Highlights
Companies would need to change the way they calculate and report Scope 2 emissions under new proposals from the Greenhouse Gas Protocol (GHGP).
The proposals for GHGP’s Scope 2 guidance mark the start of a series of consultations to update the GHGP’s corporate standards and guidance.
The changes proposed are far-reaching and important, and would affect both location- and market-based emissions.
Companies can submit their comments until 19 December 2025.
Why does this matter?
The GHGP Standards are the most commonly used measurement standards worldwide for corporate reporting of GHG emissions. They are referenced in many reporting regulations and standards including IFRS® Sustainability Disclosure Standards and European Sustainability Reporting Standards (ESRS).
Updates to the GHGP Standards are taking place over five years to modernise and strengthen the standards. Several consultations are planned to address different standards.1
For companies, the proposed GHGP updates to Scope 2 guidance would mean more precise reporting of electricity use and emissions that would reflect when and where power is actually generated and consumed. This may require companies to adjust their energy procurement, and emissions accounting and reporting practices.
In practical terms, energy attribute certificates (EACs2) purchased by companies to manage their market-based emissions may no longer qualify under these revised requirements and new types of certificates would need to become available.
What changes are proposed?
Companies would continue to report their emissions in two ways:
- location-based: emissions calculated based on the carbon intensity of the local power grid; and
- market-based: emissions calculated to take into account the type of electricity procured or EACs purchased.
Many of the practices proposed, such as hourly matching and standard supply service, are still emerging. This means that many types of certificates currently purchased by companies to manage their market-based emissions would no longer qualify. Companies would need new types of certificates to enable them to report under the proposed stricter requirements. Proposed feasibility mechanisms aim to smooth this path to some extent.
What’s next?
The proposals are open for consultation until 19 December 2025. Subsequent consultations will follow – including further proposals for Scope 2 emissions reporting. The GHGP aims to finalise new standards in 2027 and 2028.
Any changes to the updated suite of GHGP Standards will not be automatically incorporated into IFRS Sustainability Disclosure Standards or ESRS. Each of these standards refers to specific existing versions of the GHGP Standards. These references would need to be revised for the updated GHGP Standards to apply.
IFRS S2 Climate-related Disclosures does not require disclosure of market-based emissions, but some adopters may choose to present this information.
Actions for management
- Consider how the proposed changes would affect your company. They could require you to change the types of instruments you are able to use, as well as your emissions measurement.
Read our GHGP handbook for an introduction to reporting of Scope 2 emissions under existing GHGP Standards.
Take this opportunity to have your say by 19 December 2025.
For further information on the proposals, speak to your KPMG contact and visit kpmg.com/ifrs to keep up to date with the latest news and discussion.
1 A separate consultation has been launched to provide input to the GHGP’s Actions and Market Instruments Working Group.
2 EACs are also known as Renewable Energy Certificates (RECs).
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