Emissions over Time
The GHG Protocol is designed to enable reporting entities to track and report consistent and comparable emissions data over time. The first step to tracking emissions over time is the establishment of a base year. A base year is a benchmark against which subsequent emissions can be compared to create meaningful comparisons over time and may be used for setting GHG reduction targets.
To comply with the GHG Protocol principles of relevance and consistency, a reporting entity is required to establish and report a base year for its Scope 1 and Scope 2 GHG emissions. A base year is only required for Scope 3 emissions when Scope 3 performance is tracked or a Scope 3 reduction target has been set. That is the case whether the entity is reporting under the Corporate Standard or the Scope 3 Standard (see below How to apply the Corporate Standard, Scope 2 Guidance and Scope 3 Standard?).
How to apply the Corporate Standard, Scope 2 Guidance and Scope 3 Standard? |
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An entity reporting under the Corporate Standard is not required to disclose Scope 3 emissions. As a result, there are three options under the GHG Protocol for reporting Scope 3 emissions, as described in the following table, which is based on Table 1.1 in the Scope 3 Standard: |
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Option |
Description |
Applicable GHG criteria |
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1 |
A reporting entity reports its Scope 1 and Scope 2 GHG emissions and either (1) no Scope 3 emissions or (2) Scope 3 emissions from activities that are not aligned with any of the prescribed Scope 3 categories (the latter is very rare). |
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2 |
A reporting entity reports its Scope 1 and Scope 2 GHG emissions and some, but not all, relevant and material Scope 3 GHG emissions in accordance with the Scope 3 calculation guidance but not with the Scope 3 Standard. |
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3 |
A reporting entity reports its Scope 1 and Scope 2 GHG emissions and all relevant and material categories of Scope 3 GHG emissions |
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Consider this! |
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The GHG Protocol encourages reporting entities to begin reporting GHG emissions information and improve the completeness and precision of that information over time. While the GHG Protocol requires a company to establish and report a base year for its Scope 1 and Scope 2 emissions, a reporting entity that recently started to report GHG emissions information and has not established an emissions reduction target may choose not to set a base year until the precision and completeness of their emissions inventory have improved. In this situation, the reporting entity should disclose that a base year has not yet been established and the reason for not establishing a base year. |
The GHG Protocol does not require a reporting entity to report prior-year information other than the base year, but it may elect to do so.
Base year selection
A reporting entity needs to choose a base year for which verifiable emissions data is available. The base year selected should be representative of the GHG emissions of the reporting entity.
For example, a reporting entity that experienced significantly elevated levels of sales and operations in 2020 due to the COVID-19 pandemic should not select 2020 as a base year, since this base year would allow it to show significant reductions in emissions in subsequent years when sales and operations stabilized.
The objective of establishing a base year is to allow a reporting entity and users to track progress against that year.
The GHG Protocol allows a reporting entity to create a base year using an average of annual emissions over several consecutive years. This approach may be selected to obtain a more representative emissions profile that smooths out unusual fluctuations in GHG emissions.
Additionally, under the GHG Protocol, a reporting entity may adopt a policy that moves the base year forward every set number of years. While a moving base year may be more useful for an entity that is significantly growing, it does not allow users of the information to compare emissions over a longer period of time.
A reporting entity also has the option to select a separate base year for each scope. The criteria for selecting the base year for each scope are the same as those for selecting a single base year.
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Consider this! |
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While the GHG Protocol allows a reporting entity to select a separate base year for each scope, we believe a reporting entity should select a consistent base year for Scope 1, Scope 2 and Scope 3 emissions, unless there is a supportable reason for having different base years. Such reasons could include a lack of available Scope 3 information for the base year selected for Scope 1 and Scope 2, or facts and circumstances that result in non-representative emissions for one scope in the year selected as a base year compared to the other scopes presented. |
A reporting entity must disclose its selected base year (or years), as well as its rationale for selecting that year (or years).
Updating base year and prior-year (if reported and recalculated) emissions
To achieve consistent and comparable emissions data over time, a reporting entity is required under the GHG Protocol to recalculate its base year to reflect the impact of significant events that have occurred.
If other prior-year emissions data is included in the report, the general believe is that a reporting entity should also recalculate those years or clearly disclose that they have not been recalculated and are, therefore, not comparable.
A reporting entity should develop a base-year and prior-year emissions recalculation policy that describes the nature of events that would cause the base or prior years to be recalculated, as well as a significance threshold used to determine if the base and prior years require recalculation.
Once this policy is developed, it should be consistently applied (e.g., for both increases and decreases in emissions) and disclosed. See ‘Setting a significance threshold for recalculation of the base year‘ for a discussion of setting a base year recalculation policy. Anytime a recalculation of base or prior years is performed, a reporting entity should also clearly disclose the context for why a recalculation was required.
Circumstances that require recalculation
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Excerpts from GHG Protocol |
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Corporate Standard – Chapter 5 The following cases shall trigger recalculation of base year emissions:
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Scope 3 – Standard Chapter 9 – 9.3 Recalculating base year emissions Companies are required to recalculate base year emissions when the following changes occur and have a significant impact on the inventory:
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The GHG Protocol requires a reporting entity to recalculate base-year data when the events or changes in circumstances listed below occur and the reporting entity’s significance threshold is met, as discussed in ‘Setting a significance threshold for recalculation of the base year‘ below.
A reporting entity should also recalculate any reported prior-year data or clearly disclose that those years have not been recalculated and, therefore, are not comparable.
- Structural changes to the reporting entity (such as divestments, mergers and acquisitions that affect the organizational boundary)
- Outsourcing and insourcing activities that shift emissions outside the reporting boundary
- Changes in calculation methodology
- Improvements in the accuracy of emissions factors or activity data
- Discoveries of an error or errors that are individually or collectively material
- Additions of new Scope 3 categories
If base-year emissions are not recalculated for these events and changes in circumstances, the reported emissions would indicate that the amount of GHG emissions from the same assets had changed over time to a greater extent than they really did.
For example, improvements in the calculation methodology or data do not change the actual amount of GHG emitted into the atmosphere from the same assets in the past, but they make the measurement of those emissions more accurate. Therefore, such changes require recalculation of base-year data if the impact is material.
Only updating the current-year emissions for the better data or calculation methodology would make it appear as though the actual emissions had changed to a greater extent than they really did compared to the base year.
Similarly, the discovery of an error in a prior reporting year does not change the actual amount of GHGs emitted into the atmosphere in that year, so the prior-year emissions should be recalculated. See ‘Discovery of errors in prior years’ below for discussion of correcting prior year errors.
In some circumstances more accurate data may be identified that cannot reasonably be applied to all prior years or is not available for every year presented. In these cases, a reporting entity may extrapolate the more accurate data input to all years presented or present unadjusted prior year numbers and disclose the use of the new data and when it was applied.
This disclosure should be made each year the new and old data points are both presented. This disclosure aligns with the general GHG reporting principle of transparency.
Structural changes often shift emissions from one reporting entity to another without changing the actual amount of GHGs emitted into the atmosphere. The reporting entity that currently owns or controls the assets should report emissions from those assets in its base year or prior years (if recalculated) for comparison purposes.
Therefore, a reporting entity needs to recalculate its base year for any significant acquisitions or divestments. Base- or prior-year recalculations should only be made for events that have occurred and not based on management’s plans or expectations of future events.
Some outsourcing or insourcing arrangements also shift emissions from one reporting entity to another without changing the actual amount of GHGs emitted into the atmosphere. If a reporting entity is reporting Scope 1, Scope 2 or Scope 3 emissions, such arrangements would only change the scope of those emissions.
However, as noted in ‘How to apply the Corporate Standard, Scope 2 Guidance and Scope 3 Standard?‘ above, a reporting entity does not need to report Scope 3 emissions (or all relevant categories of Scope 3 emissions). Therefore, if outsourcing or insourcing arrangements shift emissions between Scope 1 or Scope 2 and a Scope 3 category that was not previously reported, recalculation of Scope 1 and Scope 2 emissions for the base and prior years (if recalculated) to reflect this change is required.
That is because not recalculating the Scope 1 or Scope 2 base-year or prior-year (if recalculated) emissions to reflect this change would make it appear as though the Scope 1 or Scope 2 emissions decreased over time, instead of just being moved to a non-reported category.
In addition, if a separate base year is selected for each scope, the base year needs to be recalculated for any changes between scopes due to insourcing our outsourcing arrangements.
The following example illustrates the base-year recalculation requirement for a structural change.
Case – Emissions over Time– Recalculation of a base year for structural change |
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Company A and Company B have prepared sustainability reports that report emissions in accordance with the GHG Protocol since 2018, and both have established a base year of 2018. Company C is a fully owned and controlled subsidiary of Company B. Below are the emissions generated by each entity. |
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GHG Emissions (metric tons of CO2e) |
Reported history |
Not yet reported |
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2018 |
2019 |
2020 |
2021 |
2022 |
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Company A |
90 |
100 |
110 |
120 |
130 |
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Company B (includes Company C emissions) |
200 |
205 |
210 |
215 |
220 |
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Total GHG emissions |
290 |
305 |
320 |
335 |
350 |
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Company C’s emissions were |
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2018 |
2019 |
2020 |
2021 |
2022 |
 |
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Company C emissions (not reported separately) |
20 |
20 |
20 |
20 |
20 |
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In 2022, Company A purchased Company C from Company B. In 2022, when the acquisition occurred, Company A determined the impact of the acquisition of Company C met the significance threshold included within its base year recalculation policy. Therefore, Company A recalculated the base year and decided to optionally recalculate the prior years presented to make sure the presentation was consistent over time. Company Breached the same conclusion. The reports issued for 2022 presented the following information: |
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GHG Emissions (metric tons of CO2e) |
2018 |
2019 |
2020 |
2021 |
2022 |
 |
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Company A (includes Company C emissions) |
110 |
120 |
130 |
140 |
150 |
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Company B (no longer includes Company C emissions) |
180 |
185 |
190 |
195 |
200 |
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Total GHG emissions |
290 |
305 |
320 |
335 |
350 |
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As illustrated above, Company A adjusted the base year and prior years presented for the impact of acquiring Company C and added the 20 metric tons of C02e generated by Company C in each year presented to its total emissions. Company B also adjusted the base and prior years reported for the impact of divesting Company C and subtracted the 20 metric tons of C02e generated by Company C in each year presented. Recalculation of the base year provides comparability of the current year emissions data with prior years. Without this adjustment, the acquisition of Company C would result in an apparent increase in emissions for Company A in 2022, and an apparent decrease in emissions for Company Bin 2022. However, the actual GHGs emitted into the atmosphere (represented by the “total GHG emissions” line item above) remained unchanged over this period. |
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Scenarios that do not require recalculation
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Excerpts from GHG Protocol |
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Corporate Standard – Chapter 5 Base year emissions and any historic data are not recalculated for organic growth or decline. Base year emissions are not recalculated if the company makes an acquisition of (or insources) operations that did not exist in its base year. Structural changes due to “outsourcing” or “insourcing” do not trigger base year emissions recalculation if the company is reporting its indirect emissions from relevant outsourced or insourced activities. |
The GHG Protocol does not require a reporting entity to recalculate base-year and prior-year (if recalculated) data when the following events or changes in circumstances occur:
- Organic growth or decline
- Acquired facilities that did not exist in the base year (or prior years if reported)
- Outsourcing or insourcing activities that only change the classification of reported emissions (i.e., insourcing and outsourcing activities that do not shift emissions outside the reporting boundary)
As discussed above, it is general believe that the GHG Protocol‘s objective is for the base year and prior years (if recalculated) to be recalculated only when the actual amount of emissions in the environment has not changed over time and not adjusting the prior years would make it appear as though emissions had changed.
The following events and circumstances reflect situations in which actual emissions change over time.
- The base year and prior years (if recalculated) are not recalculated to reflect the impact of organic growth (such as higher emissions due to increased use of existing facilities or increased emissions from newly constructed facilities) or an organic decline in operations (such as the closure of stores or facilities, as opposed to selling the stores, due to unfavorable economic conditions), since these changes reflect true changes in total GHG emissions over time.
- If a reporting entity acquires a facility or entity that came into existence after the base year, the base year would not be recalculated for the acquisition because there were no emissions from the facility or entity in the base year since it didn’t exist yet. Instead, prior year data (if recalculated) would be recalculated from the date the acquired facility or entity came into existence. Similarly, the base year would not be recalculated for a divestment of a facility or entity that came into existence after the base year. Only the prior years (if recalculated) when the divested facility or entity was operating would be recalculated.
- If insourcing or outsourcing arrangements only change the classification of emissions among scopes that were previously reported by the reporting entity, base year and prior years (if recalculated) recalculation is not required. That is because these emissions were already reported by the reporting entity. For example, an outsourcing activity that shifts emissions between Scope 1 and Scope 3 emissions when an entity reports on all relevant Scope 3 categories does not require recalculation of the base year and prior years (if recalculated). However, we believe that a reporting entity should disclose that emissions were shifted between Scope 1 and Scope 3 due to an outsourcing arrangement to prevent the reported information from being misleading. If a separate base year is selected for each scope, the base year needs to be recalculated for any changes between scopes due to insourcing or outsourcing arrangements.
Setting a significance threshold for recalculation of the base year
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Excerpts from GHG Protocol |
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Corporate Standard – Glossary Significance threshold: A qualitative or quantitative criteria used to define a significant structural change. It is the responsibility of the company/ verifier to determine the “significance threshold” for considering base year emissions recalculation. In most cases the “significance threshold” depends on the use of the information, the characteristics of the company, and the features of structural changes. |
The GHG Protocol requires a reporting entity to set a significance threshold for determining when base year data should be recalculated.
The significance threshold is a qualitative or quantitative (or combination of both) threshold used to evaluate whether base year data should be recalculated due to changes to data, organizational boundary, operational boundary, calculation methods or any other relevant changes, including those discussed in ‘Circumstances that require recalculation‘ above.
A significance threshold policy includes an assessment of structural changes and when data from such events is incorporated or removed from the reporting entity’s emissions.
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Consider this! |
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While the GHG Protocol specifies that a qualitative or quantitative significance threshold should be used for determining when base year data should be recalculated, we believe in practice a significance threshold should often include both qualitative and quantitative criteria. |
The significance threshold should be used to evaluate both individual changes as well as the aggregate impact of multiple events, because the cumulative impact of multiple small changes may result in base year data no longer being comparable.
A reporting entity should disclose its significance threshold. The level of detail included within this disclosure (e.g., quantitative significance threshold, qualitative considerations) may vary based on the goals of the reporting entity, as well as the importance of the threshold to the reported information.
For example, if there has been a significant number of events requiring recalculation of the base year, a more detailed disclosure of the significance threshold is likely appropriate.
The GHG Protocol does not specifically address what the significance threshold should be. However, regulatory standards may include such guidance, so reporting entities should consider whether their reports would be subject to any regulatory requirements.
Timing of recalculations
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Excerpts from GHG Protocol |
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Corporate Standard – Chapter 5 When significant structural changes occur during the middle of the year, the base year emissions should be recalculated for the entire year, rather than only for the remainder of the reporting period after the structural change occurred. If is is not possible to make a recalculation in the year of the structural change (e.g., due to lack of data for an acquired company), the recalculation may be carries out in the following year. |
Base years, and prior years if reported, should be recalculated assuming the change occurred on the first day of the year. Emissions over Time
For example, if a structural change occurs in the middle of the year, the base year, other prior years recalculated and current year recalculations should be recalculated for the full year, rather than for the point in time the structural change occurred. Emissions over Time
The GHG Protocol indicates that a recalculation should be made in the year of the structural change (e.g., acquisition, divestiture) if the data is available.
If it is not possible to make a recalculation in the year of the structural change (e.g., due to lack of data for an acquired company), the GHG Protocol allows a one-year grace period and states that the recalculation may be carried out in the following year.
We believe the reporting entity should disclose that the related recalculation was not made in the current year and why. Emissions over Time
Depending on the emissions data availability of an acquired entity, it may take a reporting entity more than one year, as allowed by the GHG Protocol, to gather and incorporate data from structural changes into its reported metrics.
Under these circumstances, a reporting entity should disclose the exclusions and boundary inconsistencies, as described in ‘Consistency in organizational boundaries‘ below and ‘Required disclosures‘.
| Consistency in organizational boundaries |
| A reporting entity must consistently apply the selected approach throughout its entire legal structure. That is, when the parent is the reporting entity, one subsidiary of a parent cannot apply the equity share approach for its subsidiaries while another subsidiary of the same parent applies the operational control approach for its subsidiaries. Inconsistent application of the organizational boundary over time could result in misleading information.
A reporting entity may change the consolidation approach selected, but that change would be subject to the prior-year recalculation requirements discussed in ‘Circumstances that require reclaculation‘. |
These disclosures should include the specific exclusions and justification for the exclusions, and they should clearly indicate that due to this inconsistency there may be significant excluded emissions, if applicable.
Subsequent events
The GHG Protocol does not provide guidance related to the presentation and disclosure of events that occur after the end of the reporting period but before the report is issued (i.e., subsequent events).
We believe that in the absence of guidance, a reporting entity should establish and consistently apply a policy that indicates how it will report different types of subsequent events that occur after the reporting date but before the report is issued (e.g., structural changes, application of environmental attribute certificates). Emissions over Time
Discovery of errors in prior years
As discussed in ‘Circumstances that require recalculation‘ above, the GHG Protocol requires that a reporting entity recalculate base-year information for the discovery of errors that are material, either individually or in aggregate.
If there is a subsequently discovered fact (i.e., a fact that, if known when the report was issued, would have resulted in different reported information) that impacts the base-year or any prior-year information, a qualitative and quantitative assessment of the materiality of the error should be performed. Emissions over Time
If the subsequently discovered fact existed as of the date of the report and has a material impact on previously reported information, it may be necessary to restate the previously reported information, and the assurance provider may need to withdraw and/or reissue their assurance report.
These considerations do not apply to other recalculation scenarios required by the GHG Protocol, such as recalculations due to acquisition or divestiture.
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