18 January 2023
Topics in this article
  • Net Zero | Scope 3
  • Sustainability

What are scope 1, 2 and 3 emissions?

In recent years, companies across the globe have adopted standards that have been put forward by the Greenhouse Gas Protocol.

The GHG Protocol, a partnership between the World Resources Institute and the Business Council for Sustainable development, was put together to provide accounting and reporting standards, sector guidance, calculation tools, and training for businesses and governments.

The comprehensive and standardized global framework is applied when measuring and managing emissions. This can be through private and public sector operations, value chains, products, or cities.

Following the Paris Agreement, adopted within the United Nations Framework Convention on Climate Change in December 2015, all participating countries have committed to limit global temperature rise and to reduce emissions over time.

The GHG Protocol framework has since been further developed with a new universal method for logistics emissions. This allowed governments to develop other standards, tools, and online training that helps countries and organizations to track progress toward their climate goals.

The three types of emissions

For organizations, the emissions that they produced were then divided up into three Scopes.

The three specific Scopes defined by the GHG Protocol relate to who ‘owns’ those emissions. They are:

Scope 1

These capture GHG emissions which come directly from operations that are owned or controlled by a company.

Examples include onsite energy use, such as heating or refrigerants as well as fuel consumed by owned and leased vehicles.

Scope 2

These include all the indirect GHG emissions from the generation of purchased or acquired heating and energy sources consumed by a company.

Examples include electricity, steam, heating, or cooling.

Scope 3

These involve indirect emissions (not included in Scope 2) that occur in the value chain of a company, including both upstream and downstream emissions. This might be in goods and services purchased, upstream and downstream transportation and distribution as well as employee and business travel, leased assets and waste generated during operations.

Why measure emissions?

In response to demands from customers, employees, and regulators, organizations are stepping up efforts on reporting and net-zero commitments. Reporting on Scope 1 and 2 emissions will be crucial for many businesses and many need to prepare to report emissions across Scope 3 and the entire value chain.

Going beyond this and working towards net zero is now seen by many as critical to the future success of business and humanity. A notable program is the Science Based Targets Initiatives’ (SBTi), and the new Corporate Net-Zero Standard provides guidance for companies to effectively set meaningful science-based targets to do exactly that during their net-zero and decarbonization journeys. Developed through extensive stakeholder consultation, the standard provides a mechanism for target-setting across a range of sectors, allowing companies to exhibit their carbon-reduction efforts and respond to demands for climate action.

The framework comprises four key elements: first, setting short-term targets; second, setting long-term targets; third, addressing value chain emissions; and fourth, achieving net-zero emissions.

Moreover, through reporting, businesses can identify key value chain players and the associated hotspots and weaknesses they bring, allowing for a better understanding of their exposure so they can better resource, energy, and climate-related risks.

Companies that put effective processes in place through emissions reporting, underpinned by frameworks such as the standard set out by the SBTi, will reap rewards in both the short and longer term. They can see improved transparency and customer trust as well as better brand reputation, facilitating positive engagement with both employees and consumers. See our research report Investing in a Sustainable Supply Chain for the facts and figures.

FAQs

What are the different types of Scope emissions?

Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain.

To explain this further, our Scope 3 infographic utilizes the example of how a laptop contributes to global emissions.

How do you calculate Scope 1, 2 and 3 emissions?

Calculating your Scope emissions can help you to identify ways that you can lessen adverse environmental impact.

Scopes 1 and 2 are the most straightforward to calculate as data is more readily available. For example, a company has to calculate how much fuel it has burned onsite and through the purchased electricity, steam, heating, or cooling from an energy utility (amongst other things).

Calculating Scope 3 emissions is more challenging as they are largely produced outside of a company’s purview in supply chains. Consequently, the calculations behind the 15 categories for Scope 3 emissions are often initially rough approximations to identify hot spots. Further approaches can then be made by gradually improving the approximations by using primary (actual usage) data. Companies or platforms most often start by using data determined from invoices and purchase orders and then mapping industry-standard measures. Once on the journey, more complex data approaches can be applied; read more about Carbon Accounting in this blog.

How can you lower your Scope emissions?

Every individual in a company can work to reduce carbon emissions. Day-to-day internal changes, from reducing waste in operations to switching meetings to online meetings, all have an impact. On a larger scale, reassessing current procurement practices and strategies can move the needle on Scope 3 emissions. Further sustainable procurement and decarbonization strategies can drive emissions reductions with effective supplier engagement and collaboration.

Decarbonization-as-a-Service

One of the major challenges for all organizations is how to reach net-zero emissions by addressing the carbon produced as a result of their supply chains. Proxima’s Decarbonization-As-A-Service combines a data-driven team with experienced supplier negotiation and alignment skills to accelerate to meet carbon zero supply chain goals faster.

Due to the complexities of supply chains, especially when there are many components to it, it can be difficult to know where exactly to start. This is where we at Proxima can help you, from initial report findings to meaningful actions. We support delivering and defining net-zero procurement strategies and setting Science-Based Targets. Data tools and deep category expertise, provide an initial view on crucial focus areas combined with future risk and costs.

Once the first steps are established, we work with existing suppliers and stakeholders to help refine the picture. Through pragmatic, balanced, and strategic approaches, we think about CO2 emissions as part of a broader value equation that falls into one of three buckets.

Intent Projects

Quick wins where CO2e gains may not be significant but can demonstrate strategy, intent, and progress.

Change Projects

A change of specification or supplier may lead to a lower-carbon alternative. This takes great supply market knowledge and will be a perpetual process with new evolving solutions.

Innovation and Collaboration Projects

Projects and solutions that don’t exist today but may do so in the future depending on changes in raw materials, waste removed and suppliers and competitors collaborating for the greater good.

Sustainable procurement

A huge part of a company’s sustainable impact is influenced by supply chain factors –  on average, over 80%. As sustainability continues to rise on the global agenda, especially in the case of the GHG protocol, this has meant that it has become a priority to put sustainable procurement first.

Proxima provides a Sustainable Procurement service that brings the expertise and know-how required to bring positive and lasting change.

Every organization is different, so we bring the following approaches to our sustainable procurement services. These are:

1 Expert insight – up-to-date and modern market developments

2 Assessment frameworks – help to benchmark and inform needs for sustainable procurement

3 Supply market – sourcing and change management expertise

related posts

Let’s talk.

If you are looking to drive purposeful and profitable change, get in touch.

Contact us