Many governments are taking steps to reduce Greenhouse Gas (GHG) emissions through national policies that include the introduction of emissions trading programs, voluntary programs, carbon or energy taxes, and regulations and standards on energy efficiency and emissions. As a result, companies must be able to understand and manage their GHG emissions if they are to ensure long-term success in a competitive business environment, and to be prepared for future national or regional climate policies.
Scope 1, 2 and 3 is a way of categorizing the different kinds of carbon emissions a company creates in its own operations and its wider value chain. The term first appeared in the Green House Gas Protocol of 2001, and today scopes are the basis for mandatory GHG reporting.
They are direct GHG emissions from operations that are owned or controlled by a company, for example, emissions from running boilers and vehicles. It is divided into four categories:
These are indirect emissions from the generation of purchased energy from a utility provider. This includes all GHG emissions released into the atmosphere, from the consumption of purchased electricity, steam, heat and cooling. For most organizations, electricity will be the unique source of scope 2 emissions.
These are all other indirect emissions (not included in scope 2) that occur in the value chain of a company. Emissions-wise, scope 3 is nearly always the big one. GHG protocol divides scope 3 emissions into upstream and downstream emissions- further divided into a total of 15 categories. The distinction is based on the financial transactions of the reporting company.
A. Upstream emissions are indirect GHG emissions related to purchased or acquired goods and services. These include:
B. Downstream emissions are indirect GHG emissions related to sold goods and services. These include the following categories
Scope 1 and 2 are mandatory to report, whereas scope 3 is voluntary and the hardest to monitor. However, companies succeeding in reporting all three scopes will gain a sustainable competitive advantage. If our goal is simply to maintain a correct inventory of emissions, then, theoretically, that could be done by knowing the scope 1 and scope 2 of everyone out there emitting greenhouse gasses. But real and meaningful climate action needs more work; businesses need to understand and reduce their overall impact. Scope 3 emissions are important for two reasons- Firstly, the impact of indirect emissions may outweigh the impact of the fuel a company burns and the electricity it uses. Secondly, scope 3 emissions are an acknowledgment of our shared responsibility; and our choices as a consumer, a corporation, or a public entity is completely entwined with others
Together the three scopes provide a comprehensive accounting framework for managing and reducing direct and indirect emissions. With a comprehensive measurement and mitigation plan, a company can benefit from efficiency gains throughout the value chain.
Managing carbon emissions is time-consuming, challenging and deserves close expertise. TraceSafe offers unique tools to measure, reduce and offset your carbon emissions, per scope. Start your journey towards net zero emissions with TraceSafe