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How to Report on Compensated Emissions

Clare avatar
Written by Clare
Updated over a year ago

According to the Green House Gas Protocol Corporate Standard, it is recommended that GHG emissions associated with a company's operations (Scope 1, 2, and 3) should be reported without adjustment for carbon offsets or credits.

Carbon offsets or credits should be disclosed separately to ensure that emissions are transparently reported and that reductions from offsets are not counted against a company's direct or indirect emissions.

Further, the GHG Protocol advises against including expenses related to compensated emissions in Scope 3, Category 1 - Purchased Goods and Services, as these do not represent direct or indirect emissions. Instead, these expenses should be reported in financial disclosures or a separate section on offset strategy and expenditures. Adding compensation expenses as negative amounts in PGAS is not recommended as it could mislead stakeholders about the actual emissions reductions achieved through operational changes.

In terms of reporting on compensated emissions, the GHG Protocol provides guidance under Scope 3, indicating that investments in carbon reduction projects, which may include carbon credits, should be detailed in separate reports. This is to clarify the impact of these investments on overall sustainability goals without confusing them with direct emissions reductions

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