Emission Scopes 1, 2 & 3 explained.
What is a Scope?
‘Scopes’ are a means of categorising the different forms of carbon emissions as defined by the Greenhouse Gas Protocol, which introduced a new standard, and level playing field, for companies to report their carbon emissions.
Calculating and reporting Scopes 1, 2, and 3 has become a routine exercise for companies that operate in the UK. Given the widespread adoption of these terms (notably, by the TCFD and CDP), it's worth learning which emissions fall under each of the 3 Scopes.
Scope 1 - Direct Emissions
These emissions are produced by a company's own facilities or by the vehicles it operates.
Scope 2 - Indirect Emissions (Owned)
These emissions result from a company's use of purchased power, steam, heating, and cooling.
Scope 3 - Indirect Emissions (Value Chain)
All emissions that a company is indirectly accountable for, both up and down the value chain (excluding Scope 2). This is often the most significant source of emissions, and the most difficult to quantify.
Scope 3 Report [Credit: Dow]
Scope 3 is the crucial one.
The shift towards Scope 3 reporting is significant since it broadens the definition of what emissions are considered to be within a company's reach. Without this important distinction, the emissions created through funding coal mining or employee air travel could be regarded as outside of a company's direct control and therefore outside of its carbon footprint.
Scope 3 has redefined what it means to be a Net-Zero business. In line with new definitions, companies should calculate their Scope 3, set targets, and track progress against these targets in order to achieve Net-Zero.
Scope 1, 2 & 3 Infographic (Credit: GHG Protocol)
What falls under scope 3?
Click arrows to expand.Upstream emissions
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Extraction, production, and transportation of goods and services purchased or acquired by the reporting company in the reporting year.
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Extraction, production, and transportation of capital goods purchased or acquired by the reporting company in the reporting year.
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Extraction, production, and transportation of fuels and energy purchased or acquired by the reporting company in the reporting year, not already accounted for in scope 1 or scope 2.
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Transportation and distribution of products purchased by the reporting company in the reporting year between a company’s tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by the reporting company).
Transportation and distribution services purchased, including inbound logistics, outbound logistics (e.g., of sold products), and transportation and distribution between a company’s own facilities (in vehicles and facilities not owned or controlled by the reporting company.
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Disposal and treatment of waste generated in the reporting company’s operations in the reporting year (in facilities not owned or controlled by the reporting company).
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Transportation of employees for business-related activities during the reporting year (in vehicles not owned or operated by the reporting company).
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Transportation of employees between their homes and their worksites during the reporting year (in vehicles not owned or operated by the reporting company).
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Operation of assets leased by the reporting company (lessee) in the reporting year and not included in scope 1 and scope 2 – reported by the lessee.
Downstream emissions
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Transportation and distribution of products sold by the reporting company in the reporting year between the reporting company’s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company).
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Processing of intermediate products sold in the reporting year by downstream companies (e.g. manufacturers).
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End-use of goods and services sold by the reporting company in the reporting year.
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Waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life.
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Operation of assets owned by the reporting company (lessor) and leased to other entities in the reporting year, not included in scope 1 and scope 2 – reported by the lessor.
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Operation of franchises in the reporting year, not included in scope 1 and scope 2 – reported by the franchiser.
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Operation of investments (including equity and debt investments and project finance) in the reporting year, not included in scope 1 or scope 2.
You can only manage what you measure. We help your business measure carbon emissions throughout the value chain, building your data capability.
We can help your business become self-sufficient in terms of measuring, managing and reporting carbon emissions — easing the transition to a low-carbon economy. For more information, take a look at our Climate Transition service or contact us here.