Are Your Company’s Green Claims Truly Green? New GHG Reporting Rules Could Expose the Truth
November 28, 2025
The world of corporate sustainability reporting is about to get a whole lot stricter. The Greenhouse Gas (GHG) Protocol, the gold standard for measuring and disclosing emissions, is proposing significant changes that will impact how companies, especially public ones, report their environmental footprint. And this is the part most people miss: these changes could expose greenwashing practices and force companies to be more transparent about their energy sources.
The consultation, open until December 19, 2025, focuses on two key areas: refining Scope 2 emissions reporting for purchased electricity and introducing “consequential accounting” to assess the broader impact of energy projects. This article dives into the proposed Scope 2 revisions, which are particularly relevant for companies operating in markets like Alberta, where renewable energy investments are booming.
Understanding the GHG Protocol: The Three Scopes of Emissions
Before we delve into the changes, let’s revisit the basics. The GHG Protocol categorizes emissions into three scopes:
- Scope 1: Direct emissions from sources owned or controlled by the company (e.g., factory smokestacks).
- Scope 2: Indirect emissions from purchased electricity, steam, heating, or cooling.
- Scope 3: All other indirect emissions from a company’s value chain, such as supplier activities or product use.
Why Scope 2 Matters: The Spotlight on Electricity Consumption
Scope 2 is where the proposed changes pack the biggest punch. Currently, companies can report these emissions using either a location-based method (averaging grid emissions where they operate) or a market-based method (contracting for renewable energy). However, the new rules aim to close loopholes and ensure claims of “green” energy are backed by real, tangible impacts.
Location-Based Method: Precision Over Generalization
The revised location-based method ditches broad regional averages in favor of pinpoint accuracy. Instead of using generic emission factors, companies will report emissions based on the exact time and place electricity is consumed. This means factoring in imported electricity, which was previously often overlooked.
But here’s where it gets controversial: The proposal introduces a strict hierarchy for selecting emission factors: location precision trumps time precision, which trumps factor type. For instance, a local emission factor with annual data would be preferred over a national factor with hourly data. While this aims for accuracy, some argue it could disadvantage companies in regions with limited data availability.
Market-Based Method: Closing the Loopholes on Renewable Claims
The market-based method is also getting a makeover. Currently, companies can claim renewable energy credits from generators anywhere, regardless of whether they’re physically connected to the grid. The new rules demand temporal alignment (matching energy use with generation time) and physical deliverability (ensuring the generator can actually supply power to the company’s location).
This means no more claiming wind power from a turbine across the country if it can’t realistically reach your facility. This shift could significantly impact companies relying on Power Purchase Agreements (PPAs) with out-of-region renewable projects, particularly in markets like Alberta, where PPAs have fueled renewable energy development.
Transitioning to the New Rules: A Balancing Act
Recognizing the potential disruption, the proposal includes a transition mechanism for existing contracts. Two options are on the table: a legacy clause allowing continued use of non-compliant contracts for a limited time with disclosure, or a single effective date after which all contracts must meet the new standards.
Implications: A New Era of Transparency
These changes will have far-reaching consequences. Public companies, already under scrutiny for greenwashing, will need to ensure their emissions reporting aligns with the stricter Scope 2 guidelines. This is especially crucial in light of the Canadian Securities Administrators’ recent warning against overly promotional environmental claims.
For companies investing in Alberta’s renewable energy sector through PPAs, the new rules will require careful consideration of how these projects are reflected in their Scope 2 calculations.
Food for Thought: Is “Green” Enough?
The proposed GHG Protocol revisions raise important questions. Will the increased transparency lead to more genuine sustainability efforts, or will it simply push companies to find new ways to game the system? How will the transition impact the financing of renewable energy projects, particularly in markets reliant on out-of-region investments?
We want to hear your thoughts! Do you think these changes will effectively combat greenwashing, or will they create new challenges for businesses? Share your opinions in the comments below.
For further insights and guidance on navigating these changes, please contact Bill Gilliland.
Special thanks to Nada Farag, articling student, for her valuable contributions to this article.
