Understanding Scope 1, 2 and 3

How it can help businesses with their carbon reduction strategy

Melanie Catelo

Melanie Catelo

03 May, 2023

Understanding Scope 1, 2 and 3

Climate change is a pressing issue that businesses need to address, and reducing their carbon footprint is a critical component of this effort. To do this effectively, businesses need to understand and track their greenhouse gas (GHG) emissions, which are categorized into three scopes: scope 1, scope 2, and scope 3. Understanding these scopes is essential for businesses that want to reduce their carbon footprint and contribute to a more sustainable future.

What are scope 1, 2 and 3 emissions?

Scope 1

emissions are direct GHG emissions that occur from sources that are owned or controlled by a business, such as emissions from a company's fleet of vehicles, industrial processes, or heating and cooling systems.

Scope 2

emissions are indirect GHG emissions from the consumption of purchased electricity, heat, or steam. Finally,

scope 3

emissions are all other indirect GHG emissions that occur in a company's value chain, including emissions from the production of purchased goods, transportation, and waste disposal.

Understanding these scopes is crucial because they represent different sources of GHG emissions and require different strategies to address them. For instance, reducing scope 1 emissions can be achieved through more efficient processes or the adoption of renewable energy, while reducing scope 3 emissions may require collaboration with suppliers to reduce emissions in the value chain.

The Intergovernmental Panel on Climate Change (IPCC) reminds us that global GHG emissions need to be reduced by at least 45% by 2030 and reach net zero emissions by 2050 to limit the global temperature increase to 1.5°C. This requires a concerted effort from all sectors, including businesses.

Source: WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (pdf)

Source: WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (pdf)

How can businesses use scope 1, 2 and 3?

To reduce their carbon footprint, businesses need to take a holistic approach that addresses all three scopes of emissions. Here are some steps that businesses can take to reduce their carbon footprint:

  • To reduce scope 1 emissions, businesses can implement energy-efficient measures such as upgrading their heating and cooling systems or installing renewable energy sources such as solar panels or wind turbines. Companies can also switch to alternative fuels such as biofuels or hydrogen.

  • Scope 2 emissions can be reduced by purchasing renewable energy or installing on-site renewable energy sources such as solar panels. Many utility companies also offer green energy tariffs, which allow businesses to purchase electricity generated from renewable sources.

  • Scope 3 emissions are more complex. Businesses can work with their suppliers to reduce emissions in the value chain. This can be achieved through collaboration and the adoption of sustainability measures such as reducing waste, improving energy efficiency, and using sustainable materials.

Why should businesses measure scope 3 emissions?

Measuring Scope 3 emissions has several benefits. Typically, for most companies, GHG emissions and cost-saving opportunities occur outside their own operations. Using Scope 3 emissions data, organisations can:

  • Analyse their supply chain to identify emission hotspots

  • Identify supply chain risks related to resources and energy

  • Determine which suppliers are leaders in terms of sustainability performance and which are late adopters

  • Assess their supply chain for energy efficiency and cost reduction opportunities

  • Encourage suppliers to implement sustainability initiatives

  • Enhance their product's energy efficiency

  • Educate employees so that they can reduce the emissions they generate from travel and commuting for business

How we simplify the process

To make it easier for businesses to take action, we help with carbon accounting and offer a range of projects that remove carbon, as part of their reduction strategy, while simultaneously restoring biodiversity, and benefiting communities most impacted by climate change. We use a rigorous assessment methodology that evaluates the impact of these projects, ensuring that they are science-backed and of the highest quality.

Reducing GHG emissions is essential to mitigating the impacts of climate change, and businesses have a crucial role to play in this effort. Understanding scopes 1, 2, and 3 is essential for businesses that

want to reduce their carbon footprint. By understanding these categories of emissions, businesses can take targeted actions to reduce their carbon footprint and contribute to a more sustainable future.