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Understand the role which scope 1, 2 and 3 emissions play in reporting carbon emissions.
Understanding and measuring the initial source of your carbon emissions is essential for small businesses looking to minimise their emissions.
When you start looking into carbon reporting, one thing to keep in mind is how carbon emissions are categorised. The most popular greenhouse gas accounting standard, the Greenhouse Gas Protocol (GHG), offers a mechanism for classifying emissions into three “scopes,”: scope 1, 2, and 3.
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According to the Greenhouse Gas Protocol itself, the concept of the three scopes enables firms to “understand their full value chain emissions and focus their efforts on the greatest reduction opportunities.”
It’s crucial that each scope is understood individually and the differences between the three are clear before starting to record carbon emissions.
Scope 1 emissions cover GHG emissions that your company makes directly. An example of these emissions could be running a boiler to heat a company office. Scope 1 emissions are standalone from scope 2 and 3 emissions as they are direct emissions from an organisation.
Scope 2 emissions are emissions your company makes indirectly, which are upstream emissions. These types of emissions include emissions from purchased electricity, steam, heating, and cooling. An example of these emissions could be electricity or energy purchased to power a company office.
Scope 3 emissions are quite different to scope 1 and 2 emissions, and some can find these emissions harder to understand. Scope 3 emissions are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for up and down its value chain. Scope 3 Emissions can be ‘upstream’ and ‘downstream’. Upstream scope 3 emissions include purchased goods and services, capital goods, fuel & energy related activities, transportation and distribution, generated waste, business travel, employee commuting and leased assets. Downstream scope 3 emissions include investments, franchises, leased assets, end-of-life treatment of sold products, use and processing of sold products, and also transportation and distribution. An example of this is when we buy, use and dispose of products from suppliers.
For the most part, the three scopes of carbon reporting created by the Greenhouse Gas Protocol (GHG), exist simply to provide a comprehensive and systematic framework for organisations to assess and manage their carbon emissions.
Each scope plays a part, by addressing different aspects of carbon footprint and keeping them separate makes the process logical and easy-to-use. By breaking down the emissions into separate categories, organisations can create smarter strategies to reduce your overall carbon footprint.
When calculating carbon emissions, it’s important to be mindful of the scope of the emissions, and whether they are upstream, or downstream.
Scope 1 emissions are standalone from scope 2 and 3 emissions as they are direct emissions from an organisation.
Scope 2 emissions cover emissions a company makes indirectly, which are ‘upstream’ emissions. These types of emissions include emissions from purchased electricity, steam, heating, and cooling.
Scope 3 Emissions can be ‘upstream’ and ‘downstream’. Upstream scope 3 emissions include purchased goods and services, capital goods, fuel & energy related activities, transportation and distribution, generated waste, business travel, employee commuting and leased assets.
Downstream scope 3 emissions include investments, franchises, leased assets, end-of-life treatment of sold products, use and processing of sold products, and also transportation and distribution.
In most cases, and in the current regulatory environment, measuring scope 1 and 2 emissions may be mandatory for your organisation. Scope 1 and 2 emissions are typically mandatory as they are emissions generated directly from the organisation’s operations. Reporting scope1 and 2 emissions is usually done through annual reports in line with the Streamlined Energy and Carbon Reporting (SECR) framework.
Scope 1 emissions are the easiest to identify, report and act on as they directly relate to the equipment and processes within an organisation’s control, such as fuel used to run fleet vehicles. This type of emission is simple to track as you have access to tools to read the energy used, which can subsequently be used with conversion factors to calculate emissions.
Scope 2 emissions are also straightforward to identify and report as they include emissions generated indirectly by a company, such as the purchase of electricity. There are likely to be clear and accessible records which track usage between an organisation and, for example, the electricity supplier to support with recording emissions.
Scope 3 emissions occur in the value chain of your organisation that you are not directly responsible for. Scope 3 emissions can be quite tricky to report due to the wide variety of sources across the value chain. This includes upstream emissions, such as employee commuting, and downstream emissions, such as end of life treatment of sold products. Often, stakeholders will need to collaborate to identify emissions, and some may need to be estimated where the activities are no longer in the organisation’s control.
If you would like to find out more about how you can reduce your emissions, learning about carbon reduction plans and environmental management systems could help you.
Reporting Scope 3 emissions is not universally mandatory, but it is becoming increasingly common, especially among larger corporations and in regions with stricter environmental regulations. Some companies voluntarily choose to report scope 3 emissions for various reasons, including stakeholder pressure, investor expectations, sustainability goals, and risk management. Some jurisdictions may require scope 3 reporting for certain industries or as part of broader environmental regulations.
To finish looking at reporting scope 1, 2 and 3 emissions, it’s important to highlight the key differences. The key differences are:
Understanding the differences between scope 1,2 and 3 emissions is fundamental for any business aiming to reduce their carbon footprint. Scope 1 covers emissions directly produced by an organisation, like fuel combustion. Scope 2 covers indirect emissions from purchased electricity or energy. Whilst scope 3 emissions reach beyond an organisation’s control, covering emissions generated from activities up and down its value chain. Scope 1 and 2 emissions are typically mandatory for carbon reporting, whilst scope 3 reporting is continually growing due to stakeholder expectations and regulatory pressures.
Being able to distinguish between these three scopes can enable organisations to plan effectively and address all the aspects of their carbon footprint in a transparent, sustainable manner.
Elisabeth is an Associate Consultant and Associate Tutor of the British Standards Institute (BSI), a BSI qualified Lead Auditor and member of the Standard Committee responsible for the publication of the BS 10008 Standard.
Elisabeth can help you decide if ISO 14001 is for you and support you through its implementation, all the way to certification.