What Are Scope 1, Scope 2 and Scope 3? Carbon Emissions Explained

Why emissions are divided into scopes

The scope framework was established by the GHG Protocol — the world's most widely used greenhouse gas accounting standard — to create a clear, consistent way of categorising emissions and avoiding double-counting. Without scopes, every company in a value chain would count the same emissions, making aggregate figures meaningless. The three-scope system assigns each emission source to exactly one company's inventory based on the principle of operational or financial control.

Understanding scopes is not just an academic exercise. Under SECR, UK companies must report Scope 1 and 2 and are encouraged to report Scope 3. Under the upcoming UK SRS and the EU's CSRD, Scope 3 reporting is expected to become mandatory for in-scope companies. Knowing which emissions fall into which scope — and what data you need to measure them — is the starting point for any carbon accounting programme.

Scope 1: direct emissions

Scope 1 covers all direct greenhouse gas emissions from sources that your organisation owns or controls. These are emissions that you directly cause through your operations.

The most common Scope 1 sources for UK organisations include:

Natural gas combustion: Gas boilers for space heating and hot water are the single largest Scope 1 source for most office-based and educational organisations. The emission factor is applied per kWh of gas consumed, taken directly from your gas bills or meter readings.

Company vehicles: Fuel burned in vehicles owned or leased by the organisation — including cars, vans, trucks, and specialist vehicles. Emission factors are applied per litre of fuel (petrol, diesel, LPG) or per mile driven. Fleet management data or fuel card records provide the activity data.

Refrigerant losses: Air conditioning systems, refrigeration units, and heat pumps contain fluorinated gases (HFCs) with extremely high global warming potential — sometimes thousands of times more potent than CO₂ per kilogram. Even small leaks can result in significant Scope 1 emissions. Maintenance records and F-gas logs are the primary data sources.

On-site generators: Diesel or gas generators used for backup power or primary power generation on sites without reliable grid connections.

Industrial processes: For manufacturing companies, direct emissions from chemical reactions, combustion in furnaces or kilns, and process-related releases.

Scope 1 data is generally the most straightforward to collect because the sources are within your direct control. The data typically comes from utility bills, fuel purchase records, fleet management systems, and maintenance logs — all of which most organisations already have in some form.

Scope 2: purchased energy

Scope 2 covers indirect emissions from the generation of purchased electricity, heat, steam, or cooling that your organisation consumes. The emissions physically occur at the power station or generation facility, not at your premises — but they are attributed to your organisation because your demand for energy is what causes them.

For most UK organisations, Scope 2 is dominated by electricity consumption. The emission factor depends on which method you use:

Location-based method: Uses the average emission factor for the electricity grid where your consumption occurs. In the UK, DEFRA publishes an annual grid average factor (which has been declining as the grid decarbonises — from around 0.50 kgCO₂e/kWh in 2013 to approximately 0.21 kgCO₂e/kWh in recent years). This method is straightforward and required for SECR reporting.

Market-based method: Reflects the specific electricity supply you have contracted. If you purchase a 100% renewable electricity tariff backed by Renewable Energy Guarantees of Origin (REGOs), your market-based Scope 2 can be zero for that supply. If you have no specific contractual arrangement, a residual mix factor is applied. The market-based method is used alongside the location-based method in frameworks like CSRD and CDP.

Scope 2 data comes from electricity bills, half-hourly meter data, and energy supply contracts. For multi-site organisations, collecting consistent Scope 2 data across all locations — each potentially with different suppliers, tariff structures, and billing cycles — is one of the primary data management challenges in carbon accounting.

A key point for UK reporting: SECR requires the location-based method. If you also report under CDP, CSRD, or SBTi, you will need both methods. A good carbon accounting platform calculates both automatically from the same underlying consumption data.

Scope 3: the value chain

Scope 3 covers all other indirect emissions that occur in your value chain — both upstream (supply chain) and downstream (use of products, end-of-life). The GHG Protocol defines 15 specific categories spanning everything from purchased goods and services to the disposal of products you sell.

Scope 3 is by far the largest source of emissions for most organisations — typically 70-90% of total footprint. It is also the most complex to measure because the data sits outside your direct control, with suppliers, logistics providers, employees, and customers.

Under SECR, Scope 3 reporting is voluntary but encouraged. Under CSRD and the anticipated UK SRS, material Scope 3 categories will need to be disclosed. The Science Based Targets initiative requires Scope 3 inclusion in net-zero targets if it exceeds 40% of total emissions.

The practical starting point for Scope 3 is a spend-based screening using your procurement data and DEFRA emission factors. This identifies which of the 15 categories are material to your organisation and where to invest in higher-quality data. Most companies find that Category 1 (purchased goods and services), Category 6 (business travel), and Category 7 (employee commuting) are among their most material — but this varies significantly by sector.

The recommended approach is progressive: start with spend-based estimates for breadth, then improve data quality in your most material categories over successive reporting periods. This is both practical and aligned with what regulators and auditors expect.

Putting it all together

For a typical UK office-based company, the emissions profile might look something like this:

• Scope 1 (5-15% of total): Natural gas heating, company vehicle fleet, refrigerant leaks • Scope 2 (5-15% of total): Grid electricity for lighting, computing, cooling • Scope 3 (70-90% of total): Purchased goods and services, business travel, employee commuting, IT services, waste

For a manufacturing company, Scope 1 is typically larger (industrial processes, furnaces), and Scope 3 includes significant upstream raw materials and downstream product-use emissions.

The key takeaway is that starting with Scope 1 and 2 gives you a solid compliance foundation — meeting SECR requirements and providing a clear view of your direct operational emissions. Building Scope 3 capability on top of that gives you the full picture needed for CSRD, SBTi, and genuine reduction planning.

Most organisations find that automated data collection and calculation — through a platform like Climatise — dramatically reduces the effort required for all three scopes. The platform applies the correct DEFRA factors for each source type, maintains the audit trail, and generates reports that present Scope 1, 2, and 3 in the format required by each framework.