What Are Scope 1, 2, and 3 Emissions? A Quick Breakdown
Understanding Carbon Emissions and Their Impact
As businesses strive to meet sustainability goals and comply with new regulations, understanding Scope 1, 2, and 3 emissions has become essential. These classifications, developed by the Greenhouse Gas (GHG) Protocol, help companies measure and reduce their carbon footprint.
In this guide, we break down each type of emission, why they matter, and how businesses can manage them effectively.
Scope 1 Emissions: Direct Emissions from Company Operations
Scope 1 emissions refer to direct greenhouse gas emissions from company-owned or controlled sources. These emissions result from activities where the organization has direct responsibility.
Examples of Scope 1 Emissions:
- Fuel combustion from company vehicles
- On-site manufacturing emissions
- Heating systems powered by fossil fuels
- Chemical processing emissions from industrial plants
Why Scope 1 Matters:
- Companies have full control over these emissions.
- Reduction efforts, such as switching to renewable energy, have an immediate impact.
- Regulatory bodies like CSRD and SEC climate disclosure rules require accurate Scope 1 reporting.
Scope 2 Emissions: Indirect Emissions from Purchased Energy
Scope 2 emissions come from indirect greenhouse gas emissions associated with the electricity, heat, or steam a company purchases to run its operations.
Examples of Scope 2 Emissions:
- Electricity consumption in offices, factories, or warehouses
- Purchased steam, heating, or cooling for facilities
Why Scope 2 Matters:
- Scope 2 emissions often make up a significant portion of a company’s carbon footprint.
- Companies can lower emissions by switching to renewable energy sources like wind or solar.
- Many carbon reduction strategies, such as Power Purchase Agreements (PPAs), focus on Scope 2 emissions.
Scope 3 Emissions: Indirect Emissions Across the Value Chain
Scope 3 emissions include all indirect emissions from a company’s supply chain and business activities not owned or controlled by the organization.
Examples of Scope 3 Emissions:
- Emissions from suppliers and outsourced manufacturing
- Transportation and logistics emissions (including shipping and freight)
- Employee business travel and commuting
- Customer product usage and disposal
Why Scope 3 Matters:
- Can account for over 70% of a company’s total carbon footprint.
- Harder to measure and control but crucial for achieving net-zero targets.
- New regulations like CSRD, SEC climate rules, and SFDR require companies to disclose Scope 3 emissions.
How to Measure and Reduce Scope 1, 2, and 3 Emissions
Step 1: Collect Carbon Emission Data
- Use AI-powered ESG platforms to track emissions automatically.
- Work with suppliers to gather Scope 3 data.
- Implement real-time monitoring for Scope 1 and 2 emissions.
Step 2: Set Reduction Goals Aligned with Net-Zero Targets
- Implement energy efficiency initiatives to reduce Scope 1 and 2 emissions.
- Use renewable energy sources to decrease Scope 2 carbon footprint.
- Collaborate with suppliers to lower Scope 3 emissions.
Step 3: Report and Monitor Progress
- Align with CSRD, GHG Protocol, and TCFD disclosure frameworks.
- Conduct annual carbon footprint audits.
- Use automated ESG reporting tools to stay compliant.
Conclusion: The Importance of Managing Scope 1, 2, and 3 Emissions
Accurately measuring and reducing Scope 1, 2, and 3 emissions is essential for regulatory compliance, investor confidence, and long-term sustainability. Companies that take proactive steps in managing their carbon footprint will gain a competitive advantage in the evolving ESG landscape.
Looking for an efficient way to track and reduce emissions? Discover how Aravina simplifies ESG reporting and carbon tracking.