Scope 2 is Changing: What the Proposed GHG Protocol and SBTi Revisions Mean for Corporate Energy and Decarbonisation Strategies

Big changes are coming to how organisations account for purchased electricity and demonstrate progress toward decarbonisation targets.

The Greenhouse Gas (GHG) Protocol and the Science Based Targets initiative (SBTi) have both released proposals that would significantly revise Scope 2 accounting and target-setting rules. Together, these changes signal a shift away from relatively simple annual renewable energy claims toward far more granular, location-and time-specific approaches.

For many organisations, this represents the most significant change to corporate electricity emissions accounting since the original GHG Protocol Scope 2 Guidance was published in 2015. While the intent is to improve accuracy, credibility, and climate impact, the implications for procurement strategies, compliance, and cost are substantial.

This article breaks down what is changing, why it matters, and what organisations should be thinking about now.

Why Scope 2 is Under Review

Scope 2 covers indirect greenhouse gas emissions from the generation of purchased electricity, steam, heat, and cooling. For most service-based and office-based organisations, electricity is the dominant source of emissions outside of Scope 3.

Since 2015, companies have been able to report Scope 2 emissions using two methods:

• Location-based, reflecting the average emissions intensity of the local grid, and
• Market-based, reflecting contractual instruments such as renewable energy certificates (RECs) or guarantees of origin (GOs).

While this framework enabled rapid uptake of renewable energy procurement, it has also been criticised. Stakeholders have raised concerns about:

• Over-reliance on low-cost certificates disconnected from real-world electricity consumption,
• Limited incentives to support new renewable generation,
• Inconsistencies between reported emissions and actual grid impacts,
• The growing gap between corporate claims and system-level decarbonisation.

The proposed revisions are intended to address these issues by tightening the link between electricity use, procurement choices, and real emissions outcomes.

Key Proposed Changes to GHG Protocol Scope 2 Guidance

1. Moving Toward Hourly Matching

One of the most significant proposals is a move away from annual matching of renewable electricity toward hourly matching.

Under current rules, a company can match its annual electricity consumption with renewable certificates generated at any time during the year. Under the proposed changes, companies may be required—or strongly encouraged—to demonstrate that clean electricity is generated in the same hour that electricity is consumed.

This reflects the reality that electricity grids are dynamic systems. Consuming power during high-carbon hours and matching it with renewable generation produced at a different time does not necessarily reduce real-world emissions.

Hourly matching is intended to drive demand for clean energy when it is actually needed, improving system flexibility and decarbonisation outcomes.

2. Stricter Location and Deliverability Requirements

The proposed revisions also strengthen spatial requirements for market-based instruments. To be valid, renewable electricity claims may need to demonstrate that power is:

• Generated within the same grid or market boundary, and
• Physically deliverable to the reporting entity’s load.

This would reduce the ability to rely on certificates sourced from distant or weakly connected markets that have little impact on the emissions intensity of the electricity actually consumed.

3. Commissioning Date and Additionality Considerations

Another major area of change relates to the age of renewable assets. The proposals include limits on how old a generating facility can be for its certificates to count toward Scope 2 claims.

The aim is to strengthen “additionality” by ensuring corporate demand supports either new or recently built renewable generation, rather than relying indefinitely on legacy assets that would operate regardless of corporate purchasing decisions.

4. Greater Precision in Location-Based Reporting

The location-based method is also being refined. Instead of relying on broad national or regional averages, companies may be required to use a hierarchy of more precise grid emission factors where available.

This would improve accuracy but may increase data and reporting complexity, particularly for multinational organisations operating across multiple grids.

How SBTi Is Responding: Changes to Target Setting

In parallel, the Science Based Targets initiative is revising how companies set and assess Scope 2 targets as part of its updated Corporate Net-Zero Standard.

Key proposed changes include:

• Separating Scope 1 and Scope 2 targets, rather than allowing them to be combined,
• Requiring companies to demonstrate progress using both location-based and market-based metrics, or through a defined zero-carbon electricity pathway,
• Increasing emphasis on time- and location-matched clean electricity procurement to align with updated GHG Protocol guidance.

The direction of travel is clear: companies will be expected not only to report lower Scope 2 emissions, but to show that their electricity procurement choices are driving credible, system-level decarbonisation.

What This Means for Corporate Energy Procurement

For many organisations, these changes could require a fundamental rethink of energy strategy.

Traditional approaches—such as purchasing unbundled certificates annually to neutralise electricity emissions, may no longer be sufficient. Instead, companies may need to explore:

• Power purchase agreements (PPAs) with stronger geographic and temporal alignment,
• Participation in 24/7 or hourly matching programmes,
• Investment in on-site or near-site renewable generation,
• Greater integration of energy management, storage, and demand-side flexibility.

These options are often more complex, more expensive, and more operationally demanding than legacy approaches, particularly in regions where hourly instruments or granular grid data are limited.

Risks, Costs, and Market Disruption

While the proposed changes are designed to improve credibility, they are not without controversy.

Stakeholders have raised concerns that:

• Costs for clean electricity procurement could increase significantly,
• Smaller organisations may struggle with data availability and system complexity,
• Existing long-term contracts could be undermined without adequate transition arrangements,
• Markets for hourly instruments are still immature in many regions.

To address this, the GHG Protocol is considering transitional mechanisms, exemptions for smaller consumers, and potential grandfathering of existing contracts. However, the final shape of these provisions is still uncertain.

Timelines and Consultation

Both the GHG Protocol and SBTi are currently in consultation phases, with final standards expected to be published around 2026–2027, followed by phased implementation.

This means organisations still have time to:

• Understand how proposed changes affect their current reporting and targets,
• Engage in consultations and industry responses,
• Begin building internal capabilities around energy data, governance, and systems.

What Organisations Should Do Now

Even though final rules are not yet confirmed, there are clear no-regret actions companies can take today:

1. Review current Scope 2 accounting and procurement strategies to understand exposure to proposed changes.
2. Assess data maturity, particularly the availability of interval-level consumption data and grid emissions factors.
3. Strengthen governance and documentation, ensuring energy and emissions data are traceable, auditable, and decision-ready.
4. Integrate energy strategy with broader ESG and risk management frameworks, rather than treating Scope 2 as a standalone reporting exercise.

Mapping of the most relevant ISOs 

What they cover, and why they matter in the context of tighter Scope 2 rules.

1. ISO 14064-1 – Greenhouse Gas Inventories (Core Standard)

What it covers

ISO 14064-1 specifies principles and requirements for:

• Quantifying and reporting GHG emissions and removals at the organisational level
• Defining boundaries (Scopes 1, 2, and 3)
• Data quality, consistency, and transparency
• Documentation and audit readiness

Why it matters for Scope 2 changes

ISO 14064-1 is the ISO backbone for Scope 2 accounting. As GHG Protocol introduces:

• Hourly matching,
• Location-based factor hierarchies,
• Stricter market-based instruments,

Organisations will need stronger inventory controls, documented methodologies, and clear assumptions, all of which ISO 14064-1 explicitly requires.

If Scope 2 data becomes more granular and complex, ISO 14064-1 provides the structure to keep it defensible.

2. ISO 50001 – Energy Management Systems (Highly Strategic)

What it covers

ISO 50001 establishes a framework for:

• Energy performance monitoring and improvement
• Understanding when, where, and how energy is consumed
• Metering, baselining, and continuous improvement
• Linking operational decisions to energy outcomes

Why it matters for hourly matching

ISO 50001 is arguably the most important ISO for the future of Scope 2.

Proposed Scope 2 rules demand:

• Interval-level (hourly) consumption data,
• Understanding of load profiles,
• Active management of demand and flexibility.

ISO 50001:

• Enables granular energy data collection,
• Supports load shifting and demand response,
• Aligns operational behaviour with decarbonisation outcomes.

Without ISO 50001-style energy governance, hourly matching will be extremely difficult to demonstrate credibly.

3. ISO 14001 – Environmental Management Systems (Foundational)

What it covers

ISO 14001 provides:

• A management system for environmental impacts,
• Risk and opportunity assessment,
• Policy, objectives, and controls,
• Continuous improvement cycles.

Why it matters

Scope 2 revisions push electricity from a passive reporting metric into an active environmental risk and strategy issue.

ISO 14001 helps organisations:

• Embed energy and emissions into governance,
• Manage regulatory and reputational risks,
• Align Scope 2 strategy with broader environmental objectives.

ISO 14001 ensures Scope 2 is treated as a systemic environmental issue, not a spreadsheet exercise.

4. ISO 27001 – Information Security Management (Critical Enabler)

What it covers

ISO 27001 addresses:

• Data integrity and security,
• Access control,
• Audit trails,
• Governance of digital information.

Why it matters for Scope 2

Hourly matching, granular energy data, certificates, contracts, and grid factors dramatically increase:

• Data volume,
• Data sensitivity,
• Audit expectations.

ISO 27001 ensures:

• Energy and emissions data is secure,
• Calculations are traceable,
• Evidence is audit-ready for regulators, SBTi, CSRD, and assurance providers.

As Scope 2 becomes more data-intensive, information security becomes climate governance.

From Claims to Credibility

The proposed Scope 2 revisions represent a shift from symbolic decarbonisation toward demonstrable impact. For organisations, this is both a challenge and an opportunity.

Those that rely on minimal-cost compliance mechanisms may face disruption. Those that invest early in robust energy strategies, digital systems, and governance will be better positioned to meet future requirements and maintain trust with regulators, investors, and stakeholders.

The message from standard-setters is clear: the next phase of climate action is not just about reporting lower numbers, it is about proving that those numbers reflect real-world change.

Start with a Scope 2 Readiness Review

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• Where your current approach will hold up
• Where it will fail under new rules
• What practical steps you should take next
  
  

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