A guide to Scope 1,2 and 3 emissions

Scope 1, 2, and 3 are categories used by the GHG Protocol to classify a company's greenhouse gas emissions. Scope 1 covers direct emissions from owned or controlled sources (e.g., company vehicles). Scope 2 covers indirect emissions from purchased electricity, heat, or steam. Scope 3 includes all other indirect emissions that occur in a company's value chain, such as from suppliers, business travel, and the use of sold products.

Understanding the impact of your business operations is vital in reducing your carbon footprint and getting to Net Zero. Efficient measurement, tracking, and reporting of greenhouse gas (GHG) emissions is essential in order to tackle climate change.

Carbon emissions are categorized into different scopes (1, 2 & 3) by the world’s most widely used Greenhouse Gas accounting framework - the GHG Protocol. The 3 scopes are designed to help organizations measure and report their carbon footprint by identifying the emissions an organization generates through its own operations as well as the wider value chain.

What Are Scope 1 Emissions? (Direct Emissions)

These are direct emissions from sources that are owned or controlled by the company. Examples include emissions from company vehicles and facilities like offices, warehouses, or factories. Addressing Scope 1 emissions often involves adopting cleaner technologies and improving energy efficiency.

What Are Scope 2 Emissions? (Indirect Emissions from Energy)

These are indirect emissions from the purchase and generation of electricity, steam, heating, and cooling. While not produced on-site, they are a direct result of the organization's energy consumption.

What Are Scope 3 Emissions? (Indirect Value Chain Emissions)

These are all other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream activities. Examples include:

• Supply chain emissions
• Transportation and distribution
• Business travel
• Use of sold products
• Waste from operations
• End-of-life treatment of products

It's important to note that while Scope 1 and Scope 2 emissions are directly associated with an organization's operations, Scope 3 emissions are often more challenging to quantify, yet typically represent the largest portion of a company's carbon footprint (often over 70%).

How Can a Business Reduce Scope 1, 2, and 3 Emissions?

Investors are paying ever more attention to a company’s environmental credentials as part of the broader ESG movement. Enhanced tracking and reporting of emissions are becoming crucial for attracting investment. Reduction strategies can include:

• Supply Chain Engagement: Reduce Scope 3 emissions through strict procurement policies or by directly helping suppliers reduce their own footprints.
• Sustainable Travel Policies: Reduce business travel emissions by incentivizing train travel over domestic flights.
• Circular Economy Principles: Reduce downstream Scope 3 emissions by selling sustainable products and implementing recycling or reuse programs.