The Greenhouse Gas (GHG) Protocol, the most widely used international carbon accounting framework, splits a company’s carbon footprint into three categories: scope 1, 2, and 3 emissions, covering direct operations, indirect energy use, and value chain activities.
Scope 1: Direct Emissions
Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the company.
Examples:
- Fuel burned in company-owned boilers, furnaces, or vehicles
- Process emissions from manufacturing (e.g. cement, chemicals)
- On-site refrigerants or fugitive emissions
These emissions happen on-site and are often the easiest to identify, but they may only represent a small share of the company’s overall footprint.
Scope 2: Indirect Energy Emissions
Scope 2 covers indirect emissions from the generation of purchased energy. This includes electricity, heating, cooling, or steam.
Even though the energy is produced off-site, it’s consumed by the organisation, so these emissions are part of your carbon responsibility.
Examples:
- Emissions from the power plant that supplies your office or factory
- Grid emissions related to electric vehicle charging
Scope 2 is usually calculated using:
- Location-based method (based on grid average emissions)
- Market-based method (based on actual energy contracts, e.g. renewables)
Scope 3: Value Chain Emissions
Scope 3 includes all other indirect emissions that occur in the value chain, both upstream and downstream. For most businesses, Scope 3 is by far the largest contributor to their carbon footprint.
Examples:
- Purchased goods and services
- Transport and distribution (inbound and outbound)
- Business travel and employee commuting
- Use and disposal of sold products
- Investments and franchising (for financial institutions)
Scope 3 is often the hardest to measure, but also the most critical to address for true decarbonisation.
Why Do the Scopes Matter?
Understanding and categorising emissions into scopes helps companies:
- Track carbon footprint accurately across the value chain
- Prioritise reduction strategies based on impact and feasibility
- Comply with reporting requirements like SECR (UK), CSRD (EU), and CDP
- Set science-aligned targets under frameworks like SBTi
- Avoid reputational risks and greenwashing claims
It also helps stakeholders, investors, customers, regulators, understand how seriously a business is addressing its climate impact.
Real-World Examples
| Company Type | Scope 1 (Direct) | Scope 2 (Energy) | Scope 3 (Value Chain) |
| Manufacturing | Boilers, factory vehicles | Purchased grid power | Raw materials, logistics, product use |
| Retail chain | Store refrigeration | Lighting and cooling | Packaging, delivery to customers, end-of-life waste |
| Software company | Fleet vehicles (if any) | Office electricity | Cloud services, remote work, commuting |
The Challenge of Scope 3
Scope 3 reporting is complex because it involves:
- Data from suppliers, partners, and customers
- Estimates and assumptions (e.g. spend-based models)
- Risk of double counting (especially in shared supply chains)
Still, Scope 3 often accounts for 70–90% of a company’s total emissions, so ignoring it is not an option.
How to Track All Three Scopes
- Start with Scope 1 and 2
- Use direct data (e.g. fuel usage, electricity bills)
- Identify hotspots in owned operations
- Map your Scope 3 categories
- Use GHG Protocol’s 15-category model
- Focus first on high-impact areas like purchased goods or logistics
- Use carbon accounting software
- Tools like ClearVUE.Zero streamline data collection and analysis across all scopes
- Enable real-time monitoring and scenario planning
- Engage your value chain
- Collaborate with suppliers to gather primary data
- Use procurement levers to drive upstream change
- Set targets and report progress
- Align with SBTi or CSRD standards
- Communicate your footprint transparently through ESG reports
Conclusion
Scope 1, 2, and 3 emissions aren’t just accounting categories, they represent a roadmap for real climate action. By understanding where your emissions lie, you can design a strategy that tackles both the visible and invisible parts of your carbon footprint.
Start by measuring. Then reduce what you can. Offset what you can’t. And always keep moving toward net zero.
Frequently Asked Questions (FAQ)
What are Scope 1, 2 and 3 emissions?
Scope 1, 2 and 3 are categories used to organise a company’s greenhouse gas emissions. They cover emissions from the organisation’s own operations, purchased energy and activities across its wider value chain.
What are Scope 1 emissions?
Scope 1 emissions come directly from sources that a company owns or controls. Examples may include fuel burned in company vehicles or emissions from equipment used on-site.
What are Scope 2 emissions?
Scope 2 emissions are linked to the energy a business purchases and uses. This can include electricity as well as heating or cooling supplied by another organisation.
What are Scope 3 emissions?
Scope 3 emissions come from activities within a company’s value chain. They may include emissions connected to purchased materials or transport, along with the use of products after they are sold.
Why is it important to measure all three scopes?
Measuring all three scopes gives a business a clearer view of its total carbon footprint. It can also help identify where reductions may have the greatest impact and support more transparent carbon reporting.
