Scope 1, 2, and 3: Understanding Carbon Emission Categories

What are Scope 1, 2, and 3 Emissions?

The Greenhouse Gas Protocol provides a globally recognized framework for categorizing corporate emissions into three classifications:

Scope 1 Emissions

Scope 1 emissions are greenhouse gas (GHG) emissions from direct sources owned or controlled by the reporting organization.

Some examples of this include:

• Stationary combustion of fuels in boilers, turbines, furnaces, incinerators
• Mobile combustion in company owned/operated vehicles, ships, planes
• Manufacturing processes and chemical reactions
• Fugitive emissions like methane leaks and refrigerant releases

Scope 2 Emissions

Scope 2 emissions are GHG emissions created from purchased energy sources, such as electricity, steam, heating, and cooling consumed by the reporting organization. While these emissions are technically generated by offsite utilities, they result from the reporting organization’s energy usage.

Some examples of this include:

• Electricity purchased from a utility supplier
• Any energy used when working under a capital-leased space
• Cooling purchased from a utility supplier

Scope 3 Emissions

Scope 3 emissions are the rest of the indirect emissions resulting from the reporting organization’s value chain not covered in Scope 2. This is the largest group of emissions and includes:

• Supplier and contractor emissions
• Transportation, distribution, and logistics
• Waste disposal and treatment
• Franchises
• Investments
• Processing and use of sold products
• Employee business travel and commuting

Why is it Important to Categorize Carbon Emissions?

Depending on your organization's size and location, you may be required to report your annual greenhouse gas emissions in your ESG reports. Categorizing the different types of carbon emissions helps organizations understand where emissions come from and how they can be more strategic in minimizing emissions.

For example, if an organization finds that most carbon emissions come from a source outlined in Scope 1, it can adjust its operations to account for those emissions. While Scope 1 emissions are easier to account for, Scope 3 emissions can be challenging to reduce as this category includes the widest range of emissions. One of the most common ways to reduce Scope 3 emissions is to use offsets. However, organizations can inset emissions, and one example of such would be by reducing employee travel and commute emissions with creative employee benefits solutions like the Carbon Saving Account.

Understanding how carbon emissions are categorized is essential for documenting and reporting emission behaviors for ESG reports. If an organization wants to accurately report their ESG growth and changes, it’s necessary to understand the three categories of carbon emissions.

Scope 1, 2, and 3 FAQ

What are Scope 1, 2, and 3 emissions in regards to supply chain sustainability?

In regards to supply chain sustainability, Scope 3 is the most relevant of the three categories of carbon emissions that relate to a company's supply chain. One category of Scope 3 emissions includes supplier and contractor emissions. If you’re looking to understand where to categorize emissions coming from your supply chain, those would be categorized under Scope 3.

What is included in scope 2 emissions?

Scope 2 emissions are greenhouse gas emissions resulting from the usage of purchased energy sources, such as electricity, steam, or heating. If your organization uses energy under a capital leased space, this is also included in Scope 2 emissions.

What are scope 1, 2, and 3 emissions?

Scope 1, 2, and 3 emissions are three different categories of greenhouse gas emissions. Scope 1 emissions refer to emissions created directly from a reporting organization. Scope 2 emissions come from the usage of purchased energy sources, such as electricity, steam, or heating. Scope 3 emissions are indirect emissions resulting from day-to-day business operations, such as the emissions created along the supply chain line.

Minimize Scope 3 Emissions with Scope Zero

Provide employees with opportunities for financial wellness while minimizing Scope 3 emissions. Schedule a demo to learn how you can measure, reduce, and report Scope 3 work-from-home and commute emissions while reducing spend on sustainability goals.

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