
Emission factor quality gets a quantitative benchmark (recommended)
Emission factors should have no more than 5% cut-off or exclusions applied to be considered of high completeness, and be supplemented by uncertainty assessment. This means that companies need to have a good understanding of the scope covered by emission factors and ensure their completeness. Regional emission factor models should account for cross-border flows — imports and exports. These are recommendations, not requirements, but they set a clear direction of travel for what auditors and regulators will increasingly expect.
How to prepare for the future standard
Stress-test existing Scope 3 inventories
Run current inventories against the emerging rules: the 95% boundary requirement, disaggregation by data type, and supplier allocation. Identify gaps before they become disclosure vulnerabilities under regulatory or investor review.
Institutionalize hotspot analysis
This is no longer a strategic exercise carried out periodically. It is becoming a compliance and audit requirement — the formal basis for justifying exclusions under the 95% rule. It needs governance, documentation, and regular refresh cycles.
Increase data quality transparency now
Disaggregate by data source, document assumptions, and tag activities by origin. Build an audit-ready data quality trail within your reporting tools — and avoid the retrospective rework that will follow once disclosure requirements are formally in place.
Prepare for assurance before it is mandatory
Whilst third-party assurance remains a recommendation, regulatory reporting frameworks are increasingly introducing verification as a requirement. Regardless, the requirement to disclose verification status will put the unassured inventories side-by-side with assured peers. Consider running internal assurance or limited assurance dry runs to help identify inconsistent methodologies and undocumented assumptions.
Reassess supplier engagement strategies
Diversified suppliers and high-impact categories will require product- or facility-level data. Category 1 methodologies are shifting from a data collection exercise to a supply chain transformation agenda.
Map exposure to new and expanded categories
Category 16 is relevant to platform-based, digital, and intermediary business models. Even where optional, materiality under CSRD or investor expectations may make it effectively mandatory. Category 15 applies to any organization with significant investment activity.
Build structured digital infrastructure
The growing complexity of requirements — disaggregation, traceability, auditability — makes structured digital tooling essential. Spreadsheet-based approaches are reaching their limits for entities with very large amounts of data at this level of rigor.
Our Read
The opportunity: clarity on grey areas. Today, practitioners spend significant effort interpreting boundaries, allocation rules, and data hierarchies — rebuilding the same rationale from one inventory cycle to the next. The revision settles many of these points. Stricter rules will save time, not cost it.
The risk: more measurement, less action. The revision will demand greater granularity, more documentation, and higher rigor. The trap is to invest so heavily in measurement that decarbonization falls down the agenda. Measurement serves reduction — not the reverse. Digitalisation is a solution to increase measurement efficiency while also driving decarbonization.
The underlying trend: a defensible, steerable carbon figure. Scope 3 figures once served to rank hotspots internally. They now feed into regulatory reporting, audits, and investor decisions. The stakes have changed; the level of rigor must follow.
The convergence: alignment across frameworks. Several forthcoming requirements are already embedded in the latest versions of SBTi and CDP frameworks. Organizations currently aligned with these requirements will be less impacted by the transition. The development of the new standard in partnership with ISO opens the path to durable international harmonization.
SE Advisory Services continues to monitor and engage with the evolution of the GHG Protocol. These developments will reshape not only GHG inventories, but also how climate strategy, investment decisions, and performance narratives are constructed. We support organizations in translating this evolving doctrine into robust, decision-ready carbon accounting architectures.