Memorandum of understanding between GHG Protocol and IFRS Foundation

In a further step towards harmonising the global sustainability reporting landscape, the IFRS Foundation and the Greenhouse Gas (GHG) Protocol have signed a memorandum of understanding (MoU) to ensure compatibility and that the information provided meets the needs of capital markets.

Why the need for collaboration?

The GHG Protocol has established comprehensive global standardised frameworks for businesses to measure and manage GHG emissions in their operations and value chains. These include the:

IFRS® Sustainability Disclosure Standard, IFRS S2 Climate-related Disclosures, requires GHG emissions to be measured in accordance with the GHG Protocol Corporate Standard (2004), and using the Scope 3 categories set out in the Corporate Value Chain (Scope 3) Standard (2011).

Because these two sets of standards are interconnected, compatibility is vital to supporting the information needs of capital markets.

Terms of memorandom of understanding (MoU)

Both parties have committed as part of the MoU to work closely together to ensure compatibility of the respective standards. The MoU:

  • Sets out general principles for cooperation between the two organisations.
  • Strengthens relations between the parties when developing new standards and guidance, aiming to minimise the cost and effort required, while ensuring the information needs of general-purpose financial report users are met.
  • Puts in place governance arrangements so that the International Sustainability Standards Board (ISSB) is actively engaged in updates and decisions made in relation to the GHG Protocol Corporate Accounting and Reporting Standard. This includes the ISSB appointing a representative as an observer on the GHG Protocol Independent Standards Board.

In announcing the MoU, Emmanuel Faber, ISSB Chair, said, "The GHG Protocol standards are vital tools for enabling companies around the world to measure their greenhouse gas emissions consistently and comparably. Through the enhanced partnership between the International Sustainability Standards Board and GHG Protocol we are better placed to support ongoing compatibility between our work so that the information companies provide meets the needs of capital markets around the world. The result should lead to much welcome minimised cost and effort for preparers."

BDO comment

BDO welcomes this news. We look forward to ongoing co-operation between the GHG Protocol and the ISSB given the interconnectedness of the GHG Protocol for entities measuring Scope 1, Scope 2 and Scope 3 GHG emissions, and then reporting them under IFRS S2.

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