• FutureTrack

Scope 1, Scope 2, and Scope 3 Emissions

Updated: Jul 22

You have probably seen the terms Scope 1, Scope 2, and Scope 3 thrown around by now but, what do they mean and why are they used?




The scopes are used to categorise emissions when measuring a carbon footprint. They differentiate between indirect and direct emission sources, which helps to improve accuracy and transparency in the footprinting process, and enables organisations to set clear goals and targets.

Scope 1

Scope 1 emissions are the direct result of activities that occur from owned or controlled sources. Some examples of Scope 1 emission activities include:

  • Driving a company owned vehicle to and from clients

  • Burning coal onsite to generate electricity

  • Using diesel to power onsite generators

  • Fugitive emissions from air conditioning units

The key factor in determining Scope 1 emissions is the directness of emissions. Looking at the example above; driving a company owned vehicle to and from clients is a Scope 1 emission activity because the travel is a direct part of the company’s operations. On the other hand, driving your own car to and from your place of employment is not a Scope 1 emission activity, but is a Scope 3 activity. This is because employees travelling to and from work is not a direct aspect of the company’s operations, meaning emissions that occur from this activity are indirect.

Scope 2

Scope 2 emissions occur as a result of the consumption of energy and are usually understood as the purchases of electricity, heat, or steam directly from a third-party supplier. Above, we looked at burning coal onsite to generate electricity as a Scope 1 emission activity. If another organisation purchased their electricity from the site in the example, the purchasing organisation would be responsible for the share of emissions that their energy took to produce. However, these emissions would be considered Scope 2. This is because the purchasing organisation did not directly produce the emissions, but they are an indirect result of them purchasing the energy.

Scope 3

Scope 3 emissions cover all other indirect emissions that are not covered in Scope 2. These emissions are usually split into the following categories:


Purchased goods and services

  • Includes emissions from the extraction, production, and transportation of products purchased or acquired by your company. Products include both goods (tangible products) and services (intangible products).


Capital goods

  • Includes emissions from the extraction, production, and transportation of capital goods acquired or purchased by your company.


Fuel and energy-related activities

  • Includes emissions from the extraction, production, and transportation of fuels and energy acquired or purchased by your company.


Upstream transportation and distribution

  • Includes emissions from the transportation and distribution of your purchased goods and services by a third-party i.e., by vehicles not owned or operated by your organisation.


Waste generated in operations

  • Includes emissions from the third-party disposal and treatment of waste generated in your company’s owned or controlled operations, in the reporting year. This includes emissions from disposal of both solid waste and wastewater.


Business travel

  • Includes emissions from the transportation of employees for business purposes in vehicles not owned or operated by your organisation e.g., air travel, taxi travel etc. This does not include emissions from employees commuting to and from work.


Employee commuting

  • Includes all emissions from staff and employees commuting to and from work. It does not include emissions from company owned vehicles or emissions arising from business travel. 


Upstream leased assets

  • Includes emissions from the operations of leased assets. It is only relevant to organisations that operate leased assets that have not been accounted for in Scope 1 or 2.


Downstream transport and distribution

  • Includes emissions that occur from the transportation and distribution of your sold products by a third-party i.e., in vehicles or facilities not owned or operated by your organisation.


Processing of sold products

  • Includes emissions from the processing of sold products by downstream companies.


Use of sold products

  • Includes emissions from the downstream usage of sold products.


End-of-life treatment of sold products

  • Includes emissions from the disposal of sold products.


Downstream leased assets

  • Includes emissions from the operations of assets that your organisation leases to other entities. It is only relevant to organisations that lease assets that have not been accounted for in Scope 1 or 2. It is not relevant to organisations that use leased assets i.e., lessees.


Franchises

  • Includes emissions from the operations of franchises, if not already accounted for in Scope 1 and 2.


Investments

  • Includes emissions from the operations of investments, if not already accounted for in Scope 1 and 2.


In most reporting frameworks, it is not mandatory to report Scope 3 emissions. This is primarily because Scope 3 emissions are more difficult to accurately measure, report, and benchmark than Scope 1 and Scope 2 emissions. However, there is a lot of value in measuring some aspects of your Scope 3 emissions, as they can provide you with valuable insights into how your operations indirectly affect your environment.

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