As organizations continue to pursue sustainable business practices and strive to mitigate climate impacts, understanding and managing greenhouse gas (GHG) emissions has become an integral part of corporate sustainability and environmental, social, and governance (ESG) strategies. Across the globe and in the U.S., there are various regulations and legislations coming down, such as the SEC (Securities & Exchange Commission) proposal for all U.S. publicly traded companies to disclose their carbon emissions and information about climate risks that their companies face. These regulations broadly indicate that organizations must transparently report their Scope 1, 2, and 3 emissions and be held accountable for any misinformation or greenwashing.
In this article, we provide an overview of scopes 1, 2, and 3 emissions to develop a basis of knowledge on carbon emissions and how they are either directly or indirectly linked to an organization. As part of our series on corporate emissions, you can also view our deep dive article on Scope 3 Emissions: Overcoming Challenges and Misconceptions.
What are scopes 1, 2, and 3 emissions?
Scope 1, 2, and 3 emissions are categories within the Greenhouse Gas (GHG) Protocol that help organizations measure, report, and reduce their carbon footprint. These different scopes measure both direct and indirect emissions that are associated with organizations' value chain and operational practices. Understanding and addressing these emissions is crucial for organizations looking to reduce their environmental impact and align with ESG (Environmental, Social, and Governance) standards.
Scope 1: Direct Emissions
Scope 1 emissions are GHG emissions that are directly emitted from sources owned or controlled by an organization. Examples include organization-owned vehicles, generators, and other owned sources. To reduce Scope 1 emissions, organizations can implement measures like energy efficiency improvements, transitioning to renewable energy, and employing cleaner transportation alternatives.
Scope 2: Indirect Emissions from Purchase Energy
Scope 2 emissions are GHG emissions that are indirectly emitted by the organization from the generation of purchased electricity, heat, cooling or steam. Though these are not owned by the organization, they are consumed and therefore account as a part of the organization’s emission footprint. That’s because these emissions happen off-site at power or energy plants but are attributed to the organization’s energy consumption. To lower Scope 2 emissions, organizations can focus on energy efficiency, sourcing renewable energy, and engaging in power purchase agreements (PPAs) with green energy providers.
Scope 3: Indirect Emissions from the Value Chain
Outlined in both the “Upstream activities” and “Downstream activities” of the figure above, scope 3 emissions are all other indirect emissions. By far, scope 3 emissions are typically the largest portion of a organization’s overall emission profile. Examples of scope 3 emissions include fuel, transportation of goods, employee commuting, use of sold products, end-of-life of sold products, and leased assets to name a few. Given their impact compared to scope 1 & 2 emissions, addressing scope 3 emissions is essential for meaningful carbon reduction. Strategies to mitigate Scope 3 emissions include supplier engagement, lifecycle assessments, promoting circular economy practices, and encouraging remote work for employees.
As a rule of thumb, an organization’s scope 1 emissions are often another’s scope 3 emissions and vice versa. For example, a company might hold a contract for shipping products to vendors. In this case, the emissions from transporting the product from the production company would be accounted as their scope 3 emissions, while the emissions of transporting the product from the shipping company would be their scope 1 emissions.
To effectively manage their emissions, organizations should set ambitious, yet achievable reduction targets based on industry standards, aligned with the global goals to limit global warming to well below 2°C above pre-industrial levels. Science-based targets can provide a robust framework for determining the level of emissions reduction necessary for an organization based on their industry and operational complexity. By embracing these targets, companies can contribute to a sustainable future and meet growing expectations from investors, customers, and regulators.
Professional Help
Data gathering, measuring, managing, reporting, and strategizing mitigation plans of an organization’s emissions can be a challenging task due to the broad set of operational activities and stakeholders involved. As such, many organizations seek the assistance of experts to help with their emission reduction goals. Reach out to Earthara to discuss your emission reduction objectives.
Sources & References
[2] https://www.epa.gov/climateleadership/scope-1-and-scope-2-inventory-guidance
Diagram : Scopes 1, 2, and 3 Emissions | Source: EPA Scope 1 and 2 Inventory Guidance