Let’s start with greenhouse gases
You may have heard of Scope 1, 2, and 3 emissions. What are they and why are they important?
Let’s start with the emissions themselves: greenhouse gases. The most common greenhouse gases (GHGs) are water vapour (H2O), carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and ozone (O3). The terms greenhouse gases (GHG), carbon dioxide and carbon dioxide equivalent (CO2e) are often used interchangeably, sometimes shortened to just ‘carbon’ as in ‘carbon footprint’.

The GHG Protocol
A company’s emissions are classified into Scope 1, 2, and 3 based on where they originate. This terminology is defined in the Greenhouse Gas Protocol, which provides standards and tools that help track progress toward climate goals. The GHG Protocol was created in the late 1990s when the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) identified the need for an international standard for corporate greenhouse gas accounting and reporting.

The Scopes
Scope 1 considers direct emissions generated by a company’s business activities, while Scope 2 covers indirect emissions from purchased energy, and finally, Scope 3 covers indirect emissions within the value chain. It is vital for businesses to understand these scopes in order to identify the risks and opportunities associated with them, come up with strategies to reduce their GHG emissions and track their progress.
Scope 1
Scope 1 emissions are the direct GHG emissions from a company’s business activities. These include the generation of electricity, heat and steam, the manufacturing of chemicals, waste processing, transportation using company owned vehicles and fugitive emissions through equipment leaks.
Scope 2
Scope 2 emissions are the indirect emissions generated by the production of purchased energy. This includes purchased heating, electricity, steam, and cooling.
Scope 3
Scope 3 emissions are all the other indirect emissions occurring in a company’s value chain, including upstream and downstream activities. These consist of all the emissions which are not included in Scopes 1 and 2 and are a consequence of the company’s business activities, including sources that the company does not own or control. For a business which is not directly burning fossil fuels or purchasing a great amount of electricity, Scope 3 emissions can account for over 90% of a company’s footprint.
The categories of Scope 3 upstream emissions are:
1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities not included in Scope 1 or Scope 2
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
Categories of Scope 3 downstream emissions are:
9. Downstream transportation and distribution
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products
13. Downstream leased assets
14. Franchises
15. Investments
Scope 3 consists of the product life cycle emissions from cradle to grave, inclusive of all emissions from raw materials, manufacturing, transport, storage, sale, use and disposal.
Why is it important to measure our Scope 3 emissions?
GHG standards are important tools which help identify emission reduction opportunities, track performance and engage with all stakeholders on a corporate level. Businesses have found that developing corporate value chain and product GHG inventories offer a positive return on investment, along with helping companies to:
- Identify and understand associated risks and opportunities with Scope 3 emissions
- Look for reduction opportunities through target setting and performance tracking
- Engage with value chain stakeholders in GHG management and sustainability
- Improve stakeholder information and corporate governance through public reporting
Value chain GHG emissions present businesses with great risks, but even greater opportunities. By choosing a consistent, integrated approach towards their operations, businesses should seek to minimise their Scope 3 emissions. The GHG framework allows businesses to identify ‘hot spots’ or activities which generate the most emissions in their value chains and pivot them towards strategic thinking which encourages their reduction.
Furthermore, reaching net zero requires companies to reduce all emissions as much as possible. Reducing Scope 3 upstream and downstream emissions requires extensive stakeholder engagement and cooperation — indeed, working tirelessly on a shared goal.
Businesses operate on a global scale and these value chains transcend national borders. In order to reduce the impact of climate change, businesses can play a key role by incorporating the Scopes and GHG standards into their practices. Through meaningful engagement with these standards, we, as businesses, can take a crucial step in the right direction to combat climate change.
Would you like help measuring your organisation’s emissions and setting reduction targets? Get in touch!