The Basics of the GHG Protocol

The Greenhouse Gas (GHG) Protocol is the world’s most widely used standard for measuring and managing greenhouse gas emissions. It was developed in the late 1990s through a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).

Its purpose is simple: create a common language so that organizations everywhere measure emissions in a consistent, transparent way. Without it, every company could calculate its footprint differently, making comparisons and reporting meaningless.

Today, the GHG Protocol is the framework behind most global sustainability initiatives, from science-based targets to mandatory disclosure laws.

The Three Scopes of Emissions

The GHG Protocol divides emissions into three categories called Scopes:

• Scope 1: Direct emissions. From sources a company owns or controls, such as boilers, furnaces, or company vehicles.

• Scope 2: Indirect emissions from energy. From purchased electricity, steam, heating, or cooling.

• Scope 3: All other indirect emissions. From upstream and downstream activities, including purchased goods, shipping, waste disposal, employee commuting, and product use.
  

For most organizations, Scope 3 is the largest category, often 75 to 90 percent of the total footprint.

Why the GHG Protocol Matters to SMBs

At first glance, the GHG Protocol may seem designed for multinationals. In reality, it affects businesses of every size.

• Supply chains rely on it. Large companies like Microsoft and Walmart require suppliers to report emissions using the GHG Protocol, since their own Scope 3 depends on supplier data.
  

• Regulations reference it. Emerging laws such as the EU’s CSRD and California’s SB 253 call for emissions disclosure, and most companies use the GHG Protocol to comply.
  

• Investors trust it. Financial stakeholders increasingly expect companies to disclose emissions in a standardized way. Using the GHG Protocol signals credibility and seriousness.
  

For SMBs, this means that even a simple, high-level GHG inventory aligned with the Protocol can make a big difference in customer trust and contract eligibility.

A Practical Example

Consider a regional catering business.

• Scope 1 emissions: propane used in cooking equipment and fuel from delivery vans.

• Scope 2 emissions: electricity and cooling for the central kitchen.

• Scope 3 emissions: purchased ingredients, packaging, and employee travel.

By following the GHG Protocol, the company can quantify all three categories consistently. When a corporate client asks for emissions data, the company can provide a clear, trusted report instead of scrambling to explain.

How to Use the GHG Protocol

Getting started with the Protocol does not mean hiring a full sustainability department. SMBs can begin with a manageable process:

1. Collect activity data. Gather records for fuel, electricity, travel, purchasing, and waste.

2. Categorize by Scope. Sort each activity into Scope 1, 2, or 3.

3. Convert to CO2e. Use emission factors provided by the GHG Protocol or reputable databases.

4. Build a baseline. Your first GHG inventory becomes the foundation for setting reduction goals.

5. Report and refine. Share results transparently and improve data collection each year.
   

The Bottom Line

The GHG Protocol is the accounting system of sustainability. Just as businesses use generally accepted accounting principles (GAAP) for financial reporting, they use the GHG Protocol for carbon reporting.

For SMBs, adopting it is no longer optional. It is how you stay relevant in modern supply chains, how you win credibility with customers and investors, and how you future-proof your business against tightening regulations.

In short, the GHG Protocol is not just for “big business.” It is for every business that wants to grow in a climate-conscious economy.