Greenhouse Gas Emissions Topic Methodology

The GHG Topic Methodology confronts the climate crisis by translating emissions impact into currency to understand the actual societal costs of emissions to the world.

The accumulation of GHG emissions in the atmosphere not only alters our physical environment, with rising temperatures and sea levels and more extreme weather events, but also reduces the well-being for all of us. These changes are becoming more unpredictable in their frequency and magnitude, adding further risks to companies and investors.

The GHG Topic Methodology guides preparers of impact accounts to measure and value, in currency, the impact of a company’s GHG emissions on people and the planet. Ultimately, the methodology encourages companies whose GHG emissions are material to manage and reduce their emissions.

The content of the GHG Topic Methodology builds on IFVI & VBA’s General Methodology 1: The Conceptual Framework for Impact Accounting and will be complemented by other Topic and Industry-specific Methodologies.

Download Greenhouse Gas Emissions Topic Methodology

Highlights

  • The methodology accounts for all GHGs emitted in Scope 1, 2, and 3 as defined by the GHG Protocol.
  • The data expected from preparers of impact accounts aligns fully with data already reported through ESRS E1: Climate Change, IFRS S2: Climate-related Disclosures, and GRI 305: Emissions 2016.
  • The methodology establishes a social cost of carbon of USD 236 (2023), based on the two leading models produced by the Climate Impact Lab and Resources for the Future, DSCIM and GIVE, respectively.
  • The methodology acknowledges the relevance of qualitative information to supplement quantitative results as part of impact accounting, including how the quantitative results relate to performance targets and planetary boundaries.
  • The methodology does not account for avoided emissions, emissions reductions targets, or GHG offset projects, whether developed within the value chain or purchased through carbon credits. Future work plans may develop approaches to address each of these.

Influences

The development of this methodology builds on frameworks and protocols published by leading organizations in the impact management ecosystem and sustainability-related disclosures required by governing jurisdictions and international standard setters, including:

Development process

The development of the GHG Emissions Topic Methodology is governed by the Valuation Technical & Practitioner Committee (VTPC) and follows the Due Process Protocol.

  • Development of a GHG emissions methodology was approved by VTPC as part of the 2023 Work Plan.
  • Research and development began in June 2023. VTPC discussion meetings were held in September and December 2023.
  • The VTPC approved the Exposure Draft of the GHG Emissions Topic Methodologyon January 11, 2024.
  • The public comment period was held from February 8 – April 30, 2024.
  • A preliminary analysis of the public comment period was presented to the VTPC in June 2024.
  • A revised final version of the GHG Emissions Topic Methodology based on public comment was approved by the VTPC in September 2024.
  • Final version was released along with its Basis for Conclusions on September 16.

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