With the growing focus today on corporate carbon footprints, enterprise organizations and smaller businesses alike have a vested interest in understanding different emissions scope levels—and it’s not just about proving an organization’s energy output.
Forward-thinking business leaders must take time to understand the GHG Protocol and emissions scope levels as a way to gain better insights into concepts like science-based target setting, sustainability and regulatory compliance, climate change action, and even outside investor or stakeholder pressure.
As a decision maker, if you’re unsure about how to differentiate emissions scope levels, it will be even more difficult to formulate and especially implement strategies on reduction and compliance. As you work to assemble your company’s first greenhouse gas inventory, understanding the respective scopes can help you identify where emissions exist across your organization, procure decision-useful data, and develop concrete strategies for scaling in the future.
By using this guide as a starting point, you can develop your knowledge of Scope 1, 2, and 3 emissions as they relate to corporate responsibility.
The Importance of Understanding Emission Types
In a business context, there are many benefits to understanding and reporting on different types of energy or carbon emissions. These advantages might include greater transparency leading to increased consumer trust, being prepared for eventual regulatory compliance, and the ability to respond to stakeholder inquiries more quickly. Yet to capitalize on these perks, business leaders must first take ownership of where their organization stands.
According to the Anthesis Group, emissions reporting is at the very center of climate change efforts and is integral to public awareness. Anthesis, a global consultancy focused on energy analytics and climate strategy, asserts that—
“As companies, public bodies, and consumers continue to align with the global sustainable development agenda, it has become essential to ensure that carbon and GHG reduction strategies are in place, which first requires an understanding of those emissions.”
With these basic truths in mind, we can deduce that understanding scope emissions paves the way to more informed climate actions.
Taking responsibility for emissions can often look different based on the level of direct impact and obligation. In other words, reducing emissions is not always a clear-cut path. This is particularly true when someone else is paying your organization for services, as is the case for industries like real estate and manufacturing, or vice versa, when your company leases office space or flies on planes in the course of business travel. Even so, special circumstances don’t eliminate the need for developing an accurate emissions picture.
What are Scope 1 Emissions?
Scope 1 emissions are greenhouse gasses (GHG) that come from energy sources or other equipment or processes that an organization or enterprise owns and operates directly. Most often, Scope 1 sources include direct sources of energy and electricity, but they can also describe energy substances that are released when a process has basic warming potential.
For example, refrigerants in HVAC systems, directly owned transport fleets, fuel combustion furnaces, and even methane released from agriculture can be considered Scope 1 emissions.
Responsibilities and Requirements for Scope 1
The Environmental Protection Agency (EPA) offers guidance on how to understand, measure, and report Scope 1 emissions accurately. The EPA also offers different methods and mathematical processes for calculating emissions, including the Continuous Emissions Monitoring System (CEMS) and the Fuel Analysis Method.
Because Scope 1 emissions are owned and controlled by a specific organization or business, it’s important for responsible parties to take ownership. Creating steps for reduction, when and if necessary, is one of the major ways that businesses can start to meet their obligations around Scope 1 measurements.
What are Scope 2 Emissions?
Scope 2 emissions cover any indirect emissions associated with the purchase of other types of fuels. Typical sources can include steam, gas, electricity, and other cooling sources. Corporations may indirectly cause Scope 2 emissions when they purchase, consume, or produce other types of energy in the course of standard operations.
Responsibilities and Requirements for Scope 2
With Scope 2 emissions, responsibility often starts with understanding which sources are resulting in the most emissions. Electricity is a primary source, since it is so fundamental to day-to-day business activities.
If you are leasing office space or data center space, for example, you need to understand what part of the site’s emissions are being counted towards the facility owner’s Scope 2 emissions. This is in comparison to your own emissions as an offtaker of space and services.
How can businesses plan to use Scope 2 emissions sources more effectively? Asking questions around usability and responsibility is critical to long-term energy efficiency. If it’s feasible to reduce these sources, reduction is always encouraged.
What are Scope 3 Emissions?
Further down the energy chain, Scope 3 emissions include any “upstream or downstream” activities that are associated with the business’ indirect holdings, supply chain, product lifecycle, and operational sources. In contrast to Scope 1 emissions, Scope 3 emissions are not directly owned by the organization in question.
Notably, Scope 3 emissions are embodied in sources including purchased goods and products, energy consumption associated with business travel, and other indirect sources that don’t fall under the umbrellas of Scope 1 or 2. Even so, organizations are still responsible for the sources behind Scope 3 emissions and may be held accountable for them in the long run.
Responsibilities and Requirements for Scope 3
With Scope 3 emissions, transparency is key—both on the part of the organization and on the corresponding individual or service provider. Since these emissions are distant and harder to track, there is a high level of debate (and even some controversy) on how heavily these emissions can and will be regulated globally.
Since an international consensus has yet to be determined, the primary responsibility for Scope 3 emissions is often making better climate-focused decisions as much as it is possible or feasible to do so. Enterprises should always:
- Ask the right questions of their suppliers
- Make energy-conscious decisions throughout the product life cycle
- Take an active role in energy reduction at various levels of the organization
- Inform and educate employees about energy-conscious decisions, particularly when traveling or engaging with other businesses
How Can You Understand Your Carbon Emissions Profile?
Understanding your company’s carbon emissions profile requires a dedication to making positive, future-forward changes. Technological or digital solutions such as carbon accounting software enable proactive carbon management on an ongoing basis. Additionally, organizations can benefit from automation through the lens of a smarter and cleaner energy procurement strategy.
Not only does accurate carbon accounting improve visibility, but it also fosters better compliance, consumer trust, and stakeholder confidence.
With carbon accounting software, corporations have the ability to achieve more reliable data for emissions reporting with respect to the Environmental, Social, and Governance (ESG) criteria and for sustainability reporting. Accurate emissions data naturally lends itself to more decisive long-term actions, which may directly or indirectly impact local, regional, and international climate protocols.
Reduce Carbon Emissions with Cleartrace
For businesses that want to get a better handle on different types of carbon emissions levels, it’s crucial to develop comprehensive strategies and protocols that report accurately. Carbon accounting software creates a clearer picture of emissions so that organizations can take a proactive, responsible approach to managing their energy usage and output.
Cleartrace helps enterprises take control of their emissions profiles. At all levels, you can report more accurately and take decisive steps to decarbonization.