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Defining Scope 1, 2 and 3: Carbon Emissions Explained

Defining Scope 1, 2 and 3: Carbon Emissions Explained


We hear a lot about carbon dioxide and the fact that it is one of the main drivers of climate change. But it also helps to regulate the Earth’s atmospheric temperature, making the planet an ideal place for humans and species to thrive. Without it, the planet would be covered in ice, and the Earth wouldn’t exist as we know it today. We all know the negative affects that it has on the Earth's climate, but key thing to note is that we must find a sustainable balance of how much carbon we emit so that it doesn’t contribute to global warming. That's where the GHG Protocol devised scopes 1, 2 and 2 to categorise the different areas where emissions come from, allowing us to measure them across the 3 scopes and work on solutions to reduce them.


What are carbon emissions and why are they important to measure?

Currently, CO2 represents the main greenhouse gas contributing to about 80% of the overall global warming effect from emissions. One of the most significant ways a business can reduce its environmental impact is by reducing their carbon footprint - and this can’t be done without monitoring carbon emissions. As we previously touched on, without keeping our carbon emissions tracked and measured, we can’t take action in creating an efficient climate change strategy.


What are scope 1, 2, and 3 emissions?


In order for companies and individuals to take measures to reduce their carbon footprint, it’s important to understand and learn where these emissions come from. Defining carbon emissions into three different scopes provides a way of categorising the amount of carbon emitted by companies within their own operation, and across any associated wider networks of suppliers and customers.

The GHG Protocol Corporate Standard categorises greenhouse gas emissions associated with a company’s Corporate Carbon Footprint (CCF) into three different scopes, Scope 1, 2 and 3. If a business is looking at measuring which scope they fall into, or aiming for scope 3, then achieving scope 1 and 2 are mandatory to report, whereas scope 3 is a target to work towards that will set businesses apart in terms of a sustainable advantage.


Scope 1 2 3 Emissions


Scope 1 - direct emissions

Scope 1 emissions are those released directly from company-owned and controlled resources, meaning any gases that result from activities at the firm. All fuel sources that produce greenhouse gases must be reported in this scope.

Scope 1 emissions are split into four different categories:

  1. Stationary combustion - this includes things like fuels and heating sources.
  2. Mobile combustion - A company's fleet of vehicles, including cars, vans, and trucks, that utilize fuel for propulsion are considered to be mobile combustion.
  3. Fugitive emissions - emissions of greenhouse gases which originate from sources such as air conditioning or refrigeration units. These are extremely important to measure and encouraged to report on as they are a thousand times more dangerous than CO2 emissions.
    Process emissions - these are released during any industrial process or on-site manufacturing through factory fumes or chemicals for instance.




Scope 2 - indirect emissions

Unlike direct emissions, indirect emissions are defined by GHG Protocol as ‘a consequence of the activities from the reporting company but occur at sources owned or controlled by another company’. Indirect emissions include scope 2 and 3 but there are clear differences between the two.

Scope 2 emissions refer to the carbon dioxide and other greenhouse gases produced by outside sources, such as energy purchased by a company for electricity, heating, cooling, and steam. Essentially it covers electricity consumed by the end-user.

There are exceptions to this; if the reporting company generated its energy on-site from owned or controlled sources, then the greenhouse gases associated would be classified as direct scope 1 emissions. 

Scope 2 emissions make up a significant portion of greenhouse gas emissions globally, with a minimum of one-third of the total being attributed to them.


Scope 3 - indirect value chain emissions

Scope 3 emissions, which are all other indirect emissions from sources in the value chain, are also a major contributor to global emissions. Achieving this scope is one mean feat - you’d need to take into account all of the emissions linked to the company’s operations including both upstream and downstream emissions. GHG Protocol will divide the scope 3 emissions into 15 categories split between upstream or downstream depending on the financial transactions of the reporting company.


Upstream emissions

The indirect emissions of greenhouse gases associated with the production and acquisition of items and services from origin to end use must be considered by the company. These include:


Business travel and employee commuting - this refers to any business travel using rail, air, underground, taxis or buses.

Waste generated - This refers to any trash sent to dumps or sewage processing plants.

Purchased goods and services - this includes the environmental impact of the company's acquisitions of goods and services from the beginning of production to the time they are bought within the same year.

Transportation and distribution - this occurs in both upstream and downstream activities across the value chain. For scope 3, this includes emissions from any type of travel as well as from third-party storage.

Capital goods - these are the end products used by the business to make a product, provide a service, store, sell, and distribute items.


Commuting on bus


Downstream emissions

These are indirect greenhouse gas emissions within a company’s value chain related to sold goods and services and emitted after they leave the company’s ownership or control.


Investments - largely associated with financial institutions but can be integrated into other businesses in their reporting. They include investing in stocks and bonds, arranging financial deals for projects, managing investments, and providing services to customers are all services offered.

Franchises - these are businesses that are given the authorization to sell or provide products and services from another company in a designated area.

Leased assets - inclusive of the reporting organisation (upstream) and other organisations (downstream).

Use of sold products - this includes ‘in-use’ products sold to consumers and measures the emissions as a result of these products being used.

End-of-life treatment of sold products - this relates to products sold to consumers and how those products are disposed of.




Measuring and reducing your carbon emissions

If reducing your scope 1, 2, or 3 emissions is on your radar, this information might seem daunting and a lot to take in. But measuring your carbon footprint has many benefits for you and your business, especially if you're wanting to become carbon neutral and eventually climate neutral. These can be:

  • Greater transparency and trust in your brand with your customers
  • Measuring your emissions allows you identify areas of weakness to improve on across your value chain
  • You can run at a greater efficiency - this can include reduced costs from energy and resources
  • Your customer and employee satisfaction from a business that actively aims to achieve positive environmental change for a greener future

How we can help

It's quite a rigorous process, we've done it. As a carbon neutral company, we know there's a lot to consider, but it's not impossible. There are steps to take which are a great starting point to help reduce your emissions, and we're here to help. Our ultimate goal is to make ecommerce a sustainable industry, and helping others make those steps is super important. That's why we can review and help you achieve the highest standards of supply chain sustainability. So, whether it's commiting to fully climate neutral packaging, or optimising your despatches to ensure a minimal carbon footprint, we can advise you on where to start and best practices.


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