What Are Scope 1, 2 And 3 Emissions?
More and more companies and organizations are now dedicating their efforts to becoming more conscious and sustainable. From performing Life Cycle Assessments (LCA) and taking steps towards creating a more sustainable work environment in the office to reducing their carbon footprint, corporate social responsibility is at the top of the eco-centered checklist. That’s hardly a surprise given that 60% of investors are more likely to buy stock in a company that is perceived as sustainable, versus one that is not. Customers are also more than willing to pay more for sustainable goods from a brand with deep care for the environment.
One of the most significant ways to reinforce your company’s Sustainable Development Goals (SDGs) is by closely monitoring and reducing its carbon emissions. After all, carbon emissions are responsible for 81% of overall GHG emissions. However, it’s important to understand the different emission scopes 1, 2 & 3 in order to find the best way to reach carbon-neutral status and gain a sustainable competitive advantage.
What are scope 1, 2, and 3 emissions?
According to the leading GHG Protocol corporate standard, greenhouse gas emissions are classified into three scopes. Scope 1 and 2 are mandatory to report. Scope 3 is at the discretion of each individual company because it’s the hardest to monitor.
Scope 1 emissions are the direct result of each individual company’s activities. These emissions are released into the atmosphere through fuel combustion in boilers, furnaces, vehicles, company facilities, etc. It’s important to point out that all fuels that actively release GHG emissions must be included in Scope 1.
Fugitive emissions also adhere to this category. Companies should monitor and report any leaks from greenhouse gases (eg. air conditioning or refrigeration) as they are a thousand times more dangerous than CO2 emissions. These pollutants damage the ozone layer present in the atmosphere creating an even bigger ozone hole.
Lastly, Process emissions that occur during processes, and on-site manufacturing are also classified as Scope 1. The report should include information about the exact CO2 from chemicals, factory fumes, etc.
Scope 2 emissions are indirect and include the consumption of purchased electricity, steam, heat, and cooling. These indirect emissions from electricity purchased and used by the organization are pretty easy to monitor and report either by calculating them from your local power grid or by looking at the contracts you have with your electric utilities.
Scope 3 emissions are the hardest to monitor and report due to the sheer number of partners in the value chain. This specific category includes all indirect upstream and downstream emissions that are not owned by the company. So in other words, these emissions are linked to the company's operations. Some examples are business travel, employee commuting, waste, and purchases of production-related products (eg. materials) as well as non-production-related products (eg. office furniture, machines).
Scope 3 emissions also include transportation and distribution as well as buildings, vehicles, machinery, and all other capital goods that are used by the company to manufacture a product. Then we have investments, "in-use" products that are sold to the consumers, and "end-of-life" treatment.
Monitoring and measuring scope 1, 2, and 3 emissions
While it may seem a bit challenging at first, businesses that monitor and measure scope 1, 2, and 3 emissions are not only able to identify the biggest “hot spots” in their supply chains but also focus on achieving the most meaningful reductions. What’s more, transparency provides greater clarity to investors and consumers. Let’s not forget that being sustainable also increases productivity by 22% and profitability by 27% according to numerous studies.