GHG Protocol Scope 3 Phase 1 Revisions (March 2026): What Corporates Need to Know
The Greenhouse Gas (GHG) Protocol has released its Scope 3 Standard Revisions: Phase 1 Progress Update (March 2026), offering the clearest view yet of how the 2011 Corporate Value Chain (Scope 3) Accounting and Reporting Standard will be rewritten.
While the document is not a final standard and remains subject to change, it signals the direction corporates should begin preparing for, particularly around boundary setting, data quality, financed emissions, and a new Category 16 for facilitated value chain activities.
This blog breaks down the key revisions, why they matter, and what sustainability, finance, and ESG reporting teams should action now.
Why This Update Matters
The Scope 3 Standard has remained largely unchanged since 2011, even as stakeholder expectations, regulatory frameworks (IFRS S2, ESRS E1, SEBI BRSR Core), and science-based target programmes have evolved rapidly.
The Phase 1 update, developed by the Scope 3 Technical Working Group (TWG) across 42 meetings, targets three areas:
Series A: Data quality and allocation
Series B: Boundary setting and a new value-chain category
Series C: Investments (Category 15) and financed emissions
A full public consultation draft will follow. The changes will apply to companies reporting under BRSR, CDP, SBTi, and the emerging IFRS/ESRS frameworks, given the Scope 3 Standard's central role in corporate GHG accounting.
The Seven Revisions Every Corporate Should Prepare For
1. The 95% Boundary Rule (Revision B1)
Companies will be required to account for and report at least 95% of total required scope 3 emissions, with no more than 5% excluded. This replaces the current soft language of "disclose and justify any exclusions".
De minimis emissions are permitted but must fall within the 5% cap.
The rule aligns with SBTi and CDP's existing 5% thresholds.
Companies must quantitatively validate exclusions annually (Revision B2), though hotspot analysis is permitted (Revision B3).
Implication: Loose qualitative justifications for excluding scope 3 categories will no longer be acceptable.
2. Mandatory Data Disaggregation by Data Type (Revision A1)
Reported scope 3 emissions must be disaggregated into tiers based on data type, distinguishing specific (primary), secondary, and spend-based emissions.
Reveals how much of a company's inventory is built on high-quality data versus EEIO estimates.
An "Unclassified" tier is retained to protect feasibility for smaller reporters.
TWG support: 80%.
Implication: Companies relying heavily on spend-based data will face transparency pressure to shift toward supplier-specific data.
3. Verification Disclosure Becomes Required (Revision A2)
If a company verifies any portion of its scope 3 inventory, it must disclose whether emissions are "Fully verified", "Partially verified", or "Not verified".
Companies that choose not to verify are not required to disclose the absence of verification.
Designed to align with ISO 14065:2020.
4. A New Category 16 for "Other Value Chain Activities" (Revision B11)
One of the most consequential changes: the creation of Category 16 for facilitated activities — emissions from third-party activities a company enables, initiates, or influences but does not own.
This category captures previously ambiguous business models, including:
Insurance-associated emissions and underwriting (referenced to PCAF Part B and Part C)
Brokerage, booking agents, and two-sided marketplaces
Fourth-party logistics providers and pipeline operators
Licensing arrangements
Advertising tied to performance-based compensation
Most subcategories are optional, except distribution of fuel and/or energy (16.5), which is required for oil and gas distributors.
Implication: Financial institutions, insurers, and asset-light platform businesses now have a structured home for emissions that previously fell into a reporting grey area.
5. Category 15 Narrowed to True Financed Emissions (Revisions C1–C4)
Category 15 is being redefined to only include investments, commonly called "financed emissions". Insurance, underwriting/issuance, derivatives, cash deposits, and other financial services are being moved to Category 16.
Additionally:
Category 15 now applies to all companies, not just financial institutions; non-FIs with joint ventures, minority stakes, or debt investments must report.
The minimum boundary expands to include an investee's scope 1, scope 2, and scope 3 emissions (Revision C6).
Equity proportionality calculations will include both equity and debt in the denominator (Revision C10), harmonising with PCAF Part A.
6. Stricter Allocation Rules for Supplier Data (Revision A8)
Corporate-level data allocation will be restricted to homogeneous suppliers only. Diversified suppliers (e.g., a conglomerate with both manufacturing and professional services) cannot be allocated using aggregated corporate-level data.
Implication: Companies sourcing from diversified suppliers must push for facility-, product-, or activity-level data.
7. Required vs. Optional Emissions Reported Separately (Revision B7)
All required scope 3 emissions must be reported separately from optional emissions. This prevents large but uncertain optional categories (such as indirect use-phase emissions) from distorting year-over-year comparisons.
What Should Indian Corporates Do Now?
For companies reporting under BRSR Core, SEBI's ESG mandates, or preparing for CBAM, EcoVadis, or SBTi validation, the direction is clear:
Audit your current scope 3 boundary against the proposed 95% rule. Identify categories currently excluded under vague justifications.
Map data quality by category. Determine which emissions are supplier-specific, activity-based, or spend-based. Begin shifting high-value categories to primary data.
Engage diversified suppliers for facility-level or activity-level data ahead of the A8 restriction.
If you have investments, joint ventures, or minority stakes, start scoping Category 15 emissions now — including investee scope 3.
If your business model involves brokerage, licensing, advertising, or financial services, assess exposure to Category 16.
The public consultation draft is forthcoming, and the final standard will likely take effect over the next reporting cycles. Early movers will avoid a compressed compliance window.
How Oren Can Help
Oren's ESG advisory team supports corporates navigating evolving GHG Protocol requirements, from scope 3 boundary setting and data quality improvement to financed emissions calculation and BRSR, CDP, and SBTi alignment.
If your organisation is preparing for the revised Scope 3 Standard, get in touch for a scope 3 readiness assessment.
Frequently Asked Questions (FAQs)
Q1. When will the revised GHG Protocol Scope 3 Standard take effect?
The March 2026 document is a Phase 1 Progress Update, not a final standard. A full draft will be released for public consultation in line with the GHG Protocol's Standard Development Plan. Final approval by the Independent Standards Board (ISB) and ratification by the Steering Committee will follow the consultation period. The current proposed revisions remain subject to change.
Q2. Does the new 95% boundary rule apply to all scope 3 categories?
Yes. Companies reporting in conformance with the revised standard must account for and report at least 95% of their total required scope 3 emissions across categories. Exclusions (including de minimis emissions) are capped at 5% cumulatively. Certain category-specific justified exclusions (such as downstream emissions of intermediate products and select financial instruments in Category 15) sit outside the 5% threshold, subject to disclosure and justification.
Q3. How does Category 16 differ from Category 15?
Category 15 is narrowed to investments where a company provides capital and holds a claim on the underlying entity (financed emissions). Category 16 captures value chain activities a company facilitates (enables, initiates, or earns transactional income from) without owning. Examples include insurance underwriting, brokerage, licensing, and advertising. Most Category 16 subcategories are optional, while all Category 15 investments are required.
Q4. Will non-financial institutions also need to report financed emissions under the new Category 15?
Yes. The proposed Category 15 applies to all companies across all sectors, not just financial institutions. Non-financial institutions holding equity stakes, joint ventures, project finance exposures, or corporate debt investments must account for the scope 1, scope 2, and scope 3 emissions of those investees. Companies without investments can mark the category as "Not Applicable" using the new exclusion disclosure notation (Revision B6).
