What is carbon footprint and
Scopes 1, 2, and 3

From brushing your teeth to cooking your lunch to flying abroad on holidays – your everyday actions are having an impact on the environment. The most straightforward way to measure that impact is carbon footprint. A carbon footprint can be comprised of many variables, but it boils down to how many emissions are generated by any given activity. 

Individuals, companies, products, and even industries have carbon footprints. Your personal footprint can include everything from your daily commute, your food, your clothes, your travel, your home, etc. Carbon footprint can be derived from virtually any day-to-day activity. For companies, the carbon footprint is generated by its daily operations, buildings, energy use, production activities, business travel, raw materials sourcing, packaging and shipping, and more. The larger the footprint, the bigger impact on the environment. The first step in taking climate action is understanding what your carbon footprint is, highlighting which activities produce the most emissions. The next step is reducing the footprint – switching to renewable energy, reducing your travel or finding cleaner means of commuting, reducing food waste and consumerism, to name a few. Finally, the unavoidable emissions can be offset by purchasing carbon credit for certified emissions reduction projects. 

What are Scopes 1, 2, and 3

Scope 1, 2, and 3 are methods of categorizing the various types of carbon emissions produced by a company in its own operations and throughout its value chain. Scopes were initially used in the Green House Gas Protocol of 2001, and they are still the foundation for required GHG reporting today.

Source: esganalytics.io

Scope 1: Direct emissions from company-owned and controlled resources. 

These emissions are divided into four categories:

  1. Stationary combustion – fuels and heating sources that produce greenhouse gas emissions.
  2. Mobile combustion – greenhouse gas emissions from company vehicles (owned or controlled).
  3. Fugitive emissions – emission leaks from sources such as refrigeration and air conditioning units.
  4. Process emissions – emissions from industrial processes and onsite manufacturing.

Scope 2: Indirect emissions are those caused by the generation of purchased energy from a utility provider. In other words, all greenhouse gas emissions released into the atmosphere as a result of the use of purchased electricity, steam, heat, and cooling.

Scope 3: All indirect emissions not included in scope 2 that occur in the company’s value chain, including both upstream and downstream emissions. Companies focusing on reducing Scope 3 emissions focus on reducing business travel, encouraging employees to work from home, using climate-friendly transportation throughout the business, and reducing waste. Upstream activities include business travel, including employee commuting, waste generated, purchased goods and services, transportation and distribution, capital goods, fuel and energy-related activities. Downstream activities cover investments, franchises, leased assets, used sold products and end-of-life treatment.

Scopes 1 and 2 emissions are covered within the GHG protocol and can be calculated in a straightforward manner, using accounting data such as utility bills, procurement documents, etc. Scope 3 emissions oftentimes account for the majority of a company’s total greenhouse gas emissions, are more complex to measure, but all the more important. . While Scope 1 and 2 are mandated reporting categories within the GHG protocol, Scope 3 remains still a voluntary reporting category, due to the fact that a significant proportion of these emissions come from sources that the company does not directly own or control. However, a company’s carbon accounting is not complete until it has totalled all of its emissions across its entire value chain. 

When companies declare that they have achieved carbon neutrality goals, the truth is that this impressive feat was met by switching to renewable energy and purchasing carbon offsets for their Scope 1 and 2 emissions only. These efforts are laudable, but they are insufficient. Scope 3 accounts for 85 to 90% of most companies’ emissions. This is true whether you are a product manufacturer, a service provider, or one of the many ubiquitous and expanding digital marketplaces. Scope 3 is where companies’ carbon footprints continue to be polluting and where delving into the specifics of a company’s business model can reveal opportunities to significantly reduce environmental impact and operational costs at the same time.