The three “Scopes” – one of the most important distinctions in carbon accounting, and probably the least intuitive (initially, anyway). In this article we’ll explain the Scopes in simple terms and run through an example business.

What are Scope 1, 2, and 3 emissions?

The Scopes are based on the Greenhouse Gas Protocol – the gold standard methodology for carbon footprinting – and divide emissions into three categories:

• Scope 1: These are your business’s direct emissions. If emissions physically happen at a site or from a vehicle you directly own or control, it’s Scope 1.
• Scope 2: These are the emissions from the energy you buy. You don’t own or control the power plant, but it’s producing electricity for your business.
• Scope 3: And then there’s Scope 3, the category for everything else. It covers all the emissions linked to your business but happening outside of your control, up and down your value chain: your suppliers, your employees and your customers.

Simply put, the Scopes are just a way for businesses to split up the emissions they are responsible for when completing a carbon footprint. You could replace the word “Scope” with “type” or “bucket”. As more businesses look to measure and reduce their emissions, the Scopes provide a consistent methodology for identifying which emissions are relevant and how to categorise them.

Until recent years, businesses focused on measuring Scope 1 and 2 only – emissions from things you own or control (or the electricity you buy) are relatively easy to measure. However, for most sectors, Scope 3 is the largest contributor – not surprising, given the wide range of sources that it covers! This means that all three Scopes are now measured as standard for any carbon footprint. So let’s dive into each in detail.

What are Scope 1 emissions?

Scope 1 is fairly straightforward, really—these are the emissions that come directly from any assets that you own or control.

Imagine you owned a pair of googles which, when worn, made greenhouse gas emissions visible to the eye. Now imagine you wear these into work the next day. Anything you spot happening when you’re on-site is Scope 1!

If you’re a simple office-based business, there won’t be much to see. If you have a gas-powered boiler on-site, you’ll see the emissions from gas being burned to heat the office. If you have an air conditioning system, you’ll also see “fugitive emissions” – the refrigerant in the system slowly leaking. That will probably be it.

But if you work somewhere that actually burns fuel as part of an industrial process – for example, for manufacturing – then you might see a wider range of emissions.

Now look outside the window as the company car pulls into the car park. That’s Scope 1 too, because Scope 1 includes emissions from any owned asset, whether fixed (like an office) or mobile (like a car).

Because Scope 1 is entirely your doing, it’s often the first place companies start when trying to appear a bit greener. You might swap out your petrol-guzzling fleet for electric vehicles or install a shiny new boiler. But as you may have guessed, this is just the tip of the iceberg.

What are Scope 2 emissions?

Moving on to Scope 2 emissions, which are a bit more slippery. These are the indirect emissions from the energy you purchase – mainly electricity, but also any heating, cooling, and so on.

Wearing those goggles, you won’t see any Scope 2 emissions when you’re in work. Of course, you can see everything that is being powered by electricity: the lighting, the laptops and screens, and (if you make stuff) the machinery. But to actually see the emission, you’d have to go outside, follow the power lines that connect your site to the grid, and end up at the power plant that actually helps to generate the electricity.

For most businesses, Scope 2 emissions contribute a little bit more than Scope 1, especially if you use electric heating systems. Tackling these emissions is all about energy efficiency – those little things (like turning off lights, closing down laptops) that can all add up to make a big difference.

What if you have a renewable tariff? Well, there are actually two ways to account for Scope 2 emissions: location-based and market-based.

What is the location-based method?

You use the average emissions from the grid in your area – the National Grid in the UK. This reflects what is actually happening in the office when you power on a laptop or turn on a light. Unless you produce your own electricity, you’ll be using the same power from the grid as everyone else, which is a mix of both green and fossil-fuel-based sources. You can see the exact breakdown at any time using this dashboard.

What is the market-based method?

This method lets you account for any eco-friendly energy you’ve gone out of your way to buy. Although your office isn’t directly hooked up to those energy sources, you’ve still helped to fund providers of renewable energy and increase the mix of green energy in the grid (as long as it’s a high quality green tariff!).

What are Scope 3 emissions?

This is where things get really interesting. Scope 3 includes all of the emissions that happen across your entire value chain, that you don’t directly control. While Scope 1 and 2 are tightly defined – you know exactly where to look, and what to look for – Scope 3 is a smorgasbord of emission sources, happening across your suppliers, employees and customers at different times. Using our goggles, we won’t be able to see any Scope 3 emissions when we’re in the office – you’d have to go snooping around your suppliers’ factories, or your employees home offices, to give only two examples. This breadth is why Scope 3 is usually the largest category, and the most difficult to measure.

Scope 3 emissions are divided into two categories: upstream and downstream.

What are Scope 3 upstream emissions?

These are the emissions that occur from all of the “inputs” into your business that you don’t directly control. For example, almost every business has a supply chain – other businesses that provide goods and services to enable your work. This activity generates emissions and (because you pay for it) you’re partly responsible for it. The same is true of your employees. You don’t directly control how your employees commute into work, or how efficient their home offices are. But this activity supports your business, so it falls into Scope 3.

What are Scope 3 downstream emissions?

This covers all of the “outputs” of the business – everything that happens after the sale of your product or service. This may include the emissions from transporting your products to retailers or customers, the energy used by customers when they’re using your product, and even the emissions generated when your product is eventually thrown away. While less important for those selling intangible services, these emissions can often be a large contributor for those selling products, particularly if they require energy to be used.

Scope 1, 2 and 3 Example: A Fashion Business

A worked example really helps to make the Scopes a bit more tangible. Let’s say you’re in the fashion business – you design T-shirts for sale to consumers in your own stores. Your carbon emissions would probably look something like this:

• Scope 1: This is the gas that’s used to heat your stores, and the air con used to cool them. If you have your own delivery vehicles, these would also be included here.
• Scope 2: This includes all of the the electricity your shops, powering the lighting, tills and everything else that needs power.
• Scope 3: By far the largest source. This includes everything that goes into producing your garments – growing the fibres in the field (or synthetically), then all the processing that turns that raw material into a T-shirt. It also includes your customers: the energy used to care for the T-shirt (such as washing machines), and even the emissions from them disposing of T-shirt. Alongside these product-specific emissions, you’ll also have things like employee commuting and business travel to think about.

So to get serious about reducing your overall footprint, you’d have to look at every stage of your product lifecycle, from where you source your fabrics to how your customers care for their clothes. Maybe you’d opt for recycled or organic materials, or rethink your shipping methods, or use labelling to remind your customers that washing their clothes at 30 degrees is just as effective. These may be harder to control than your Scope 1 and 2 emissions, but they can be influenced – and in doing so the potential benefits for the planet are huge.

Doesn’t Scope 3 involve lots of double-counting?

Yes – and that’s the point! In the fashion example, the Scope 3 emissions from your suppliers involve all of the energy used to produce your garments – in other words, your suppliers’ Scope 1 and 2 emissions. The same emissions (the energy) appear in both your footprint and the footprint of your supplier (only categorised differently).

This might seem somewhat unfair – why should your suppliers, employees and customers all count towards your emissions? And this is a completely natural reaction – but it’s the wrong way of thinking about your Scope 3 emissions.

Why should you measure Scope 3 emissions?

If you’re serious about emissions reduction – the ultimate aim of the game – then you want your footprint to cover as broad a range of activities related to your business as possible. Without Scope 3, you’re missing the big picture – myopically focusing on your immediate activity without paying attention to how your decisions influence your entire value chain.

Once you’ve quantified the environmental harms across your value chain, you can start to take focused and meaningful action to influence them. The decisions you make – which suppliers to use, how to engage employees, which customer segments to target – all have an impact, and Scope 3 footprinting gives you the evidence you need to start making decisions with the planet in mind.

What’s more, without Scope 3 you can end up with a perverse incentive whereby you can “reduce” your emissions by simply outsourcing your operations. For example, you could get rid of your own delivery vehicles (reducing Scope 1) and use a third-party (increasing Scope 3).

Finally, and thinking about the upside, measuring your Scope 3 emission can help you to identify opportunities for engagement across your value chain that wouldn’t otherwise be obvious. You can begin to talk to people outside of your organisation in a more informed, engaging way, including your customers. In some cases, you might spot an opportunity to really engage your customers on sustainability, helping you to differentiate from competitors that are behind the curve.

How we help

At Seedling, we make it easy for any business to measure a full Scope 1, 2 and 3 footprint and take steps to reduce it. Get in touch for a demo.