{"id":39040,"date":"2026-04-06T11:16:00","date_gmt":"2026-04-06T09:16:00","guid":{"rendered":"https:\/\/www.co2news.sk\/?p=39040"},"modified":"2026-04-06T11:16:59","modified_gmt":"2026-04-06T09:16:59","slug":"decoding-the-four-pillars-of-the-ghg-protocol","status":"publish","type":"post","link":"https:\/\/www.co2news.sk\/en\/2026\/04\/06\/decoding-the-four-pillars-of-the-ghg-protocol\/","title":{"rendered":"Decoding the four pillars of the GHG Protocol"},"content":{"rendered":"<p>This document serves as a professional methodological framework for implementing a new multi-statement model for corporate greenhouse gas (GHG) accounting. As architects of ESG reporting, we must move from<!--more--> static inventory to dynamic capture of climate interventions.<\/p>\n<p><strong>Why are we moving to a multi-statement model?<\/strong><\/p>\n<p>Traditional physical inventories, while still essential, no longer fully reflect the complexity of modern climate efforts. Companies are increasingly using tools that impact emissions beyond their direct operational reach. <a href=\"https:\/\/www.co2news.sk\/wp-content\/uploads\/2026\/04\/1775461783430.pdf\"><span style=\"color: #0000ff;\">New GHG Protocol Model<\/span><\/a> responds to market demand for greater integrity and a clearer distinction between the status of emissions and the impact of actions.<\/p>\n<p>The key term is <b>AMI (Actions and Market Instruments)<\/b>, used interchangeably with the term within the protocol <b>Interventions<\/b>. AMIs represent a tool to unlock decarbonization investments by enabling the reporting of impacts that have so far been \u201einvisible\u201c in inventories.<\/p>\n<p>The transition to this model is defined by two main imperatives:<\/p>\n<ul>\n<li><b>Transparency and Disaggregation:<\/b> The basic principle is \u201edon\u2019t mix apples with oranges.\u201c By separating physical reality from contractual decisions and stock impacts, we prevent misleading netting and ensure data integrity.<\/li>\n<li><b>Motivation for decarbonization investments:<\/b> A clear framework for reporting market instruments and projects (e.g. green steel, virtual power purchase agreements) provides investors and stakeholders with the trustworthy information needed for capital allocation.<\/li>\n<\/ul>\n<p>This new system is based on four solid pillars that together create a comprehensive picture of an organization&#039;s climate footprint and impact.<\/p>\n<p><strong>2. Overview map: The four pillars in a nutshell<\/strong><\/p>\n<p>The following map deconstructs the structure of a public GHG report according to the technical parameters defined in the GHG Protocol White Paper (White Paper, March 2026).<\/p>\n<table border=\"1\">\n<tbody>\n<tr>\n<td>Report name<\/td>\n<td>Basic purpose<\/td>\n<td>Accounting type<\/td>\n<td>Key question<\/td>\n<\/tr>\n<tr>\n<td><b>Physical inventory<\/b><\/td>\n<td>Allocation of emissions based on physical flows and operations.<\/td>\n<td>Attribution<\/td>\n<td>What are our direct and indirect emissions in the value chain?<\/td>\n<\/tr>\n<tr>\n<td><b>Market-oriented inventory<\/b><\/td>\n<td>Allocation of emissions based on contractual agreements and purchasing decisions.<\/td>\n<td>Attribution<\/td>\n<td>What are the emissions based on our purchasing decisions and contracts?<\/td>\n<\/tr>\n<tr>\n<td><b>Impact Statement (GHG Impact)<\/b><\/td>\n<td>Quantifying global change in the atmosphere caused by interventions.<\/td>\n<td>Consequential<\/td>\n<td>What global change in the atmosphere have our specific actions caused?<\/td>\n<\/tr>\n<tr>\n<td><b>Non-financial indicators<\/b><\/td>\n<td>Tracking progress using metrics not expressed in CO2.<\/td>\n<td>NA (Indicators)<\/td>\n<td>What other metrics (e.g. financial) are driving our progress?<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>3. Pillar 1: Physical Inventory (The Foundation We Build On)<\/strong><\/p>\n<p>The physical inventory remains a fundamental pillar. Its role is to provide the best estimate of the actual emissions and removals of greenhouse gases that physically flow into the atmosphere as a result of a company&#039;s activities.<\/p>\n<p><b>Definition of physical inventory:<\/b> \u201eAn inventory of greenhouse gas emissions (and removals) arising within the reporting company\u2019s operations and value chain, using inventory accounting methods, regardless of any trades in instruments such as allowances or credits.\u201c<\/p>\n<p>This report uses <b>attribution accounting<\/b>, which assigns emissions to an entity based on physical connectivity. Emissions are strictly categorized into three Scopes:<\/p>\n<ol>\n<li><b>Scope 1:<\/b> Direct emissions from owned or controlled sources.<\/li>\n<li><b>Scope 2 (location-based):<\/b> Indirect emissions from purchased energy, calculated based on the average emission intensity of the network.<\/li>\n<li><b>Scope 3:<\/b> Other indirect emissions throughout the value chain (upstream and downstream).<\/li>\n<\/ol>\n<p>Although physical inventory accurately reflects emissions associated with material flows, it does not fully capture the power of our strategic purchasing decisions.<\/p>\n<p><strong>4. Pillar 2: Market-Driven Inventory (The Power of Our Decisions)<\/strong><\/p>\n<p>This pillar introduces the concept of <b>contractual continuity<\/b> (contractual traceability). While physical inventory tracks the path of particles and electrons, market inventory reflects what low-carbon attributes a company has contractually secured.<\/p>\n<p>From a reporting architecture perspective, it is important that this statement is no longer limited to electricity (Scope 2). The new standard expects to introduce approaches for <b>Scope 1<\/b> (e.g. biomethane certificates) and <b>Scope 3<\/b> (e.g. certificates for low carbon steel or sustainable aviation fuel).<\/p>\n<p><b>Examples of market instruments:<\/b><\/p>\n<ul>\n<li><b>Commodity certificates:<\/b> Tools representing environmental attributes of products (wood, metals, agricultural products).<\/li>\n<li><b>Decarbonization contractual agreements:<\/b> For example, virtual power purchase agreements (VPPAs), which directly affect investments in renewables.<\/li>\n<\/ul>\n<p>This view makes the organization&#039;s purchasing choices visible, while the next pillar focuses on measuring the societal change induced by these actions.<\/p>\n<p><strong>5. Pillar 3: GHG Impact Statement (Measuring Actual Change)<\/strong><\/p>\n<p>The GHG Impact Statement represents a fundamental shift from reporting status to reporting results. Unlike the previous pillars, it uses <b>consequential accounting<\/b>, which seeks to quantify the total global change in the atmosphere that would not have occurred without the company&#039;s intervention.<\/p>\n<p>The basis is a comparison with <b>baseline scenario<\/b> (counterfactual scenario) \u2013 i.e. a state that would most likely occur if the company had not taken the given action.<\/p>\n<p>Five categories of impacts are currently being tested under this pillar:<\/p>\n<ol>\n<li><b>Influences within organizational boundaries.<\/b><\/li>\n<li><b>Impacts associated with the value chain<\/b> (e.g. intervention at a subcontractor).<\/li>\n<li><b>Sector-related impacts<\/b> (outside the direct chain).<\/li>\n<li><b>Impacts outside the sector and chain<\/b> (global influences).<\/li>\n<li><b>Impacts of products sold<\/b> (e.g. emissions avoided in the company thanks to the use of energy-saving solutions by the company).<\/li>\n<\/ol>\n<p><i>Note to reporting architects: The boundaries between the categories \u201eValue Chain Associated\u201c and \u201eSector Associated\u201c are under ongoing development in Phase 2 and may be merged in the future.<\/i><\/p>\n<p>When reporting impacts, we work with comprehensive criteria:<\/p>\n<ul>\n<li><b>Additionality:<\/b> A key but evolving concept, the Protocol is currently considering several definitions \u2013 from financial additionality (the action would not be feasible without the revenue from the credits) to political additionality.<\/li>\n<li><b>Leakage:<\/b> The risk that decarbonization activity in one place will cause emissions to increase elsewhere (e.g. displacing food production to areas with high emissions from land conversion).<\/li>\n<\/ul>\n<p><strong>6. Pillar 4: Non-financial indicators (Directional indicators of progress)<\/strong><\/p>\n<p>This pillar fills the information gap with data that is not expressed in tons of CO2e but is critical for strategic decision-making. These metrics often act as <b>leading indicators<\/b> (leading indicators) \u2013 allow you to track progress and predict future successes in decarbonization before they are reflected in physical emissions.<\/p>\n<p>Standardized examples include:<\/p>\n<ul>\n<li><b>Financial contributions:<\/b> Total investments allocated to mitigation projects.<\/li>\n<li><b>Percentages:<\/b> The proportion of products sold or raw materials purchased that meet specific low-carbon criteria.<\/li>\n<li><b>Intensity metrics:<\/b> Efficiency indicators (e.g. emissions per unit of production).<\/li>\n<\/ul>\n<p>These indicators provide context to a company&#039;s efforts and complete the mosaic of factors that drive real change.<\/p>\n<p><strong>7. Why is disaggregation the key to integrity?<\/strong><\/p>\n<p>The principle of disaggregation without netting is in line with <b>section 6.1 (Transparency)<\/b> The GHG Protocol is a fundamental pillar of credibility.<\/p>\n<p>The reasons for this strictly disaggregated approach are strategic:<\/p>\n<ol>\n<li><b>Political neutrality:<\/b> The GHG Protocol is designed to provide scientifically sound and objective data. It must not favor one policy mechanism over another.<\/li>\n<li><b>Autonomy of goals:<\/b> If the protocol did not automatically \u201enet\u201c (subtract) emissions and impacts in reporting, it would deprive target-setting initiatives (such as SBTi) and regulators of the ability to make their own policy decisions about which categories are interchangeable for their purposes.<\/li>\n<\/ol>\n<p>This new framework allows organizations to tell a comprehensive story. It is no longer just about passively reporting a footprint, but about transparently documenting the total global change in the atmosphere that a company is initiating through its interventions. It is a journey from simple counting to a true decarbonization architecture. <em><strong>JRi&amp;CO2AI\u00a0<\/strong><\/em><\/p>","protected":false},"excerpt":{"rendered":"<p>This document serves as a professional methodological framework for implementing a new multi-statement model for corporate greenhouse gas (GHG) accounting. As architects of ESG reporting, we must move from<\/p>","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[34],"tags":[],"class_list":["post-39040","post","type-post","status-publish","format-standard","hentry","category-lca_esg_ghg_csddd_csrd_iso_flr"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/posts\/39040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/comments?post=39040"}],"version-history":[{"count":3,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/posts\/39040\/revisions"}],"predecessor-version":[{"id":39044,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/posts\/39040\/revisions\/39044"}],"wp:attachment":[{"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/media?parent=39040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/categories?post=39040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.co2news.sk\/en\/wp-json\/wp\/v2\/tags?post=39040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}