Understanding scope 1, 2 and 3 greenhouse gas emissions

Blog 5 mins

Limiting greenhouse gas emissions is at the centre of global strategies to combat climate change. Efforts to measure and track the direct and indirect emissions of business operations are key to supporting these decarbonisation efforts and balancing compliance-focused with impact-focused actions.  Sustainability platforms such as Leaf can support businesses in tracking transportation network emissions and deliver valuable insights to strengthen a decarbonisation strategy. 

What are greenhouse gas emissions?

Greenhouse gasses (GHGs) let heat pass through our atmosphere and trap some close to the earth. They occur naturally, however increasing levels of human-induced GHG emissions are causing a warming ‘greenhouse’ effect. The main GHGs are carbon dioxide (79%), methane (11%), nitrous oxide (7%), and fluorinated gases (3%); each of these gasses have different impacts on warming, so we often use the generalisation ‘carbon emissions’ when referring to GHGs.

Through the 2015 Paris Agreement, world governments committed to limiting global temperature rises to well below 2°C above pre-industrial levels, with efforts to curb warming to 1.5°C. To achieve this, GHG emissions must halve by 2030 and drop to net zero by 2050, if not before. Emissions must reach their peak by 2025 and then begin to fall to meet this requirement, therefore we have limited time for action and every sector has a role to play. As a result, many organisations across sectors and markets have set science-based targets to cut emissions at scale and meet science-based net zero commitments by 2050 at the latest. A recent report analysing approaches to net zero found that 91% of global GDP is now captured by national government net-zero targets.

Identifying your value chain emissions and adopting systems to aggregate and analyse your emissions data will empower your business to meet net zero commitments, and support a proactive approach to aligning with increasingly mandatory climate regulations. The GHG Protocol has broken down GHG emissions into three categories in order to better understand their source, the key stakeholders and leverage points to mitigate them.

What are scope 1, 2 and 3 greenhouse gas emissions?

Many people have asked us what is the difference between scope 1, 2 and 3 greenhouse gas (GHG) emissions.

Scope 1: Direct emissions from operations that are either owner or controlled by the reporting company. This includes onsite fuel combustion such as gas boilers, building air-conditioning leaks and emissions from owned and leased company vehicles.

Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, or cooling consumed by the reporting company. These emissions are created during the production of the energy which is eventually used by your organisation.

Scope 3: All other indirect emissions within the reporting company’s value chain not included in scope 2, including both upstream and downstream emissions. For the majority of businesses, scope 3 emissions will be both the greatest share of your emissions, and the hardest to measure and mitigate.

Overview of GHG Protocol scopes and emissions across the value chain

Source: GHG Protocol  

It is worth noting that your businesses’ scope 3 emissions are someone else’s scope 1 and 2, so it is important to both avoid double counting your emissions, and recognise that the process of measuring, tracking and reducing your emissions is best done collaboratively with your value chain, making stakeholder engagement a key part of any GHG reduction strategy.

Why measure your GHG emissions?

Recent announcements from a myriad of international companies and conglomerates demonstrate how significant carbon footprints have become for businesses. For example, Mango has committed to reducing its scope 1 and 2 emissions by 80% and its scope 3 emissions by 35% by 2030. The company also hopes to achieve net zero emissions by 2050. While a new $250 million Fashion Climate Fund was launched at The Global Fashion Summit in Copenhagen June 2022, with the first $40 million being contributed by lead funders Lululemon, H&M Group, the H&M Foundation and The Schmidt Family Foundation.

Reporting on scope 1 and 2 emissions is a mandatory requirement for many businesses, with more than one third (702) of the world’s largest publicly traded companies making net zero commitments, an increase of almost 300 companies since 2019. Although reporting scope 3 emissions remains voluntary for many net zero targets, reporting emissions across the whole value chain is becoming harder to avoid. Organisations that develop a carbon reduction and reporting strategy that includes scope 1, 2 and 3 see multiple benefits, including:

  • Brand and reputational enhancement
  • Greater understanding of resource and climate-related risks in the value chain
  • Less wastage of energy and resources, potentially lowering costs
  • Identify emissions hotspots, weaknesses and leaders in your value chain

Find out more about how our sustainability platform Leaf can support your business in tracking carbon emissions

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