What are Scope 1, 2, and 3 emissions, and why is Scope 3 often ignored even though it's so bloody important?

Why bother to make this kind of distinction? Simply put, it’s a structure that fits every organisation, no matter what business they’re in.

The logical division of these emissions was established by the GHG Protocol. These three scopes help companies trace their environmental impact all the way back to the root of their supply chain.

Let’s examine the three scopes and how they’re tracked.

Scope 1 - Caused Directly By The Company

Scope 1 emissions are caused by chemical reactions undertaken by the company itself. This includes everything from running a boiler, to petrol and diesel use in vehicles, to anything that needs to be incinerated or otherwise disposed of in a way that impacts the environment.

Believe it or not, Scope 1 emissions are often the smallest of the three emissions figures for modern companies. Outside of shipping firms, utility providers, travel companies (particularly cruise ships), and the like, burning fuel and producing a large amount of waste products isn’t the primary activity of most businesses.

Scope 2 - Caused By Services On Behalf Of The Company

Scope 2 emissions are caused by the services that keep the company running. For example, the energy production that keeps the lights on and the computers running. Third party delivery and shipping also falls into this category.

For most small and medium sized businesses, Scope 2 emissions are greater than Scope 1. They’re rarely in a position to generate their own electricity, they often rely heavily on external shipping services, and most work from home impact outside of home office heating falls into Scope 2.

However, Scopes 1 and 2 combined aren’t the main obstacle to carbon neutral goals or national net zero campaigns. That’s because the next category dwarfs them both.

Scope 3 - Caused By The Company Indirectly

Between 50% and 70% of most corporate emissions are the indirect result of material and energy needs farther up or down the value chain.

Up the chain we’re talking about raw materials mining and creation, as well as chemical compounds and energy used in manufacturing. Down the chain, the company needs to include emissions that their products and services cause once in the hands of an end user. That may include computing energy consumed (a company’s digital carbon footprint can account for 4% or more of their emissions), the environmental cost of battery replacement, and the end of life impact of product disposal.

This might seem to be a simple concept, but indirect causation is a massive rabbit hole. For example, a drop shipper needs to track carbon usage from production (mining / smelting / crafting energy and chemical impact), international freight (fuel), local transport (fuel), packaging (paper / plastic), and product lifecycle emissions. That’s for a single product that the business never actually touches. The complexity of an entire product catalogue can be daunting, if the company doesn’t want to rely on guesswork.

This is why a lot of companies resort to using third party GHG auditing. Smaller firms might not have the time or expertise to conduct a proper audit, and large companies don’t want to make any mistakes, given the complexity of their operations. Anyone seeking a net zero or climate positive declaration needs to make sure that their reporting is precise.

Net Zero Includes All Three Scopes

Committing to net zero emissions means that a company needs to reduce or offset the environmental impact of all three emission scopes. Calculations are done in such a way that only the corporation’s share or slice of Scope 3 emissions are ‘charged’ to them, so there are no exaggerations or misattributions.

The GHG accounting method is one of the most reliable and accepted emissions tracking standards in the world today. If a company claims to be ‘carbon neutral’ or ‘climate positive’ but refuses to share their GHG accounting data, you have every right to be suspicious. Less reputable methods will only use Scope 1 and Scope 2 emissions in their claims, completely ignoring supply chain and end of life environmental impacts.

Green Energy Solutions Are Needed Throughout The Value Chain

Because Scope 2 and 3 emissions aren’t centralised, and because companies are quite limited on decisions that alter their Scope 3 impact, the best way to lower emissions numbers is a combination of local renewable energy production and giving patronage to suppliers using green energy solutions.

The first strategy is location dependent. Using Europe as a canvas, the southern areas will have more effective options: Up to five peak solar hours a day, on and offshore wind, and even tidal (at least at a governmental level). Northern areas can leverage around three peak solar hours, geothermal and wind power.

By incorporating efficient green energy solutions and choosing vendors who do the same (including energy providers), corporations can dramatically reduce their Scope 1, 2, and 3 emissions. Alongside internal efficiency measures, green energy solutions are the best way to achieve a carbon neutral position.

Takeaways

GHG Emission calculations can be complex. The main things to note are:

• Scope 3 emissions are the hardest to track, and the hardest to influence if a problem is discovered.
• Concentrate on what you have the most control over: Internal efficiency, alternative energy generation, and vendor/service provider selection.
• Collaborate and use collective bargaining. Offer to work with your suppliers to improve both**_ _**of your emissions figures. Collaborate with neighbouring businesses to reach an economy of scale for installing green energy solutions.
• Offer work from home solutions to reduce the need for travel, energy consumption, and hardware investments that are production intensive use rare earth elements.
• Solar has a fast break even point, wind is an excellent long term investment. Both of these green energy solutions are even better during an energy crisis, when prices are high.

As to that last point, 2021 and 2022 saw record gas and electricity price jumps. So in addition to improving your Scope 1, 2, and 3 emissions figures, wind and solar investment can have a dramatic impact on your bottom line. It’s a win-win.