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What are Scopes 1, 2 and 3 Emissions?

In this article, we clarify what Scope 1, 2, and 3 emissions are and their significance in managing a company's carbon footprint.
Business
2024-04-09T00:00:00.000Z
en-us
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You might not have read the Paris Agreement cover to cover, but there's a good chance you've heard about one of its primary goals: keeping the rise in global temperatures below 1.5°C. This figure hasn't been plucked from thin air - it's a crucial benchmark to keep the more extreme effects of climate change at bay.

So, what’s our strategy to achieve this? Well, the key is reducing greenhouse gas emissions (GHGs). And a big part of that comes down to keeping an eye on something called Scope 1, 2, and 3 emissions. These categories aren't just industry jargon, they're key to identifying the sources of emissions and figuring out effective ways to reduce them and prevent global warming. In this article, we'll unravel these terms and explain why they're essential in our collective effort to combat climate change.

In this article, we clarify what Scope 1, 2, and 3 emissions are and their significance in managing a company's carbon footprint.

Why do we need to know Scope 1, 2 and 3 emissions?

Why is it important to work out Scope 1, 2, and 3 emissions? Let's start with a quick refresher: the greenhouse effect is a natural process that helps keep the Earth's temperature at a level suitable for human life. But here's the catch – the excessive GHG resulting from human activities is supercharging this effect, leading to a rise in the average global temperature. And the fallout? It's putting the Earth’s ecosystems in a tight spot, threatening the delicate balance that supports life as we know it.

To effectively reduce your carbon emissions, whether as an individual or a company, the first step is understanding how much carbon you're actually emitting. This is where the concept of GHG emissions scopes comes into play. They provide a structured way to categorize and measure these emissions, laying the foundation for targeted strategies to cut down on carbon output.

To learn more about the Earth’s carbon cycle and why it’s out of balance head over to our article on the topic. 

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Scopes 1, 2 and 3 emissions

The Greenhouse Gas Protocol (GHG Protocol)

To understand Scope 1, 2, and 3 emissions we need to look to the Greenhouse Gas Protocol. This initiative is a comprehensive multi-stakeholder partnership, encompassing businesses, non-governmental organizations (NGOs), governmental bodies, and other entities, all brought together by the World Resources Institute (WRI) in 1998.

Their mission? To develop and establish international standards for accounting and reporting GHG emissions for businesses and to encourage widespread adoption.

  • The GHG Protocol Project Quantification Standard - This serves as a guide for quantifying emission reductions from greenhouse gas mitigation projects. It's all about measuring the impact of specific initiatives aimed at reducing GHGs.
  • The GHG Protocol Corporate Accounting and Reporting Standard - This is the core GHG Protocol standard. It provides a comprehensive framework for companies to measure and report their greenhouse gas emissions, ensuring transparency and consistency in corporate carbon reporting. It also categorizes GHG emissions into three scopes.

To learn more about the GHG protocol head over to our blog

Developing a full emissions inventory - incorporating Scope 1, Scope 2 and Scope 3 emissions - enables companies to focus their efforts on the greatest reduction opportunities" The Greenhouse Gas Protocol.

What are scope 1 and 2 and 3 emissions?

The term 'Scope emissions' first made its appearance in the GHG Protocol Corporate Accounting and Reporting Standards. These standards are a go-to resource for companies aiming to measure and report their GHG emissions accurately. They play a crucial role in breaking down a company's emissions into distinct categories, which are more commonly known as 'scopes.' More specifically, Scope 1, Scope 2, and Scope 3 emissions - each category represents a different source of emissions.

Let’s break down these categories:

  • Scope 1 emissions encompass direct emissions from owned or controlled sources. This includes emissions from company-owned vehicles, factories, and other facilities.
  • Scope 2 emissions account for indirect emissions from the generation of purchased energy. Essentially, these are emissions associated with the electricity, heat, or steam that a company buys to power its operations.
  • Scope 3 emissions cover all other indirect emissions that are not included in Scope 2. These emissions are a result of activities from assets not owned or controlled by the reporting company, such as business travel, transportation, and waste disposal.

By understanding and categorizing emissions in this way, companies can develop more targeted strategies to reduce their overall carbon footprint.

Let’s explore the different scopes in more detail.

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What are scope 1 emissions?

Scope 1 emissions are directly released into the atmosphere as a result of a company's activities. These direct emissions originate from resources that are owned or controlled by the company. To ensure comprehensive tracking and management, Scope 1 emissions are categorized into four distinct groups:

  • Stationary combustion - This category includes all fuels that produce greenhouse gas emissions during combustion (natural gas, oil, coal, etc). It encompasses a wide range of stationary sources such as boilers, furnaces, and other combustion equipment.
  • Mobile combustion - This encompasses all vehicles owned or controlled by the firm that burn fuel, including cars, vans, trucks, etc. It's important to note that emissions from electric vehicles are classified under Scope 2.
  • Fugitive emissions - These emissions are associated with the unintentional release of greenhouse gases. Common examples include emissions from refrigeration and air conditioning units, as well as leaks from industrial gases.
  • Process emissions - These are emissions released during industrial processes or general production activities. This category includes emissions from manufacturing processes, such as factory fumes, and the release of chemicals like nitrous oxide.

For a more in-depth overview of Scope 1 emissions head over to our dedicated article

car releasing exhaust fumes

What are scope 2 emissions?

Scope 2 emissions refer to indirect GHG emissions that arise from the consumption of purchased electricity, steam, heat, and cooling in buildings and production processes. These emissions are classified separately because they originate from sources not directly controlled by the company.

The majority of Scope 2 emissions typically stem from electricity consumed by the company. This category encompasses the indirect emissions produced during the generation of the electricity purchased, which is then transmitted and distributed to the company. 

For a more detailed exploration of Scope 2 emissions why not check out our article.

electricity pylon

What are scope 3 emissions?

Scope 3 emissions represent a significant part of GHG accounting. However, because it involves quantifying carbon emissions associated with a company's supply chain it is often seen as the most challenging to quantify. Unlike Scope 1 and 2 emissions, Scope 3 emissions are not directly linked to the company's own operations, but rather to the entire value chain, incorporating both upstream and downstream emissions. These significant carbon emissions are associated with the company’s operations, yet they occur outside of its direct control.

Scope 3 emissions encompass a wide range of indirect emissions, examples include:

  • Purchased goods and services - This includes emissions related to the production of goods and services before their purchase by the company.
  • Business travel and employee commuting - This covers emissions from air travel, railway travel, taxis, and the commuting practices of employees.
  • Waste disposal - Emissions arising from landfill operations, wastewater treatment, and other waste management activities.
  • Use of sold products - Emissions that result from the end use of the company's products and services by consumers.
  • Transportation and distribution - This involves emissions from transporting and distributing goods via land, sea, and air, including those related to third-party warehousing.
  • Investments - Emissions linked to equity investments, debt investments, capital goods, project finance, managed investments, and client services.
  • Leased assets and franchises - Emissions from assets leased by the company and operations of franchises.

Scope 3 emissions provide a comprehensive view of a company's environmental impact, extending beyond its immediate operations to the broader impacts associated with its value chain emissions.

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Why is it important to measure Scope 3 emissions?

Unless a company has significant real estate holdings and energy consumption the majority of a company's total emissions, around 70%, typically comes from Scope 3 sources. This statistic underscores the extent to which a company's environmental impact extends beyond its direct activities, into its wider value chain. Addressing these emissions is crucial not only for reducing a company’s carbon footprint but also for identifying cost efficiencies and reinforcing sustainable practices.

Additionally, it's revealing to note that 71% of global emissions can be traced back to just 100 companies. This fact emphasizes the enormous responsibility and influence businesses have in tackling global warming. Nowadays, the role of businesses extends beyond mere product and service delivery; they are expected to be at the forefront of environmental responsibility. The growing demand from customers, employees, and investors is for companies to actively incorporate sustainability and environmental considerations into their operations.

Companies that embrace sustainable practices also position themselves for new growth and investment opportunities. Those who ignore this shift risk falling behind, as regulatory environments tighten and consumer expectations lean heavily towards environmental stewardship.

Measuring all emissions, particularly Scope 3, is therefore not just a regulatory formality, it’s a strategic necessity, allowing companies to:

  • Pinpoint key GHG emission sources within their value chain
  • Assess the environmental practices of their partners and suppliers
  • Uncover operational inefficiencies and financial risks
  • Identify potential for cost savings and operational improvements
  • Strategise effective ways to lower their carbon emissions
  • Cultivate a culture of sustainability among all stakeholders
  • Stay prepared for evolving environmental regulations and responsibilities

Learn more about Scope 3 emissions.

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Understanding the measurement of Scopes

When we talk about measuring carbon footprints in terms of carbon and carbon dioxide equivalents, we are referring to the quantification of different greenhouse gases (GHGs) in terms of their impact on global warming. This measurement is crucial because different gases have varying levels of effect on the Earth's atmosphere.

The most common unit of measurement is the carbon dioxide equivalent (CO2e), which standardizes various GHGs based on their Global Warming Potential (GWP).

  • Carbon dioxide (CO2) - This is the primary GHG emitted through human activities, especially the burning of fossil fuels. It serves as the baseline in the CO2e metric.
  • Other greenhouse gases - Methane (CH4), Nitrous Oxide (N2O), and fluorinated gases are also significant contributors to global warming. Each of these gases has a different GWP. For example, methane has a GWP approximately 28 times higher than CO2 over 100 years. Similarly, nitrous oxide's GWP is about 300 times that of CO2 for the same time frame.

Discover more about carbon footprints and their calculation methods.

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8 tips to reduce your carbon footprint

Would we leave you without offering practical solutions? That's not how we operate at Greenly. We're all about championing sustainable development and backing companies keen on making an environmental difference. Every little bit helps, and no contribution is too small.

Ready to tackle your carbon footprint? Great! But before diving in, it's crucial to assess your GHG emissions rate. Feeling overwhelmed? No need to stress – Greenly has got your back. We offer personalized advice and support, especially with those challenging Scope 3 emissions. Reach out to our team for expert guidance.

Keep readings for tips on how to start your sustainability journey:

  1. Embrace the Three R’s Rule - The principles of Reduce, Reuse, and Recycle should become the backbone of your business model optimization. This rule isn't just a slogan; it's a practical approach that every department can implement. From sales and logistics to marketing and finance, look for ways to minimize waste and maximize resource efficiency. Whether it’s reducing paper usage, reusing materials, or recycling old equipment, every small action can contribute to a more sustainable operation and positively impact your bottom line at the same time. 
  2. Focus on renewable energies - The transition to renewable energy sources is critical in the fight against global warming. With the growing availability of green energy providers, now is the time to move away from fossil fuels. Transitioning to renewables like solar, wind, or hydropower not only reduces your carbon footprint but also prepares your business for a future where sustainable energy is the norm. Don’t be left behind in this crucial shift.
  3. Invest in carbon offsetting - Achieving zero emissions is a challenge, but every company can make strides towards reducing their carbon footprint. For emissions that are hard to eliminate, carbon offsetting is a viable option. This involves investing in environmental projects that compensate for your remaining emissions, such as reforestation or renewable energy projects. It's a way to balance out your impact and contribute positively to the global effort against global warming.
  4. Choose sustainable web hosting - Often overlooked, web hosting is a significant energy consumer. By opting for a sustainable web hosting provider, you can ensure that the energy used for your digital presence comes from renewable sources or is offset by environmental initiatives. This seemingly small change can make a substantial difference in your overall carbon footprint.
  5. Rethink your travel practices - Business travel can be a major contributor to your company's emissions. After assessing your carbon footprint, identify the travel activities with the highest impact. Encourage alternatives like train travel over short-haul flights, promote video conferencing instead of in-person meetings, and explore eco-friendly accommodation options. When travel is unavoidable, consider carbon offsetting to balance the impact.
  6. Encourage greener commuting - Employee commutes are a significant part of your overall emissions. Promoting greener commuting methods can make a big difference. Consider implementing incentives for carpooling, subsidizing public transit passes, providing bicycles for commuting, or supporting telework arrangements. These initiatives not only reduce emissions but can also enhance employee satisfaction and well-being.
  7. Engage in environmental projects - The fight against climate change is a collective effort, and businesses have a role to play beyond their operations. By supporting environmental projects, your company can contribute to broader sustainability goals. Explore opportunities for partnership in reforestation, conservation, or community-based sustainability projects. Such engagements can enhance your company's reputation and demonstrate a commitment to corporate social responsibility.
  8. Communicate with your employees and partners - Effective communication is key to successful sustainability initiatives. Keep your employees and partners informed about your environmental strategies and goals. Share insights, progress, and challenges. Encourage feedback and ideas for further improvements. A collaborative approach not only fosters a culture of sustainability but also ensures everyone is aligned and motivated toward a common goal. 

What about Greenly?

At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required. 

If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here.

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