GHG Protocol Scope 3: 95% Rule and the New Category 16 — What the Phase 1 Progress Update of March 31, 2026 Changes

On March 31, 2026, GHG Protocol published the Phase 1 Progress Update — introducing the 95% rule for Scope 3 coverage, a new Category 16 (facilitated emissions), and three-tier data disaggregation (specific / secondary / spend-based). Public consultation runs through mid-2026, with the final edition due at the end of 2027.

This is the first substantive revision of the Scope 3 Standard in 15 years, since its 2011 publication. The document is still a working draft, but the direction is locked in: the materiality loophole is closing, primary supplier-specific data is becoming de facto mandatory, and the financial sector gets its own emissions category.

For Ukrainian exporters of grain, fertilizers, metal, oil, and food products this means one thing: collecting primary data from suppliers needs to start now, not in 2027. EU buyers will rewrite their supplier questionnaires under the new edition during 2026, and there will be no buffer period for adaptation.

GHG Protocol is a joint initiative of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), launched in 1998. The Corporate Standard came out in 2004, the Scope 3 Standard in 2011. Over 15 years the Scope 3 wording has barely changed — meanwhile the world has gone through the Paris Agreement, CSRD, ISSB IFRS S2, CBAM, and the new edition of ISO 14001:2026.

The revision is split into three phases:

• Phase 1 (structural) — 2025–2026, the current Progress Update of March 31, 2026: scope, boundaries, aggregation rules, the new Category 16.
• Phase 2 (methodological) — 2026–2027: calculation methods, emission factors, verification.
• Phase 3 (sectoral) — 2027 and beyond: sector-specific guidance for oil and gas, financial services, and agriculture.

According to ghgprotocol.org, public consultation opens in mid-2026; after that the Technical Working Group (TWG) revises the draft, then comes pilot testing and the final publication in late 2027. So there are roughly 18–20 months between today's text and the formal standard.

For companies that already operate an environmental management system under ISO 14001, this timeline is a window, not a threat. While the draft is non-binding, you can build a GHG inventory at a calibrated pace without scrambling against a deadline.

The core of the Phase 1 Update is the new Scope 3 coverage rule. The current Scope 3 Standard let companies assess the materiality of a category and exclude it if emissions were deemed insignificant. In practice this meant a company could declare only 30–50% of its Scope 3 emissions and formally comply with the standard.

The draft of the new edition closes that loophole. Per the Phase 1 Progress Update PDF, a company must now cover at least 95% of its required Scope 3 emissions in its report. No more than 5% of emissions may be excluded, and every exclusion has to be:

• quantified (not "approximately," but a specific figure in tonnes of CO₂e);
• documented with a reason (why this category is excluded);
• publicly disclosed in the report (not buried in internal records).

The second major change is three-tier data disaggregation. The report has to show what percentage of each category is covered by specific, secondary, and spend-based methods. Think of it as a data-quality traffic light: the more specific data, the higher the trust, the lower the risk of restatement during verification.

Example for a Ukrainian grain trader: procurement from farms is covered by specific data (fuel, fertilizers, yield per specific field via EPDs or supplier emissions reports); packaging by secondary data (industry factors from ecoinvent / DEFRA); office services and travel by spend-based data (USD × emission factor).

The second major piece of news is the appearance of a 16th Scope 3 category. The 2011 edition had 15: from purchased goods (cat 1) to investments (cat 15). The Phase 1 Update, per esgtoday.com, adds a separate category for emissions a company does not control directly but does facilitate — facilitated emissions from licensing, insurance, and financial activities.

Category 16 is divided into five sub-categories. For most companies it is optional, but for the oil and gas sector sub-category 16.5 is mandatory.

Category 16 emissions are reported separately from the main Scope 3 — for comparability and to avoid double-counting with other categories. For Ukraine, sub-category 16.5 is a signal to oil and gas traders and distributors: the calculation format needs to be ready in 2026. For agricultural banks, insurers, and leasing companies, sub-categories 16.1–16.3 are still optional, but large EU partners will start asking about them in 2027–2028.

The Phase 1 Update does not exist in a vacuum — it is aligned with the regulatory and market frameworks that will land on Ukrainian exporters between 2026 and 2028:

• CSRD + Omnibus I. Scope simplification (companies above 1,000 employees and €450M turnover) narrows the pool of direct reporters, but ESRS E1 standards on Scope 3 disaggregation remain in force. Large EU buyers will cascade requirements down through procurement questionnaires — the same supplier data the 95% rule demands.
• ISSB IFRS S2. The international standard for climate-related disclosures references GHG Protocol directly as the calculation base. The 95% rule automatically becomes part of ISSB reporting.
• ISO 14001:2026. The new clause 6.1.4 and lifecycle perspective require the register of environmental aspects to cover supplier emissions. The 95% rule increases pressure on data quality: "approximately" no longer closes a certification audit.
• ISO 50001. Energy management under ISO 50001 is the foundation for Scope 1+2 and part of Scope 3 (transmission losses, fuel-and-energy-related activities). If you already have an energy management system in place, 60% of GHG inventory calculations are already done.
• CBAM. For metallurgy, cement, fertilizers, and aluminum, CBAM Scope 1+2 under GHG Protocol is the basis for the additional levy. Scope 3 from export customers is a separate layer: a German steel buyer will ask for CBAM figures and Scope 3 under the 95% rule, and these will be different numerator/denominator calculations.
• SBTi. Science Based Targets initiative calculates reduction targets based on total footprint. A baseline shift driven by the 95% rule will force some companies to recalibrate their targets.

The impact is uneven across sectors. The companies that will feel the changes most are those with long supply chains and a high Scope 3 footprint.

• Agricultural holdings and grain traders. Lifecycle Scope 3 for grain covers seeds, fertilizers, fuel, logistics, and packaging. All of these have to map to cat 1 (Purchased goods and services) using primary data. Spend-based proxies will no longer pass in reports for EU grain traders such as Cargill, ADM, or Glencore.
• Fertilizer producers. The CBAM rate is already in effect, and additional Scope 3 pressure from export customers creates a double layer. Ordering primary supplier-specific data on natural gas as a feedstock becomes critical.
• Metallurgy. The same scenario — CBAM plus Scope 3. Ukrainian metal exported to Germany, Poland, and Italy is already receiving supplier questionnaires demanding EPD-certified data.
• Oils, fats, and food industry. FMCG and retail buyers (Tesco, REWE, Carrefour) will cascade Scope 3 requirements through procurement policies. A shared track with the FSSC 22000 v7 climate clause becomes an organizational advantage.
• Financial sector. Agricultural banks, leasing, insurance — the new Category 16 is still optional, but ratings agencies are already monitoring buyer portfolios.
• IT and data centers. Scope 2 (electricity) and Scope 3 (capital goods, business travel) — new transparency requirements from EU customers commissioning development work.

While the draft is non-binding, companies have roughly 18 months until the final edition. Here is the sequence we recommend to clients:

Step 1 (Q2 2026): GHG inventory baseline. Commission a Scope 1/2/3 readiness gap audit, assess current coverage and the share of spend-based proxies. Cross-link with the ISO 14001 aspects register if the standard is implemented. Service: diagnostic audit.

Step 2 (Q2 2026): materiality screening. Identify categories that account for more than 5% of total Scope 3 — they are automatically must-include. Categories below 5% are candidates for justified exclusion (with documented reasons). For most Ukrainian manufacturers the material categories are cat 1 (raw materials), cat 4 (upstream transportation), cat 11 (use of sold products — for energy-intensive goods).

Step 3 (Q3 2026): supplier engagement program. Top 80% spend → request EPDs, supplier emissions reports, primary data. Build a supplier questionnaire (GHG Protocol-aligned, covering categories 1–15 and the optional category 16). Pilot with 5–10 key suppliers to refine the format before mass rollout.

Step 4 (Q3–Q4 2026): tools and data management. Pick a carbon accounting platform — Watershed, Persefoni, Sweep, or internal Excel + API for the basic level. Data escalation logic: spend-based fallback → industry secondary → supplier-specific. Audit trail for verification.

Step 5 (Q1 2027): internal audit and verification readiness. Internal validation against the GHG Protocol Corporate Standard. If the company falls under CSRD or CBAM — prepare for third-party verification under ISO 14064-3 or ISAE 3410. Cross-check against EMS aspects under ISO 14001:2026 — the documentation cascade is shared.

Step 6 (Q2–Q4 2027): reporting cycle and adaptation to the final edition. First report under the proposed 95% rule, with flexibility for the final text due in late 2027. Integration into the integrated annual report or sustainability report. Continuous improvement loop: annual review of spend-based → primary transition points.

For companies pursuing certification simultaneously, we recommend parallel implementation of ISO 14001:2026 and the GHG inventory. This cuts overall cost by 25–35% versus two separate projects. We described the audit and compliance logic in our audit and compliance guide for business in 2026.

We have been supporting management system implementation projects since 2018, and we treat GHG accounting as an integral part of EMS. For the Phase 1 Update and the 95% rule, we offer four cooperation formats:

• Diagnostic audit — Scope 3 readiness gap analysis, materiality screening, assessment of the primary vs spend-based data ratio.
• GHG inventory implementation — building the inventory from scratch, integrated with ISO 14001 and ISO 50001.
• Preparation for third-party verification — under ISO 14064-3 or ISAE 3410, including for companies subject to CSRD/CBAM.
• Supplier engagement — questionnaire design, pilots with key suppliers, annual reporting cycles.

If your company is just starting out, begin with a gap audit. It gives a realistic picture of how much work lies ahead and lets you build an 18-month plan without scrambling against the final 2027 edition.

• GHG Protocol, Phase 1 Progress Update PDF (March 31, 2026) — ghgprotocol.org/sites/default/files/2026-03/S3-Phase1ProgressUpdate-20260331.pdf
• GHG Protocol, official revision page — ghgprotocol.org/scope-3-standard-revisions-phase-1-progress-update
• ESG Today, "GHG Protocol Outlines Proposed Changes to Scope 3 Reporting Standard" — esgtoday.com
• Onestopesg, "GHG Protocol Proposes 95% Scope 3 Coverage Rule and New Category 16" — onestopesg.com
• ISO, ISO 14001 product page — iso.org/standard/14001

Need expert support implementing the changes covered above? Contact the Ekontrol team for a free consultation.