In the contemporary business landscape, climate is no longer a niche concern but a strategic and long-term priority for many industries. The Greenhouse Gas (GHG) Protocol from the World Resources Institute provides the most widely used international accounting tool for government and business leaders to understand, quantify, and manage GHG emissions.
Understanding the distinction between Scopes 1, 2 and 3 under the GHG Protocol is crucial for businesses trying to calculate and report their carbon footprint. We provide below a simple explanation of the three emissions scopes and a general step-by-step guide for implementing the GHG Protocol in your business:
Scope 1: Direct Emissions
Definition: Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the company. These include emissions from combustion in owned or controlled boilers, furnaces, vehicles, and emissions from chemical production in owned or controlled process equipment.
Examples:
- Fuel combustion from company-owned vehicles
- On-site manufacturing emissions
- Fugitive emissions from refrigerants or other equipment
Business Implications: For businesses, managing Scope 1 emissions involves taking direct actions to reduce emissions from their own operations. This could include transitioning to energy-efficient technologies, optimizing fuel use, or investing in renewable energy sources. Reporting Scope 1 emissions is often the starting point for companies as they have the most control over these emissions.
Scope 2: Indirect Emissions from Energy
Definition: Scope 2 emissions are indirect GHG emissions from the consumption of purchased electricity, steam, heating, and cooling. These emissions occur at the facility where the energy is generated but are accounted for in the reporting company’s GHG inventory because they result from the company’s energy use.
Examples:
- Electricity purchased from the grid
- District heating and cooling
Business Implications: Addressing Scope 2 emissions typically involves improving energy efficiency and sourcing energy from renewable sources. Businesses can invest in energy-efficient appliances, lighting, and machinery, or purchase renewable energy credits (RECs) to offset their electricity use. Scope 2 emissions are crucial for businesses to manage as they often constitute a significant portion of a company’s carbon footprint.
Scope 3: Other Indirect Emissions
Definition: Scope 3 emissions are all other indirect emissions that occur in a company’s value chain. These emissions are a consequence of the company’s activities but occur from sources not owned or directly controlled by the company.
Examples:
- Purchased goods and services
- Business travel and employee commuting
- Waste disposal
- Use of sold products
- Transportation and distribution (upstream and downstream)
Business Implications: Scope 3 emissions are often the largest source of emissions for companies, but they are also the most challenging to measure and manage due to their complexity and the involvement of external partners. Companies need to collaborate with suppliers, customers, and other stakeholders to gather data and implement reduction strategies. This might involve redesigning products for lower emissions, optimizing logistics, or engaging in sustainable procurement practices.
Applying the Scopes to Business
Understanding and managing emissions across all three scopes is essential for businesses aiming to achieve comprehensive carbon management and sustainability goals. Here’s how companies can approach this:
- Inventory and Baseline: Start by conducting a comprehensive GHG inventory to establish a baseline for all three scopes. This will help identify major sources of emissions and prioritize reduction efforts.
- Set Reduction Targets: Based on the inventory, set ambitious yet achievable targets for emissions reductions across all scopes. Consider adopting science-based targets to align with global climate goals.
- Implement Strategies: Develop and implement strategies for reducing emissions in each scope. This could involve operational changes, technology investments, supply chain engagement, and product innovation.
- Engage Stakeholders: Collaborate with internal and external stakeholders, including employees, suppliers, and customers, to drive emissions reductions. Transparency and communication are key to fostering a culture of sustainability.
- Monitor and Report: Regularly monitor emissions performance and report progress to stakeholders. Utilize frameworks like the GHG Protocol, CDP, and TCFD for consistent and credible reporting.
Need help starting your GHG inventory and monitoring your emissions? Or would your business benefit from automating the monitoring and calculation of emissions? Contact us today and see how our AI-powered software can help!