Understanding Scope 1, 2, and 3 Emissions
Understand the terminology behind emissions reporting
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An introduction to Scope 1, 2, and 3 emissions and their role in sustainability reporting

When we talk about how to reduce our greenhouse gas emissions, we refer to these as Scope 1, 2, and 3 emissions. But what — you may be wondering — does this mean?

Simply put: these are all ways that companies categorise their emissions. The Greenhouse Gas Protocol (launched in 1998) initially defined the term.

Both Scopes 1 and 2 are company-owned or controlled emissions.

On the other hand, Scope 3 emissions are a byproduct of the company, but they neither own nor control it.

It’s essential to measure and report on these emissions to reduce them. Considering that 73.8% of greenhouse gas emissions come from carbon emissions, it is critical.

Carbon dioxide emissions represent nearly three quarters of global greenhouse gas emissions

By knowing where your Scope 1, 2, and 3 emissions come from, you can create what the Greenhouse Gas Protocol calls an “emissions inventory”. You can then start to take action to reduce them.

What are Scope 1, 2, and 3 emissions?

Image explaining the terminology for scope 1, 3, and 3 emissions. Icons show factories, energy and trains with pollution treails. Text says “Scope 1: Emissions from resources the company owns and operates directly. Scope 2: Emissions that are indirectly caused from the energy purchased from utility providers. Scope 3: Emissions that a company is indirectly responsible for through their supply chain”

Definition of Scope 1 emissions

Scope 1 emissions come from resources the company or organisation owns and operates directly. These emissions are then released into the atmosphere as a direct consequence of the organisation’s actions. This is within the company or organisation’s control.

Examples

Examples of Scope 1 emissions include

  • Running machinery.
  • Driving vehicles.
  • Operating computers.
  • Heating buildings.
  • Process emissions (e.g., emissions produced when transforming raw materials).
  • Fugitive emissions (e.g., leaks of gases or vapours).

Definition of Scope 2 emissions

Scope 2 emissions are indirectly caused by organisations from the energy purchased from utility providers. In other words, the energy that they purchase is generated on their behalf.

Examples

Examples of Scope 2 emissions include:

  • Electricity purchased to power a building.
  • Steam.
  • Heating or cooling for personal use.

Definition of Scope 3 emissions

Scope 3 emissions are the emissions that a company is indirectly responsible for, even though they may not be directly within the realm of the company’s scope. These can be upstream or downstream emissions.

Put more simply; these emissions can be linked to the company’s operations or supply chain.

This category is the largest of the 3, includes everything that is not covered by Scope 1 or Scope 2 and is often the hardest to combat.

Examples

Examples of Scope 3 emissions:

  • Emissions caused by customers buying, using, and disposing of a product (including product end-of-life).
  • Business travel.
  • Employee commuting.
  • Waste generation.
  • Goods and services that the company purchases.
  • Distribution or transportation both to suppliers and customers.
  • Emissions produced by franchises.
  • Capital goods.
  • Leased assets.
  • Investments.
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Source: World Economic Forum

Impact of Scope 1, 2, and 3 emissions

All Scope 1, 2, and 3 emissions directly affect greenhouse gases and pollutants. These, in turn, have affected the environment and sped up the climate change process.

Nitrogen oxide that can be released into the atmosphere from petrol-fuelled cars produces smog (also known as ozone), a highly toxic gas that negatively affects your health. Additionally, it can produce acid rain, as well as nitrate particulates.

The excessive overproduction of nitrogen oxide has also led to the destruction of stratospheric ozone, creating the “hole in the ozone layer”. This has increased exposure to harmful UV rays, which cause skin cancer.

Additional pollutants include

  • Particulate matter.
  • Sulphur dioxide.
  • Ozone.
  • Carbon monoxide.
  • Carbon dioxide.
  • Non-methane hydrocarbons (VOCs).
  • Methane.
  • Chlorofluorocarbons (CFCs).

In addition to health impacts, these damage plants and crops and can reduce atmospheric visibility. In particular, black carbon particulate matter (produced by burning biofuels) significantly contributes to global warming.

Successful reduction of corporate emissions

Case study A: Schneider Electric’s emission reduction strategy

Schneider Electric, a French company, set up the Zero Carbon Project in April 2021.

Their goal is to reduce operational carbon emissions throughout their supply chain and their Scopes 1 and 2 emissions by 2025.

One way they’re doing this is by collaborating with suppliers, informing and guiding them through the process alongside them.

So far, over 1,000 suppliers have committed to signing up, and over 1,300 have attended the company’s technical training sessions. Further training sessions and support have also been provided in English and Mandarin.

As of 2021, there was about a 1% reduction in greenhouse gases across Schneider Electric’s supplier network.

Case study B: Volvo’s emission reduction strategy

Volvo pledged to reduce its customers’ emissions to reach net-zero by 2040.

Using 2019 as its baseline, it planned to:

  • Reduce greenhouse gas emissions by 50% by 2030 to tackle its Scope 1 and 2 emissions
  • Reduce its Scope 3 emissions in segments across its vehicles with
  • Truck emissions per vehicle-km reduced by 40% by 2030
  • Bus emissions per vehicle-km reduced by 40% by 2030
  • Construction equipment emissions reduced by 30% by 2030
  • Volvo Penta emissions reduced by 37.5% by 2034.

They also stated that they would focus on sustainable energy instead of fossil fuels across their operations.

As of 2021, they had managed to reduce their Scope 3 greenhouse gas emissions from sold products by 11%, including trucks and Volvo Penta.

Additionally, their Scope 1 and 2 emissions were 3% lower. However, increased sales made their bus and construction equipment emissions slightly higher.

Reducing your carbon footprint

Strategies for reducing Scope 1 and 2 emissions

As Scope 1 and 2 emissions are produced and owned by the business or company, these are the two that they have the most control over. They can enact change directly and reduce their emissions to net zero.

Instead of burning fossil fuels or using non-renewable sources, companies can achieve net zero by switching to renewable sources of electricity or gas or opting to use electric vehicles.

Strategies for reducing Scope 3 emissions

Scope 3 emissions are more challenging. However, one way to reduce these emissions is by taking a leaf out of Schneider Electric’s book and working collaboratively with suppliers and customers.

Education is the first step here, followed by implementing systems – and then action.

Summing up

The key takeaways from this article are:

  • Scope 1 emissions are directly caused by a company and its operations.
  • Scope 2 emissions are emissions caused as a result of the energy that you purchase and use
  • Scope 3 emissions are caused indirectly through both the upstream and downstream chains.
  • All emissions harm both the environment and hasten climate change.
  • You can make immediate changes to reduce your Scope 1, 2, and 3 emissions.

By understanding, quantifying, and reporting on your Scope 1, 2, and 3 emissions, you’ll be in a direct position to minimise them.

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Author

Rob Boyle
Rob built Emission Index to collect and share data, trends and opportunities to reduce our greenhouse gas emissions and expedite the energy transition.

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