The International Organization for Standardisation (ISO) and the Greenhouse Gas (GHG) Protocol announced in Geneva yesterday (9 September) a strategic partnership to harmonise and co-develop global standards for measuring and reporting GHG emissions.
This partnership aims to combine ISO's formal standards portfolio and the GHG Protocol's widely adopted corporate accounting guidance into a single suite of standards covering corporate, product and project-level carbon accounting.
The agreement
In a joint statement, the ISO and GHG Protocol said the aim is to "produce a common global language for emissions accounting" which will enhance harmonisation and reduce confusion for companies, auditors, investors and policymakers alike.
ISO Secretary General Sergio Mujica said this agreement marks a "new era for the carbon accounting landscape".
The two bodies will combine key elements of ISO's climate change mitigation standards (the 1406X family) with the GHG Protocol's standards and guidance into a unified co-branded set of carbon accounting standards. In addition, they highlighted plans to co-develop a product carbon footprint standard to meet growing demand for product-level disclosures.
Matthew Bell, EY global lead on climate change and sustainability services, noted that the ISO and GHG Protocol standards combined "underpin nearly every voluntary and regulated reporting mandate".
Given the current influence of both sets of standards in regulation and legislation, their future unified standards for measuring GHG emissions will serve to underpin jurisdictional climate disclosure requirements.
ISO's emissions standards family
ISO is a network of 173 national standard setting bodies, founded in 1947 and based in Geneva, which has published more than 25,000 international standards for ensuring the quality, safety and efficiency of products, processes and services across various sectors.
Its 1406X family includes a three-part standard for quantifying, reporting and verifying GHG emissions, reductions and removals (ISO 14064-1, ISO 14064-2, and ISO14064-3), which was issued in 2006 and subsequently revised in 2018 and 2019.
Two further standards establish general principles and competence requirements for organisations verifying environmental information (ISO 14065 and ISO 14066), and ISO 14067 establishes requirements for quantifying the carbon footprints of products.
Although voluntary, governments and industry bodies commonly reference the ISO 1406X family of standards in laws, procurement rules and regulatory frameworks.
ISO 14064 is referenced in national energy and emissions reporting requirements in both Australia and South Africa and also used in emissions trading schemes in Japan and South Korea, to name a few examples.
GHG Protocol – codifying carbon accounting for climate reporting requirements
The GHG Protocol was established by the World Resources Institute and the World Business Council for Sustainable Development in 1998. It has the stated goal of the developing the "most credible, accessible, and widely used greenhouse gas accounting and reporting standards" for companies and public sector bodies.
It has published two key carbon accounting standards: the Corporate Accounting and Reporting Standard which sets out requirements for measuring emissions; and the Corporate Value Chain Standard, which provides a framework for calculating Scope 3 emissions.
These materials have been widely adopted by companies, with 97% of the S&P 500 companies that reporting through the CDP survey using the GHG Protocol standards in 2023. They have been incorporated into laws and regulations governing climate disclosures around the world.
The TCFD framework states that GHG emissions disclosures "should be calculated in line with the GHG Protocol methodology", which has been embedded in TCFD-aligned reporting requirements for large companies in the UK, Japan, Singapore, Brazil and Switzerland.
In 2023, the ISSB released its climate standard (IFRS S2) which explicitly incorporates the TCFD recommendations. As such, IFRS S2 requires companies to calculate and disclose emissions using the GHG Protocol unless they are obliged by a jurisdictional authority or an exchange to use a different methodology.
According to the IFRS Foundations, 17 jurisdictions have finalised the regulatory process to adopt IFRS S2 and a further 14 are in the process of doing so. Meanwhile, California has explicitly incorporated the GHG Protocol standards into its legislative emissions reporting requirements, and other US states – including New York and Illinois – have followed suit in their respective draft climate disclosure laws.
In the EU, the application guidance for ESRS E1 specifies that preparers shall consider the GHG Protocol standards when reporting emissions, and that preparers "can also consider" the relevant requirements for GHG emissions disclosures in ISO 14064.
Different outlooks and approaches
Both the ISOs and the GHG Protocol standards are influential in jurisdictional climate policies and regulations, and there are several similarities between the two which can be leveraged in the work to harmonise them into one suite of joint standards.
The two sets of standards both: categorise emissions into the three scopes; emphasise the principles of accuracy, completeness, consistency and transparency; require clear definitions of organisational boundaries; and provide a framework for establishing an inventory of emissions.
However, there are also some fundamental divergences in their approaches to carbon accounting, which will have to be ironed out through the consolidation exercise.
The GHG Protocol provides a comprehensive framework, with calculation methods for each scope, emission factors, sectoral guidance and examples of best practice. In contrast, ISO 14064 is less prescriptive and more procedural, setting out the steps companies should take when quantifying, reporting and verifying their emissions.
Another key difference is that ISO 14064 includes GHG emissions removals as an inherent part of its quantification requirements, whereas the GHG Protocol only allows companies to report on removals separately from their GHG emissions in the 'optional information' section of their inventories.
Furthermore, third-party verification is mandatory for companies applying ISO 14064, but optional in the GHG Protocol standards.
Support for closer alignment, while some concerns remain
When announcing the partnership, the ISO and GHG Protocol highlighted that the agreement "aligns with recent calls for alignment" by the B7 community - a collection of businesses and trade associations in the G7 countries.
The B7 issued a communique in May this year, calling on national governments to "promote international coordination of corporate carbon accounting and reporting standards".
Highlighting ISO 14064 and the GHG Protocol in particular, the communique said coordinating standards would reduce business compliance costs, and also called for the development of globally recognised product-level carbon accounting methodologies.
The announcement of the strategic partnership was lauded by ISSB chair Emmanuel Faber, who said it "will augment the globally accepted baseline for greenhouse gas accounting" and provide more comparable carbon data for investors.
Dan Ioschpe, appointed as 'High-Level Champion' to liaise between governments and other stakeholder groups at the upcoming COP30 in Brazil, stated: "This partnership is a timely and critical step toward greater climate accountability. A unified set of standards for GHG emissions reporting will help raise ambition, enable credible net-zero pathways, and build trust across borders."
Just Climate Senior Partner Clara Barby said the two bodies can "provide coherent protocols as the basis for disclosure regimes globally", which will offer both credibility and simplicity.
However, some organisations have raised concerns over the collaboration between the two organisations.
In June, the International Council of Forest and Paper Associations released a statement, arguing that the ISO's governance structure could be "compromised" by aligning with external bodies that do not adhere to the same principles.
The statement reads: "In particular, ISO must not abandon or dilute its process by lending its brand to an organisation such as the GHG Protocol, which has yet to fully adopt or demonstrate commitment to ISO's governance."
Brussels-based NGO Environmental Coalition on Standards praised the alignment of the standards but also stressed the importance of robust governance over the harmonised standards which ensures a balanced representation of stakeholder views.
On the future consolidated standards themselves, it wrote: "A unified standard must speak clearly: carbon credits cannot replace the obligation to reduce emissions at source. For scope 3 accounting, market-based instruments are another field in which ambition cannot be dropped in the process. Allowing flexibility to artificially lower scope 3 emissions with certificate trading would undermine the credibility of the forthcoming joint standards."
BRICS
While not mentioning the ISO or GHG Protocol standards directly, the BRICS countries have this year adopted principles for a "more balanced international approach to guide the design of carbon accounting-based systems, standards and methodologies".
The principles state: "International organisations dealing with carbon accounting standards and methodologies should also include adequate representation of diverse national circumstances and interests. Measures related to carbon accounting should be deployed within a robust framework of international cooperation, based on the provision of finance, technology and capacity building, to prevent market fragmentation and structural disparities."
Next steps
According to the ISO and GHG Protocol's announcements, experts from both organisations will "collaborate through an integrated technical process" towards the goal of delivering.
Neither set out how the consolidated standards will be governed or gave timelines for the development of these harmonised co-branded standards.
Andrew Griffiths, co-founder of the Carbon Accounting Alliance, estimates that it will take between 18 months and two years for the combined standards to be developed, consulted on, finalised and published.
In a LinkedIn post, he said: "There is a lot of detail to be figured out here, and plenty of difficult negotiations ahead. But complete harmonisation of the two competing GHG measurement standards will be transformative, bringing greater cost savings, efficiencies and interoperability."