GHG Protocol Scope 3 Revisions 2026: Six Changes Reshaping Carbon Reporting

Executive Summary

On 31 March 2026, the GHG Protocol published its Phase 1 Progress Update for the Scope 3 Standard revision — the first tangible output of a process involving a 65-member Technical Working Group across 20+ countries and 42 meetings since September 2024. The original standard, published in 2011, has underpinned virtually every sustainability reporting framework globally, including CSRD, ISSB, CDP, and SBTi.

The proposed changes are not minor clarifications. They introduce data-type disaggregation, a 95% coverage floor, a new Category 16 for circularity, and fundamental shifts in how companies must collect, calculate, and report Scope 3 emissions. A full public consultation draft is expected mid-2026, with final adoption targeted for late 2027.

Bottom line: Companies that wait until 2027 to prepare will be scrambling. Those that act now — auditing data sources, tagging calculation methods, and engaging suppliers — will have a significant competitive and compliance advantage.

Table of Contents

What Happened

The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, first published in 2011, is being comprehensively revised for the first time. The revision process began in September 2024 and is structured in two phases:

• Phase 1 (current): Cross-cutting changes affecting all 15 categories — published as a Progress Update on 31 March 2026
• Phase 2 (underway): Category-specific boundary updates and circularity considerations

The Phase 1 Progress Update outlines six major proposed changes that will reshape how companies measure, report, and verify their value chain emissions. These changes are not yet final — a public consultation draft is expected mid-2026 — but the direction of travel is clear.

Crucially, in September 2025, the GHG Protocol and ISO announced a formal partnership to co-develop harmonised international standards. The revised Scope 3 Standard is likely to become the basis for a formal ISO standard, embedding it in regulatory requirements, procurement criteria, and certification contexts worldwide.

Why It Matters

The Scope 3 Standard is not just another guidance document. It is the foundational methodology on which the following frameworks are built:

• CSRD / ESRS E1 — European Sustainability Reporting Standards for climate change
• ISSB IFRS S2 — International Sustainability Standards Board climate disclosures
• CDP — Global environmental disclosure system
• SBTi — Science Based Targets initiative validation criteria
• SSBJ — Sustainability Standards Board of Japan

When the Scope 3 Standard changes, everything built on top of it changes too. Companies that have invested in Scope 3 reporting infrastructure will need to adapt. Companies that have deferred Scope 3 investment will find the bar has been raised significantly.

The 95% coverage floor, data-type disaggregation, and new circularity category will require most companies to substantially upgrade their data collection, calculation methodologies, and supplier engagement programs.

Who Is Affected

The revisions affect virtually every organisation that reports Scope 3 emissions, but the impact varies by sector and company size:

High Impact

• Manufacturing — Complex supply chains with multiple Scope 3 categories; heavy reliance on spend-based estimates
• Retail & Consumer Goods — Downstream emissions (use of sold products) often dominate; new Category 16 for circularity is highly relevant
• Financial Services — Category 15 (Investments) requirements expanding; data-type disaggregation will expose estimation quality
• Food & Agriculture — SBTi FLAG guidance already requires primary data; revisions will add further granularity requirements

Medium Impact

• Technology & SaaS — Category 1 (Purchased Goods) and Category 11 (Use of Sold Products) primary focus; relatively simpler supply chains
• Professional Services — Category 1 dominant; may benefit from simpler data collection requirements

Regulatory Context

• CSRD reporters — Must align with revised standard as ESRS E1 is updated
• SBTi-validated companies — Will need to demonstrate compliance with new requirements at next validation
• CDP responders — Scoring methodology will adapt to reflect new standard
• EU CBAM importers — Indirectly affected as embedded emissions calculations may need to align with revised methodologies

The Six Proposed Changes

1. Data-Type Disaggregation Per Scope 3 Category

Currently, companies report a single Scope 3 total per category with a narrative description of data sources. The proposed revision requires each category to be broken down by data type, reported in absolute tonnes CO₂e.

The proposed classification distinguishes between:

• Primary / activity-based data — Supplier-specific emissions factors, metered energy, transport records
• Spend-based / EEIO estimates — Economic input-output models, procurement spend allocation
• Unclassified — Data that cannot be disaggregated into the above categories

Impact: For the first time, the proportion of spend-based estimation within each Scope 3 category becomes publicly visible and directly comparable across companies. Organisations that have relied heavily on EEIO-based estimates will have that reliance clearly visible in disclosures.

Terrnix perspective: This is a significant shift toward transparency. Companies should begin tagging their Scope 3 data by type now, even before the standard is finalised. The GHG Protocol has also flagged that a similar requirement may extend to Scope 1 and Scope 2 in future revisions.

2. A 95% Coverage Floor

The current standard requires companies to account for all Scope 3 emissions and justify exclusions, but sets no quantified threshold. The proposed revision introduces a hard minimum: at least 95% of required Scope 3 emissions must be covered.

Key details:

• "Required Scope 3" means mandatory portions of Categories 1–15
• Optional Scope 3 and the new Category 16 are excluded from this calculation
• Up to 5% may be excluded, but exclusions must be quantified, disclosed, and justified — not described qualitatively
• To validate the 5% cap, companies must quantify 100% of required Scope 3, including excluded portions
• Hotspot analysis is explicitly endorsed as a permissible quantification method
• Exception: downstream emissions from intermediate products (Categories 9–12) where end use is genuinely unknown may be excluded outside the 5% threshold

Impact: Companies can no longer qualitatively justify significant exclusions. The 5% figure aligns with SBTi and CDP treatment of Scope 3 exclusions, so companies already reporting to these frameworks will have a head start.

3. New Category 16: Circularity

The proposed revision introduces a new Category 16 addressing emissions associated with circularity — including recycling, remanufacturing, reuse, and waste treatment beyond what is already captured in Category 5 (Waste Generated in Operations).

This category recognises that circular business models can both reduce and increase emissions depending on the specific activity and system boundaries. The category is currently proposed as optional and excluded from the 95% coverage floor.

Impact: Companies with circular business models (fashion rental, electronics refurbishment, packaging reuse) should begin tracking these emissions now to establish baselines and demonstrate circularity benefits.

4. Enhanced Supplier Engagement Requirements

The proposed revision strengthens requirements for supplier engagement and data collection. Companies will be expected to demonstrate systematic efforts to obtain primary data from suppliers, with clearer guidance on what constitutes "reasonable effort."

Impact: Supplier engagement programs will need to be more structured, documented, and persistent. Companies that have treated supplier data collection as a one-time survey will need to build ongoing engagement processes.

5. Improved Guidance on Avoided Emissions

The revision provides clearer guidance on how to account for and report avoided emissions — emissions reductions that occur outside a company's value chain as a result of its products or services.

Impact: Companies in clean technology, renewable energy, and energy efficiency sectors will have a more robust framework for quantifying and communicating their positive climate impact.

6. Alignment with ISO Partnership

The September 2025 partnership between GHG Protocol and ISO means the revised standard will be developed in parallel with an ISO standard. This will embed the methodology in certification and procurement contexts beyond voluntary reporting.

Impact: Companies seeking ISO 14064 certification or responding to procurement questionnaires will find the revised Scope 3 methodology becoming a standard requirement.

Key Takeaways

• The bar is being raised. The 95% coverage floor and data-type disaggregation requirements will expose weak data practices that were previously hidden behind qualitative narratives.
• Spend-based estimates will be visible. Companies relying heavily on EEIO models will need to invest in primary data collection or accept visible disclosure of estimation reliance.
• Supplier engagement is no longer optional. Systematic, documented supplier data collection will become a core requirement, not a nice-to-have.
• Circularity gets its own category. Companies with circular business models should track these emissions now to establish competitive advantage.
• ISO alignment means procurement impact. The revised standard will influence not just reporting but certification and supply chain requirements.
• Timeline is tight. Public consultation mid-2026, final standard late 2027. Companies should begin preparation now.

Industry Impact

Manufacturing

Manufacturers with complex, multi-tier supply chains face the highest burden. The data-type disaggregation requirement will require re-tagging years of Scope 3 data. The 95% floor means previously excluded minor categories must now be quantified. Action: Begin supplier data audits immediately; prioritise Categories 1 (Purchased Goods) and 4 (Upstream Transport).

Retail & Consumer Goods

Downstream emissions (Categories 9–12) often dominate for retailers. The maintained exception for intermediate products is helpful, but companies selling finished goods to consumers must quantify use-phase emissions more rigorously. Action: Invest in product lifecycle assessment capabilities; engage consumers for use-phase data.

Financial Services

Category 15 (Investments) is becoming more prominent. The data-type disaggregation requirement will force asset managers to classify portfolio company data by quality tier. Action: Develop investment-level data tagging; engage portfolio companies on data quality.

Food & Agriculture

SBTi FLAG already requires primary data for land-related emissions. The GHG Protocol revisions add further granularity requirements. Action: Align FLAG data collection with GHG Protocol data-type tagging; ensure farm-level data can be classified by source type.

Recommended Actions

Companies should take the following steps now to prepare for the revised standard:

Immediate (This Quarter)

1. Audit current Scope 3 data sources — Tag every data point by type (primary/activity-based, spend-based/EEIO, unclassified)
2. Assess coverage gaps — Calculate current coverage percentage per category against the proposed 95% floor
3. Review supplier engagement strategy — Document current approach; identify suppliers representing >80% of Category 1 emissions
4. Evaluate calculation tools — Confirm your carbon accounting platform can support data-type tagging and enhanced reporting

Short-Term (Next 6 Months)

1. Engage priority suppliers — Launch structured data collection campaigns for top-emitting suppliers
2. Build data-type tagging infrastructure — Design systems to capture and report data types for all three scopes
3. Monitor public consultation — Review the mid-2026 draft; submit feedback if relevant
4. Train internal teams — Ensure sustainability, procurement, and finance teams understand the implications

Medium-Term (Before Final Standard)

1. Pilot enhanced reporting — Produce a draft disclosure using proposed formats
2. Benchmark against peers — Compare your data quality and coverage against industry leaders
3. Integrate with CSRD/ISSB planning — Ensure your ESRS E1 and IFRS S2 reporting can accommodate revised Scope 3 requirements

Frequently Asked Questions

When will the revised GHG Protocol Scope 3 Standard be finalized?

The GHG Protocol published its Phase 1 Progress Update on 31 March 2026. A full public consultation draft is expected mid-2026, with the final revised standard targeted for late 2027. Phase 2, covering category-specific boundary updates and circularity, is already underway.

What is the 95% coverage floor in the proposed Scope 3 revisions?

The proposed revision introduces a hard minimum: at least 95% of required Scope 3 emissions must be covered. Companies must quantify 100% of required Scope 3 to validate exclusions within the 5% cap. Exclusions must be quantified, disclosed, and justified — not described qualitatively.

How do the GHG Protocol Scope 3 revisions affect CSRD reporting?

CSRD references the GHG Protocol as its baseline methodology. When the Scope 3 Standard changes, ESRS E1 (Climate Change) will need to align. Companies reporting under CSRD should monitor the revision timeline closely, as the final standard may influence future ESRS amendments and audit expectations.

What is data-type disaggregation in Scope 3 reporting?

Under the proposed revision, each Scope 3 category must be broken down by the type of data used to calculate it — primary/activity-based data, spend-based/EEIO estimates, or unclassified. This makes the proportion of estimation methods visible and comparable across companies for the first time.

What should companies do now to prepare for the Scope 3 revisions?

Companies should: (1) Audit current Scope 3 data sources and tag by data type, (2) Assess coverage gaps against the proposed 95% floor, (3) Review supplier engagement strategy for primary data collection, (4) Evaluate calculation tools for alignment with proposed changes, and (5) Monitor the public consultation draft expected mid-2026.

Will the revised standard affect SBTi targets?

Yes. SBTi references the GHG Protocol Scope 3 Standard in its target-setting criteria. As the standard evolves, SBTi will likely update its validation requirements. Companies with existing SBTi targets should monitor SBTi communications for alignment guidance.

What is Category 16 (Circularity)?

Category 16 is a proposed new Scope 3 category addressing emissions associated with circular business models — recycling, remanufacturing, reuse, and waste treatment beyond Category 5. It is currently proposed as optional and excluded from the 95% coverage floor.

References

• GHG Protocol — Scope 3 Standard Revisions: Phase 1 Progress Update (March 2026)
• GHG Protocol — Corporate Suite of Standards and Guidance Update Process
• GHG Protocol — Phase 1 Progress Update PDF (March 2026)
• EFRAG — Draft Simplified ESRS
• European Commission — Corporate Sustainability Reporting (CSRD)
• IFRS Foundation — ISSB Standards Navigator
• Science Based Targets initiative (SBTi)
• CDP — Global Environmental Disclosure System

How Terrnix Can Help

Preparing for the GHG Protocol Scope 3 revisions requires robust data infrastructure, systematic supplier engagement, and calculation tools that can adapt to evolving standards. Terrnix provides: