In every field of work, technical jargon causes confusion and discussion among outsiders - why can’t we stick to simple terms? Well, let us explain…
In this Academy article, we dive deeper into the three emission scopes: 1, 2 and 3. As a part of environmental reporting, over 95% of Fortune 500 companies use the Greenhouse Gas Protocol (GHG Protocol) as their ‘golden standard’. The GHG Protocol was developed by the World Research Institute in 2001 and breaks down greenhouse gas emissions into three scopes.
So what do these scopes entail, and why should a distinction even be made? Aren’t all emissions equally important? In the case of the GHG Protocol, it’s not a matter of different importance that drives the need to classify emissions. In this case, it’s rather the fact that emissions have different bases of origin. In the following paragraphs, we will break down scope 1, 2 and 3 and dissect their origin.
Scope 1 emissions are defined as direct emissions that a company generates at a firm level. These emissions are direct GHG emissions from sources owned by the company. Some examples include stationary combustion (e.g. fuel for generators), mobile combustion (e.g. fuel in company vehicles), building onsite energy use, fugitive emissions or process emissions. In short: everything the firm burns and consumes that directly produces GHG emissions
Scope 2 covers indirect emissions from purchased energy. Although these emissions are originally generated elsewhere, they are still part of a company's emission responsibility and must be counted as such. In the end, if the company wouldn’t consume the energy, it would never been produced in the first place. Some examples of scope 2 emissions are purchased electricity, heating or cooling. These emissions are easily abated and can for instance be reduced by opting for more sustainable energy sources.
Scope 3 covers all indirect emissions in the value chain. For most companies, their carbon footprint consists largely of scope 3 emissions - often >90%. Did you know that for Nike, their scope 3 impact accounts for over 98% of total emissions?
These emissions are a consequence of the company’s activities but occur from non owned sources. These include emissions generated in the supply chain, such as purchased material, emissions from business travel or waste generated in operations.
Currently, EU regulations under CSRD require listed companies, banks, insurance companies and public-interest entities to report scope 1 & 2 emissions. So then why is it important to measure scope 3 emissions as well? In many cases, as we see with Nike, emissions along the value chain represent the largest GHG impact.
Coolset helps companies gain insights in their emissions - including scopes 1, 2 and 3 with minimal input by leveraging the latest climate science and machine learning. Eager to learn more? Request a demo and see for yourself how we help our clients make an impact.