Calculation and Reporting Frameworks

In this module, you’ll learn how scope 3 emissions tie into broader climate reporting frameworks. These structures are critical for accurate, credible, and comprehensive emissions management.

After this module, you’ll:

• Understand how scope 3 emissions relate to GHGP and PCAF standards
• Study which reporting frameworks require disclosure of scope 3 emissions
• Learn more about how corporations integrate this scope type into sustainability strategy

The estimated time to complete is 18 minutes.

Terms to Know

• Science-Based Targets - Emissions reduction targets that align with the Paris Climate Agreement
• Science-Based Target Initiative (SBTi) - A collaborative partnership that defines and promotes the best practices for setting Science Based Targets (SBTs), or emissions reduction targets that align with the Paris Climate Agreement to limit global warming to below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
• United Nations Sustainable Development Goals - A set of 17 global goals designed to address a wide range of social, economic, and environmental challenges the world faces to create a more sustainable and equitable future for all.

Calculation and Reporting Frameworks

Understanding and accurately reporting scope 3 emissions is crucial for achieving climate targets and meeting growing disclosure expectations. One way organizations can promote consistency in scope 3 calculation and disclosure across global operations is by applying the Greenhouse Gas Protocol (GHGP) alongside widely recognized reporting and disclosure standards.

Calculation and reporting frameworks provide structured approaches for measuring and quantifying business carbon emissions, particularly the significant volume and impact of scope 3 emissions. These frameworks address data collection processes, emission factors, and conversion factors, enabling more standardized and comparable emissions calculations across organizations.

Regulators, investors, and other key stakeholders benefit from this alignment, as these frameworks encourage organizations to present emissions data in a transparent and consistent manner. Common accounting standards and disclosure platforms related to scope 3 emissions include the GHGP, PCAF, GRI, CDP, and ISSB.

GHGP and PCAF Accounting Standards

The GHGP is a globally recognized accounting framework designed to standardize how businesses and organizations measure, manage, and report greenhouse gas emissions. It covers both direct and indirect emissions and introduced the concept of scopes 1, 2, and 3. Scope 3 encompasses all indirect emissions that occur across a company’s value chain outside of its direct operations. By formally defining scope 3 emissions, GHGP recognizes the significance of these indirect impacts and empowers businesses to take ownership of emissions across the lifecycle of their products and services.

The Partnership for Carbon Accounting Financials (PCAF) is a complementary accounting standard specifically developed for the financial sector. Built in alignment with the GHGP, PCAF provides detailed, standardized methodologies for calculating financed emissions, which are addressed at a higher level within GHGP’s scope 3 category 15. Developed in collaboration with financial institutions, PCAF supports consistent assessment and disclosure of emissions associated with investments, lending activities, and other financial assets. The framework highlights the financial sector’s role in driving sustainable outcomes by offering clear guidance for calculating the carbon footprint of portfolios, loans, and other asset classes.

Together, GHGP and PCAF play a critical role in advancing scope 3 emissions accounting. GHGP provides a comprehensive framework for value-chain emissions across industries, while PCAF delivers the sector-specific detail needed to quantify financed emissions. Addressing scope 3 emissions through both standards enables organizations to develop a more complete understanding of their carbon footprints across value chains and investment portfolios.

With support from GHGP and PCAF, organizations can design effective sustainability strategies, set emissions reduction targets, align internal actions with broader climate goals, and establish a strong foundation for transparent reporting.

Reporting Frameworks and Scope 3

Beyond accounting standards such as the GHGP and PCAF, several reporting, disclosure, and target-setting frameworks encourage organizations to address scope 3 emissions as part of broader sustainability and climate-related reporting. The following is a non-exhaustive overview, as frameworks continue to evolve in scope, structure, and regulatory relevance.

Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) is one of the most widely adopted sustainability reporting standards globally. GRI encourages organizations to consider emissions across their value chains, including scope 3, when reporting environmental performance. Its standards are designed to improve the quality, consistency, and comparability of sustainability disclosures across organizations and sectors.

Carbon Disclosure Project (CDP)

CDP operates a global disclosure system that enables companies, investors, cities, states, and regions to disclose environmental data. CDP’s climate change questionnaire includes detailed questions on scope 3 emissions, strongly encouraging organizations to disclose value-chain emissions. The depth, coverage, and quality of scope 3 data disclosed play an important role in CDP scoring.

International Sustainability Standards Board (ISSB)

The International Sustainability Standards Board (ISSB) introduced the IFRS Sustainability Disclosure Standards in June 2023, including IFRS S1 for general sustainability-related disclosures and IFRS S2 for climate-related disclosures. IFRS S2 explicitly includes scope 3 emissions and requires companies to disclose absolute gross greenhouse gas emissions across scopes 1, 2, and 3 where material, with transitional relief provisions to support organizations in the early years of reporting.

Science Based Targets initiative (SBTi)

The Science Based Targets initiative (SBTi) provides guidance for setting emissions reduction targets that are aligned with climate science. While SBTi is not a reporting or disclosure framework, it plays a critical role in scope 3 management. SBTi requires companies to set scope 3 targets when value-chain emissions represent a significant portion of their total footprint and relies on GHGP-aligned emissions inventories to assess progress against targets.

Task Force on Climate-related Financial Disclosures (TCFD)

The Task Force on Climate-related Financial Disclosures (TCFD) established a principles-based framework for climate-related financial reporting. While TCFD does not prescribe specific calculation methodologies, it encourages organizations to disclose material scope 3 emissions as part of assessing climate-related risks and opportunities. TCFD recommendations have heavily influenced newer regulatory and disclosure frameworks, including ISSB standards.

Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS)

The Corporate Sustainability Reporting Directive (CSRD) is a regulatory framework that significantly expands sustainability reporting requirements for companies operating in or connected to the European Union. Under CSRD, organizations must report in accordance with the European Sustainability Reporting Standards (ESRS). ESRS E1 explicitly requires the disclosure of scope 3 emissions where material, using methodologies aligned with the Greenhouse Gas Protocol, with phased implementation provisions for certain scope 3 categories.

Although these frameworks differ in focus and applicability, they share a common objective: promoting consistent, reliable, and decision-useful ESG and climate-related disclosures.

Case Study: Agora

In addition to Agora’s commitment to disclose emissions associated with scopes 1, 2, and 3, the organization plans to disclose its emissions through CDP to maintain a competitive edge among industry peers. Stephanie understands that including high-quality scope 3 emissions data is critical to achieving a strong CDP score. She begins the process of disclosing Agora’s emissions to CDP using this guidance.