Scope 1, 2, 3 emissions for businesses

If carbon accounting feels like learning a new language, you're not alone. But here's the thing: once you understand the basic grammar of Scope 1, 2, and 3 emissions, everything else starts to make sense. This explainer breaks down what each scope covers, why they matter, and how they fit together to give you a complete picture of your organisation's carbon footprint.

Before diving into the technical details, let's start with the why. The Greenhouse Gas Protocol introduced the concept of emission scopes to standardise how organisations track their carbon emissions. These scopes clarify which emissions organisations directly produce (Scope 1), indirectly cause through energy consumption (Scope 2), and influence across their entire value chain, both upstream with suppliers and downstream with customers (Scope 3).

This structure simplifies emissions accounting by outlining your organisation's different levels of responsibility and influence, making it easier to identify opportunities for reduction.

For organisations globally, understanding these scopes is increasingly important. With sustainability reporting becoming mandatory across major jurisdictions, this is becoming a compliance requirement. At the same time, stakeholder expectations from customers, investors, and your own people are growing, making a clear grasp of your emissions across all scopes increasingly valuable.

Scope 1 emissions are the most straightforward for most organisations - these are direct emissions from sources owned or controlled by your organisation. In simple terms, if your organisation is doing the burning, the combustion happens on your premises, or leaks occur from your process or equipment you control, it's Scope 1.

• • Stationary combustion: Fuels used in buildings and stationary equipment such as gas and diesel
• • Mobile combustion: Vehicles your organisation owns or operates including cars, vans and trucks
• • Fugitive emissions: Leaks, commonly from refrigerants, air conditioning systems
• • Process emissions: Emissions from industrial processes or manufacturing such as cement production

An interesting example under Scope 1, though not straightforward to measure, is livestock-related emissions, such as methane (CH₄) from cow burps. Fertiliser use can also release nitrous oxide (N₂O). In the waste sector, landfill sites and wastewater treatment plants also release emissions such as methane as organic matter breaks down. The GHG Protocol has specific guidance on this if it applies to you.

Scope 2 emissions come from the generation of energy that the organisation purchases and consumes. While you don't directly create these emissions, they occur because of energy consumed by the organisation.

For most organisations, electricity is the primary source of Scope 2 emissions.

If your organisation does not purchase steam, heating, or cooling services (which applies to most organisations), then your Scope 2 emissions will be electricity only.

Scope 3 is where things get comprehensive and complex. These are all the indirect emissions that occur in your value chain, both upstream and downstream from your operations.

For most organisations, Scope 3 represents the largest portion of their carbon footprint, accounting for around 80% of the total footprint. If you are a services organisation, this most likely will be over 90%.

The complexity of Scope 3 arises from the depth and breadth of what is covered. Getting scope 3 data for an organisation means reliance on external suppliers, often dealing with data scarcity, and indirect influence. Add to that a supply chain that might stretch across different states, territories, and countries, and you've got a lot of moving parts to piece together.

The GHG Protocol defines 15 Scope 3 categories. This guide focuses on the most common ones first.

• • Purchased goods and services: The emissions from producing everything you buy such as office supplies and raw materials
• • Business travel: All work-related travel including flights, trains, and taxi rides
• • Employee commuting: The daily journey to and from work for your people
• • Transportation and distribution: Getting your supplies delivered and your products shipped
• • Waste generated in operations: Emissions from disposal or recycling of your products
• • Capital goods: Emissions from manufacturing major purchases such as machinery, infrastructure and buildings

Downstream scope 3 categories

• • Use of sold products: Emissions from customers using your products such as energy consumption
• • End-of-life treatment: What happens when your products are disposed of or recycled
• • Transportation and distribution: Getting your products to customers
• • Processing of sold products: When your products become components in other products

Instead of approaching all emissions together, most organisations benefit from this approach:

• • Focus on Scope 1 and 2 first. These are generally easier to measure and often what's required for reporting (also in your sphere of control)
• • Add the most significant Scope 3 categories instead of trying to tackle all 15

Important note: If you fall under mandatory reporting requirements, assurance standards may apply from Year 1. Understanding requirements early helps build a strong foundation for your reporting.

Common implementation challenges include data availability from suppliers, stakeholder buy-in across departments, and knowing where to focus efforts. Organisations typically address these through structured stakeholder engagement, materiality assessments, and phased implementation approaches.

Understanding your emission scopes isn't just about meeting reporting requirements. It provides a framework for:

• • Risk management: Identifying climate-related risks across your value chain
• • Co-benefits: Finding cost savings and operational efficiency opportunities
• • Innovation and future-proofing: Preparing for low-carbon business models
• • Enhanced stakeholder trust: Building confidence with customers and investors

The key to successful emissions measurement is understanding why you're doing this in the first place. Compliance or supplier requirement reasons? Keep in mind that you need this documented as assurance requirements may apply to you based on where you fall under reporting obligations, and suppliers may also ask for this information. Like building a house, starting with the right foundation avoids costly rework.

Focus on the scopes and categories most relevant to your business.

You don't fall under reporting obligations but still want to do this? Start with data you have, improve on it over time. Be transparent about your approach and what data you are collecting. It's better to be transparent and authentic, and customers appreciate this more. It also reduces the risk of greenwashing.