10 Reasons to Track a Corporate Carbon Footprint
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In this article, we’ll explain what a corporate carbon footprint is, why it’s important, how it is measured, and reasons why your company should track it too.
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What are Scopes 1, 2 and 3 Emissions?
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“ You might not know your Scope 1 from your Scope 3, but if your company is serious about fighting climate change, you need to. ”
The Paris Agreement's 1.5°C target isn’t just a lofty ambition, it’s a scientifically backed threshold to avoid the worst climate impacts. But to stay on track, we need to dramatically cut global greenhouse gas emissions. And that begins with understanding what we’re emitting in the first place.
That’s where Scope 1, 2, and 3 emissions come in. These categories aren’t just industry lingo – they’re powerful tools for tracking climate impact and uncovering where the biggest opportunities for emissions reductions lie.
In this article, we break down:
- What Scope 1, 2, and 3 emissions really mean and why they matter
- How these categories help businesses map and manage their carbon footprint
- Why Scope 3 emissions are often the biggest – and hardest – to reduce
- How leading companies are using Scope emissions reporting to drive decarbonization
What are Scope 1, 2, and 3 emissions? A quick overview
The concept of Scope 1, 2, and 3 emissions was introduced by the Greenhouse Gas Protocol (GHG Protocol) – the globally recognized standard for measuring and managing greenhouse gas emissions. It provides a clear framework for categorizing emissions based on where they originate and how much control a company has over them.
This classification helps organizations map out their full carbon footprint, from operations to supply chains, and plays a critical role in identifying where reductions are most needed. Whether you’re reporting on emissions, setting climate targets, or building a decarbonization strategy, understanding the three scopes is an essential first step.
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Why do we need to understand Scope 1, 2, and 3 emissions?
The need to categorize emissions into different scopes arose from a simple but urgent truth: you can’t manage what you don’t measure.
As greenhouse gas (GHG) concentrations in the atmosphere began to rise rapidly in the late 20th century, scientists and policymakers sounded the alarm about the consequences of unchecked emissions, including rising global temperatures, ecosystem collapse, and widespread disruption to societies and economies. But while it was clear that emissions needed to be cut, there was no consistent way for companies and organizations to measure and report them.
“ That changed in 2001, when the GHG Protocol Corporate Standard - formally known as the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard - was released. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), this framework introduced the concept of Scope 1, 2, and 3 emissions - a way to classify emissions based on how they’re generated and who has control over them. ”
This system allowed businesses to move beyond guesswork or siloed reporting. By dividing emissions into:
- Scope 1 (direct emissions),
- Scope 2 (indirect emissions from energy use), and
- Scope 3 (all other indirect emissions across the value chain),
This became even more important following the Paris Agreement in 2015, where nearly every country on Earth committed to limiting global warming to well below 2°C, with efforts to cap it at 1.5°C above pre-industrial levels. Hitting that target requires slashing global emissions by nearly half by 2030 and reaching net zero around mid-century. Given that a significant share of global emissions stems from corporate supply chains, production, energy use, and logistics, companies now play a central role in achieving those goals. In fact, just 100 companies are responsible for 71% of global industrial emissions – a stark reminder that business-led climate action isn’t optional, it’s essential.
The Scope 1, 2, and 3 framework helps businesses:
- Understand their full emissions footprint
- Identify the biggest sources of emissions
- Develop credible reduction strategies
- Report transparently to stakeholders, regulators, and customers
Today, this framework is widely used in climate reporting standards, ESG disclosures, and science-based target setting. Essentially, it's a roadmap for corporate climate action.
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A breakdown of the scopes
Each of the three scopes represents a different category of greenhouse gas emissions – from those produced directly by a company to those embedded throughout its supply chain. Understanding how they differ is key to identifying where emissions come from and how to reduce them effectively.
Let's break down these categories:
Scope 1 emissions: direct emissions from owned operations
Scope 1 emissions are those released directly from sources that a company owns or controls. These emissions are typically the most straightforward to measure and report, as they stem from on-site activity.
They fall into four main categories:
| Category | Description |
|---|---|
| Stationary combustion | Fuel burned in on-site equipment such as boilers, furnaces, or generators. |
| Mobile combustion | Emissions from company-owned or controlled vehicles (e.g. cars, vans, lorries). |
| Fugitive emissions | Unintentional leaks from systems like air conditioning, refrigeration, or industrial gas handling. |
| Process emissions | GHGs released during production processes and industrial activities, such as chemical reactions or waste treatment. |
Companies with manufacturing operations, large vehicle fleets, or temperature-controlled environments often have significant Scope 1 emissions. Because they result from a company’s own actions, these emissions are typically the first target in decarbonization strategies.
Scope 2 emissions: indirect emissions from energy use
Scope 2 emissions refer to the indirect greenhouse gas emissions associated with purchased electricity electricity, steam, heat, or cooling a company purchases for its operations. While these emissions don’t occur on-site, they are a direct result of the organization’s energy consumption and are included in its overall carbon footprint.
For most businesses, electricity is the primary source of Scope 2 emissions. These emissions vary depending on how the energy is generated, for example, coal-fired power stations will have a much higher emissions intensity than renewable sources like wind or solar.
Reducing Scope 2 emissions often involves energy efficiency improvements or switching to lower-carbon energy sources, such as purchasing renewable electricity or installing on-site solar panels.
Scope 3 emissions: indirect emissions across the value chain
Scope 3 is the broadest and usually the most significant category. It covers all other indirect emissions that occur because of a company’s activities, but happen outside its own operations, including both upstream emissions (like those from suppliers and manufacturing) and downstream emissions (such as product use and disposal).
Scope 3 is usually broken down into 15 categories:
| Category | Description |
|---|---|
| 1. Purchased goods and services | Emissions from the production of goods and services that the company buys, including raw materials, packaging, and third-party services. |
| 2. Capital goods | Emissions from the production of capital assets like machinery, buildings, or equipment. |
| 3. Fuel- and energy-related activities (not included in Scope 1 or 2) | Emissions from the extraction, production, and transportation of fuels and energy purchased by the company. |
| 4. Upstream transportation and distribution | Emissions from transporting and distributing goods purchased by the company, in vehicles not owned or controlled by the company. |
| 5. Waste generated in operations | Emissions from waste disposal and treatment of waste produced by the company’s operations. |
| 6. Business travel | Emissions from employee travel for work purposes, such as flights, trains, or hotel stays. |
| 7. Employee commuting | Emissions from employees traveling to and from work, including public transport, car use, or cycling. |
| 8. Upstream leased assets | Emissions from the operation of assets leased by the company (if not included in Scope 1 or 2). |
| 9. Downstream transportation and distribution | Emissions from transporting and distributing sold products, in vehicles not owned or controlled by the company. |
| 10. Processing of sold products | Emissions from the processing of intermediate products sold by the company, when further transformation is required before end use. |
| 11. Use of sold products | Emissions from the use of goods and services sold by the company. |
| 12. End-of-life treatment of sold products | Emissions from the disposal or recycling of products after consumer use. |
| 13. Downstream leased assets | Emissions from the operation of assets owned by the company but leased to others. |
| 14. Franchises | Emissions from the operation of franchises not directly owned or controlled by the company. |
| 15. Investments | Emissions associated with the company’s investments, including equity, debt, and project finance. |
These emissions are often the hardest to measure, but also represent the biggest opportunity for meaningful reductions, especially for companies with global supply chains or consumer-facing products that are responsible for significant carbon emissions across the value chain.
“ In many industries, Scope 3 emissions make up the bulk of a company’s footprint, often more than 70%, which is why they’re increasingly a focus for climate reporting and reduction targets. ”
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Why is it important to measure Scope 3 emissions?
Measuring Scope 3 emissions gives companies something that Scope 1 and 2 can’t: a complete view of their climate impact.
These emissions might fall outside a company’s direct control, but they’re deeply shaped by its choices. What materials are purchased, how goods are moved, how products are used and disposed of - it all adds up.
“ Crucially, Scope 3 data helps companies do more than just reduce emissions. It offers insight into supply chain risks, inefficiencies, and untapped opportunities. It’s the kind of visibility that supports smarter, more resilient decision-making. ”
And as regulations tighten and stakeholders expect greater transparency, ignoring Scope 3 emissions is no longer an option.
Understanding these emissions allows companies to:
- Spot the biggest sources of emissions across their value chain
- Evaluate suppliers and partners through a sustainability lens
- Uncover operational inefficiencies and reduce costs
- Align with ESG frameworks and upcoming reporting requirements
- Show customers and investors they're taking real climate action
- Demonstrate awareness of their full environmental impact and act on it meaningfully
Scope 3 may be complex, but measuring it is now essential for any company serious about sustainability and long-term success.
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Are Scope 1, 2, and 3 emissions reporting mandatory?
Whether reporting on Scope 1, 2, and 3 emissions is required depends on where a company operates, its size, and which reporting frameworks or regulations it falls under. While Scope 1 and 2 reporting is increasingly mandated by law, Scope 3 is still often voluntary, though that’s starting to change as global climate policies evolve.
Key frameworks that rely on Scope 1, 2, and 3 emissions reporting:
Several major sustainability and climate disclosure frameworks either require or recommend that companies report across all three scopes:
| Framework | Scope 1 & 2 | Scope 3 | Notes |
|---|---|---|---|
| GHG Protocol | Mandatory | Recommended when material | Forms the basis for most global emissions reporting standards. |
| CDP (Carbon Disclosure Project) | Required | Required | Completeness of all three scopes affects scoring. |
| TCFD (Task Force on Climate-related Financial Disclosures) | Expected | Encouraged | Scope 3 is included if relevant to material climate risks. |
| Science Based Targets initiative (SBTi) | Required | Required if >40% of total emissions | Scope 3 target-setting mandatory above threshold. |
| ESRS (EU Sustainability Reporting Standards) | Mandatory | Mandatory | Required under the CSRD for all in-scope companies. |
Now let’s look at how this plays out in different regions.
Streamlined Energy and Carbon Reporting (SECR): Mandatory for large UK companies (defined as meeting two of the following: £36M+ turnover, £18M+ balance sheet, 250+ employees). Requires Scope 1 and 2 reporting, but Scope 3 is voluntary.
TCFD-aligned reporting: Mandatory for large listed companies, banks, and insurers. Companies are expected to disclose Scope 1 and 2 emissions, and Scope 3 where 'material'.
Upcoming UK Sustainability Disclosure Standards (SDS): Will likely reinforce TCFD-aligned reporting with clearer expectations for Scope 3 in line with international standards.
Until recently, the U.S. Securities and Exchange Commission (SEC) had proposed rules that would have required publicly listed companies to disclose Scope 1 and 2 emissions, and Scope 3 if material or included in climate targets. However, in 2025, the SEC formally withdrew its defense of the rules following legal challenges and a change in administration. This effectively halts federal-level progress on mandatory climate disclosures for now.
That said, momentum is still building at the state level. California’s new legislation – SB 253 and SB 261 – will require large companies doing business in the state to report Scope 1 and 2 emissions by 2026, and Scope 3 by 2027. These laws are likely to shape national standards over time, particularly for companies with multi-state operations.
Corporate Sustainability Reporting Directive (CSRD): Requires large companies (and listed SMEs) to report Scope 1, 2, and 3 emissions under the ESRS standards.
EU Taxonomy & SFDR: Encourage emissions transparency across the entire value chain, as part of sustainability-related disclosures.
Carbon Border Adjustment Mechanism (CBAM): Requires embedded emissions disclosure for imports in certain sectors, linked to Scope 3 reporting by foreign producers.
How are Scope 1, 2, and 3 emissions measured?
Once you know which emissions you need to report, the next step is working out how to measure them accurately, and that starts with understanding what exactly you’re measuring.
To calculate a company’s greenhouse gas emissions, you need a method that accounts for the different types of gases released, not just carbon emissions. That’s why emissions are typically expressed in carbon dioxide equivalent (CO₂e) - a unit that allows various greenhouse gases (GHGs) to be compared on a like-for-like basis. Some gases trap far more heat in the atmosphere than others, so CO₂e provides a standardized way to measure and report a company’s full emissions footprint.
“ CO₂e, or carbon dioxide equivalent, is a way to express the impact of different greenhouse gases using a common unit. It shows how much warming a gas would cause compared to carbon dioxide, which is used as the baseline. ”
Here’s a quick comparison of the most common greenhouse gases:
| Gas | Global Warming Potential (GWP) | Atmospheric Lifespan | Common Sources |
|---|---|---|---|
| Carbon Dioxide (CO₂) | 1 | 300–1,000 years | Burning fossil fuels, deforestation, cement production |
| Methane (CH₄) | ~28–34 (over 100 years) | ~12 years | Agriculture (livestock), landfills, oil & gas extraction |
| Nitrous Oxide (N₂O) | ~265–298 | ~114 years | Fertilizers, industrial processes, fossil fuel combustion |
| HFCs (Hydrofluorocarbons) | 12–14,800 | 15–29 years | Refrigeration, air conditioning, aerosol propellants |
| PFCs (Perfluorocarbons) | ~6,500–12,200 | Thousands of years | Aluminum production, electronics manufacturing |
| SF₆ (Sulfur Hexafluoride) | ~23,500 | ~3,200 years | Electrical insulation (e.g. circuit breakers) |
| NF₃ (Nitrogen Trifluoride) | ~17,200 | ~500 years | Semiconductor production, LCD panels |
What does this mean in practice?
In simple terms, measuring emissions means:
- Identifying the activities that produce greenhouse gases (like driving, electricity use, manufacturing, shipping)
- Collecting activity data (such as litres of fuel burned or kilowatt hours of electricity consumed)
- Applying emissions factors - values that convert activity data into CO₂e
For example:
If your company burns 1,000 litres of diesel in company vehicles:
- Activity data = 1,000 litres of diesel
- Emissions factor (UK DEFRA 2024) = 2.68 kgCO₂e per litre
- Emissions = 1,000 × 2.68 = 2,680 kgCO₂e
Emission factors are typically provided by:
- DEFRA (UK)
- EPA (US)
- ADEME (France)
- IPCC or GHG Protocol for international use
Where to find data and tools
You can use emissions calculators or databases provided by trusted sources to simplify the process. These tools often have built-in emissions factors for different fuels, activities, and countries.
Recommended resources:
- GHG Protocol’s Calculation Tools
- DEFRA’s UK Government conversion factors
- EPA’s GHG Emission Factors Hub
How to measure and report your emissions: a step-by-step guide
“ Understanding the three scopes is one thing; measuring and reporting them is another. For many companies, the process can feel overwhelming at first. It involves identifying where emissions come from, choosing the right frameworks, collecting the right data, and deciding how to disclose it all clearly. ”
Here’s how to get started:
1. Map your emissions sources
Begin by identifying which activities in your operations and value chain generate greenhouse gas emissions. Use the Scope 1, 2, and 3 framework as your guide:
- Scope 1: Direct emissions from sources you own or control (eg. company vehicles, onsite fuel use).
- Scope 2: Indirect emissions from purchased energy, such as electricity, heating, or cooling.
- Scope 3: All other indirect emissions, including those from suppliers, transportation, product use, and disposal.
You’ll find that Scope 1 and 2 are generally easier to measure. Scope 3 is broader and more complex, but it also tends to account for the majority of a company’s carbon footprint, especially in sectors with long value chains or energy-intensive products.
2. Choose a reporting framework
There’s no one-size-fits-all approach. Choose a framework that aligns with your regulatory requirements and stakeholder expectations. Some of the most widely used include:
| Framework | Description | Best for |
|---|---|---|
| GHG Protocol | The foundation for most emissions reporting. Defines Scope 1, 2, and 3 categories. | All companies starting emissions measurement – forms the baseline for most other frameworks. |
| CDP (Carbon Disclosure Project) | Requests full emissions data across all scopes. Used by investors to benchmark performance. | Companies seeking investor transparency or looking to improve ESG scores. |
| Science Based Targets initiative (SBTi) | Requires Scope 1 and 2 disclosure, and Scope 3 if it accounts for 40%+ of total emissions. Helps set reduction targets aligned with climate science. | Companies setting science-based or net-zero targets. |
| GRI (Global Reporting Initiative) | Broad sustainability reporting with detailed emissions and energy disclosures. | Companies producing integrated or non-financial sustainability reports. |
| ESRS (under the CSRD) | Makes Scope 1, 2, and 3 reporting mandatory for in-scope companies operating in the EU. | Large EU-based companies or those affected by the Corporate Sustainability Reporting Directive. |
| ISO 14064 | Provides internationally recognised standards for quantifying, reporting, and verifying GHG emissions. | Companies needing third-party assurance or formal certification for emissions data. |
Step 3: Collect your data and calculate emissions
Once you’ve mapped your emissions and selected a reporting framework, the next step is to gather the right data and build a reliable emissions inventory using consistent, recognised methods. This often involves converting activity data, like litres of fuel used or kilowatt hours of electricity consumed, into carbon dioxide equivalents (CO₂e), using emissions factors from sources like DEFRA, ADEME, or the EPA.
To help you understand what’s typically required for each scope, here’s a quick summary:
| Scope | What it covers | How it’s reported | Common data & metrics | Common challenges |
|---|---|---|---|---|
| Scope 1 | Direct emissions from owned or controlled sources (e.g. fuel combustion, company vehicles, industrial processes) | Often required under regulatory schemes. Based on fuel logs, meter readings, and equipment data | CO₂e from fuel usage, mileage, and on-site combustion | Ensuring completeness, especially for fugitive/process emissions |
| Scope 2 | Indirect emissions from purchased energy (electricity, steam, heating, cooling) |
Standard in frameworks like CDP and TCFD. Emissions are typically calculated using two methods: - Location-based: based on the average emissions from the local electricity grid - Market-based: reflects specific energy contracts (e.g. renewable energy certificates or supplier guarantees) |
CO₂e from energy bills, adjusted for RECs or grid mix | Splitting emissions across shared or leased properties |
| Scope 3 | All other indirect emissions across the value chain (e.g. supply chain, logistics, product use) | Often voluntary but expected under SBTi, GRI, and ESRS. Based on spend data, supplier input, or lifecycle models | CO₂e by category (purchased goods, distribution, commuting, end-of-life) | Data availability, reliance on estimates, and tracking emissions beyond your control |
Where to find your data
Start with what you already track and build from there:
- Scope 1: Fuel logs, vehicle mileage reports, refrigerant top-ups, meter readings
- Scope 2: Utility bills, energy meter data, green energy certificates (RECs, GOs)
- Scope 3: Procurement records, supplier disclosures, freight invoices, travel booking systems, employee commuting surveys, lifecycle assessment tools
Best practices
- Use primary data where possible, it’s more accurate and defensible
- Where needed, use secondary data or spend-based estimates (but disclose your methodology)
- Prioritise high-emission categories in Scope 3 rather than trying to do everything at once
- Keep records of your assumptions, data sources, and emissions factors
- Improve accuracy over time, reporting is iterative
“ No matter where you start, the goal is progress over perfection. Emissions reporting improves with time, especially as you refine data collection, strengthen supplier engagement, and align with evolving standards. ”
Common challenges in emissions reporting – and how to overcome them
Even with the right framework in place, measuring and reporting emissions can be difficult, especially for companies navigating it for the first time. Challenges vary depending on company size, complexity, and value chain, but most fall into a few key areas.
Here’s a breakdown of the most common obstacles and how to address them:
| Challenge | Why it’s an issue | How to overcome it |
|---|---|---|
| Data availability and quality | Activity data may be missing, incomplete, or inconsistent — especially for Scope 3 emissions. | Start with what's available, prioritise high-impact areas, and work toward better data over time. Use spend-based estimates or industry averages where needed, and disclose your assumptions. |
| Third-party data gaps (Scope 3) | Suppliers, distributors, and partners may not track or share emissions data. | Engage key suppliers early. Include data sharing in procurement policies or sustainability clauses. Use lifecycle databases or industry benchmarks when primary data isn’t accessible. |
| Tracking emissions across sites or regions | Companies operating across multiple facilities or geographies often lack centralised data systems. | Implement a centralised emissions reporting platform or tool. Align internal teams on data formats and collection schedules. |
| Choosing the right emissions factors | Different countries or sources provide different values. Using inconsistent or outdated factors skews results. | Use emissions factors from recognised sources (GHG Protocol, DEFRA, ADEME, EPA). Stay consistent across scopes and update regularly. |
| Time and resource limitations | Smaller organisations or overstretched teams may struggle to allocate time and expertise to reporting. | Focus on material categories first. Use external tools or platforms to automate data collection and calculation. Seek expert support when needed. |
| Regulatory changes and evolving standards | Keeping up with new legislation (like CSRD or California SB 253) requires ongoing attention and adaptation. | Stay informed through regulatory updates. Choose flexible reporting tools that adapt to new standards. Build internal expertise gradually. |
Use the right tools to make reporting easier
With growing reporting expectations and increasingly complex value chains, manual tracking isn’t becoming unsustainable. That’s where digital platforms and data tools come in.
They help you:
- Automate emissions tracking across scopes
- Standardize reporting using recognized methodologies
- Collaborate with suppliers and improve data quality
- Visualise emissions trends and reduction opportunities
But not all tools are created equal, and choosing the right partner can make all the difference...
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How Greenly can help
At Greenly, we know that measuring and managing your carbon footprint can feel overwhelming, especially when it comes to Scope 3. That’s why we’ve built a platform designed to streamline the process, without compromising on accuracy or credibility.
Here’s how we can support your emissions reporting journey:
End-to-end emissions tracking
Our platform helps you track Scope 1, 2, and 3 emissions in one place, with user-friendly dashboards and automated data integration to make reporting intuitive, not burdensome.
Advanced Scope 3 modelling
From spend-based estimates to supplier surveys and lifecycle data, we provide robust tools to help you map and improve value chain emissions, even when third-party data is limited.
Framework-aligned reporting
Whether you're reporting under the GHG Protocol, CSRD, CDP, or setting targets with SBTi, Greenly ensures your data meets the latest standards and expectations.
Custom action plans
We don’t just quantify emissions, we help you reduce them. Get tailored recommendations to cut carbon across operations, logistics, procurement, and product design.
Sources:
- Greenly, Paris Agreement: All You Need to Know
https://greenly.earth/en-gb/blog/ecology-news/paris-agreement-all-you-need-to-know - Greenly, What is the Greenhouse Gas Protocol?
https://greenly.earth/en-gb/blog/company-guide/what-is-the-greenhouse-gas-protocol - GHG Protocol, Homepage
https://ghgprotocol.org/ - Greenly, What Are the Scope 3 Emissions?
https://greenly.earth/en-us/blog/company-guide/what-are-the-scope-3-emissions - World Economic Forum, Scope 3 Emissions Are Key to Decarbonization – But What Are They and How Do We Tackle Them?
https://www.weforum.org/stories/2023/09/scope-3-emissions-are-key-to-decarbonization-but-what-are-they-and-how-do-we-tackle-them/ - Greenly, SECR Reporting: All You Need to Know
https://greenly.earth/en-gb/blog/company-guide/secr-reporting-all-you-need-to-know - Greenly, TCFD Standards: All You Need to Know
https://greenly.earth/en-gb/blog/company-guide/tcfd-standards-all-you-need-to-know - UK Government, UK Sustainability Reporting Standards
https://www.gov.uk/guidance/uk-sustainability-reporting-standards - Greenly, What is the Corporate Sustainability Reporting Directive (CSRD)?
https://greenly.earth/en-gb/blog/company-guide/what-is-the-corporate-sustainability-reporting-directive-csrd - Greenly, The Carbon Border Adjustment Mechanism (CBAM)
https://greenly.earth/en-gb/blog/company-guide/the-carbon-border-adjustment-mechanism-cbam - Greenly, What is an Emission Factor?
https://greenly.earth/en-gb/blog/company-guide/what-is-an-emission-factor - GHG Protocol, Calculation Tools and Guidance
https://ghgprotocol.org/calculation-tools-and-guidance - UK Government, Greenhouse Gas Reporting: Conversion Factors 2024
https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2024 - US Environmental Protection Agency (EPA), GHG Emission Factors Hub
https://www.epa.gov/climateleadership/ghg-emission-factors-hub
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