When was the last time you saw the sun shining at night?
This strange question underpins the proposed changes to the world’s leading carbon accounting framework – the Green House Gas Protocol (GHG Protocol).
As the world races to tackle climate change, accurate measurement of greenhouse gas emissions is more important than ever. Investors, companies, and policymakers rely on these measurements to make informed decisions.
Yet current accounting rules allow companies to claim 100% renewable energy when they still rely on electricity produced by burning fossil fuels. The numbers on paper don’t always reflect the reality of how power is generated, transmitted, and consumed.
The sun doesn’t shine - and solar power isn’t generated - at night.
This is why updating the GHG Protocol Scope 2 guidance is critical.
What is the GHG Protocol?
The GHG Protocol is the foundational global framework for the measurement and disclosure of corporate greenhouse gas emissions. GHG Protocol standards are voluntarily used by approximately 83% of S&P 500 listed companies.1
They also underpin mandatory corporate disclosure regimes, including the EU Corporate Sustainability Reporting Directive and California’s Climate Disclosure Laws.2
The problem with Scope 2 accounting rules
Carbon emissions are categorised by Scope 1, 2 and 3, which account for the different types of emissions emitted by a company. Scope 1 covers direct emissions that are owned or controlled by a company, typically through burning fossil fuels. Scope 3 encompasses all other indirect emissions that occur up and down its value chain, from suppliers to customers. Scope 2 emissions are the greenhouse gases produced from the electricity, heat, or steam that a company purchases. For most businesses, electricity is a major source of these indirect emissions. Accurately accounting for these emissions is essential for corporate climate strategies and investor transparency.
Renewable electricity generation is highly variable. Wind and solar produce power intermittently, when the wind is blowing and the sun is shining. A coal-fired power station, on the other hand, can generate electricity and highly polluting emissions continuously. Location matters because transmission losses occur as electricity travels long distances, and regional energy mixes differ widely – some regions are heavily reliant on burning coal for electricity, whilst others have vast fields of solar panels.
Current accounting rules can obscure the true carbon impact of electricity use. Companies may report zero emissions on paper whilst relying on fossil fuels, or claim renewable energy from regions that cannot physically supply their operations. Mechanisms like using Renewable Energy Certificates (RECs) to match solar generation to nighttime consumption create a gap between reported emissions and actual grid realities.
These accounting standards were originally developed to help foster an emerging voluntary renewable energy market. Now that renewable energy is the world’s fastest growing source of energy, it is time to update the standards to reflect reality.
How updated guidance can help
For the first time in a decade, the GHG Protocol is revising the Scope 2 accounting standards.
Investors should support the proposed updates to Scope 2 guidance that better aligns carbon accounting with the realities of electricity systems. Specifically:
- Hourly matching of renewable energy consumption to production
- Deliverable market boundaries to ensure the electricity produced can feasibly cover the distance, via physical grid connections, to the consumer
- Phased implementation to give companies and electricity markets time to adjust
- Recognition of legacy renewable energy certificates to protect voluntary front-runners.
Research shows that these approaches would create demand for battery and storage technology, accelerate grid decarbonization, and strengthen voluntary clean energy markets, ultimately supporting a faster transition to a low-carbon economy.
By supporting these updates, investors can help ensure that corporate climate commitments are backed by real-world data, creating more transparent markets and stronger incentives for renewable energy deployment when and where it is needed most.
What next? We're calling on investors to endorse the GHG Protocol’s proposal to strengthen Scope 2 standards
Modernising carbon accounting for electricity is no longer optional – it’s essential for trustworthy corporate reporting and informed investment decisions. Updated GHG Protocol Scope 2 guidance will reflect the reality of how electricity is generated, transmitted, and consumed, ensuring that climate commitments are measurable, credible, and actionable.
As the primary audience for corporate disclosures, investors have a critical role to play.
By endorsing these updates, they will improve the credibility of emissions reporting, enhance market transparency, and accelerate the global shift to a renewable energy system. Supporting this effort is not just good for the planet – it is good for long-term investment strategy.
If you would like to learn more about supporting the proposed updates to the GHG Protocol Scope 2 standards, please contact Jackie.Garton@ShareAction.org.
Footnotes
1 97% of companies disclosing to CDP use the GHG Protocol. GHG Protocol (2025). ‘GHG Protocol Overview’. Available online at: https://ghgprotocol.org/#3 [Accessed 23 December 2025]
2 European Financial Reporting Advisory Group. European Sustainability Reporting Standards (AR 39.(a)). Available online at: https://xbrl.efrag.org/e-esrs/esrs-set1-2023.html [Accessed 7 January 2026]; California Legislative Information, SB-253 Climate Corporate Data Accountability Act ((5)(A)(i)(I)). Available online at: https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=202320240SB253&showamends=false [Accessed 7 January 2026]
