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

When producing a Streamlined Energy & Carbon Report (SECR), emissions are defined under differing scopes by the GHG Protocol – Scope 1, Scope 2 and Scope 3. These scopes cover various information and differ scope by scope, both within your company’s control and from their value chain.

The Current State of SECR Reporting – New Changes to Scope 3

Currently Scope 1 and 2 reporting is mandatory in the UK and Scope 3 is voluntary. Though, as of December 2023 a new deadline is looming, in which a Call for Evidence has been established by The Department for Energy Security & Net Zero, with the potential to change this voluntary status.

With this in mind, it is worth considering the differing types of information included within these scopes, and how your company will be collating this data. It is widely known that Scope 3 requires larger investment, management and time due to this information being from their value chain rather than internal, so we suggest beginning the process of your Scope 3 reporting as soon as possible.

What are Scope 1 Emissions? | Direct GHG (Greenhouse Gas) Emissions

Scope 1 Streamlined Energy and Carbon Reporting is a crucial aspect of corporate sustainability. This particular framework focuses on direct greenhouse gas emissions that a company generates from its own activities and operations, including combustion of fuels on-site and process-related emissions such as boilers and vehicles. This, along with Scope 2, are considered most within the control of your company.

By understanding and addressing Scope 1 emissions, companies can not only comply with regulatory requirements but also implement strategies to reduce their environmental impact, contributing to a more sustainable and responsible business model.

Examples of Scope 1 Emissions

Scope 1 emissions are divided into 4 areas:

• Stationary Combustion Sources (such as industrial boilers and power plants – these are fuels from fixed sources)
• Mobile Combustion Sources (the burning of fuels through transportation – cars, vans, planes)
• Fugitive Emissions (unintentional/uncontrolled releases of gases e.g equipment leaks)
• Process Emissions (greenhouse gas emissions released directly during industrial or chemical processes)

What Are Scope 2 Emissions? | Indirect Emissions

Scope 2 relates to the emissions that a company makes indirectly – such as the consumption of purchased electricity. These emissions occur due to the activity of the company, but are considered indirect as the source at which the emissions occur is out of the company’s control. The most common type of Scope 2 emission is electricity purchased for own consumption from the National Grid or a third party.

Companies typically possess the source data required to translate direct gas and electricity purchases into a metric, representing tons of greenhouse gas emissions, with this information residing within procurement, finance, estates management, or a dedicated sustainability function.

Examples of Scope 2 Emissions

Scope 2 emissions are generated by the following sources:

• Electricity
• Steam (such as in a boiler room)
• Heating and cooling (HVAC Systems)

What are Scope 3 Emissions? | Other Indirect Emissions

Scope 3 is often where the highest amount of impact comes from, contributing up to 70% of a company’s total carbon footprint, but it can also be the most challenging to report on, due to originating from sources associated with a company rather than the company’s operations directly.

This scope covers all other indirect emissions that occur in your company’s value chain and are broken down into sources which are effectively emissions related to your suppliers (upstream) or emissions related to sold goods or services (downstream).

Reporting Scope 3 emissions’ voluntary status is under consideration following a December 2023 Call For Evidence from the The Department for Energy Security & Net Zero, making it increasingly important to understand what constitutes as Scope 3. Causes of Scope 3 emissions can include:

• Suppliers providing raw materials to the company: Scope 3 emissions extend to the entire supply chain, encompassing the carbon footprint associated with the extraction, production, and transportation of raw materials sourced by a company. For instance, if a company utilises metal, plastic, or other materials in its products, the environmental impact extends beyond its immediate operations to include the extraction of those materials, their manufacturing, and transportation to the company.
• Transport services used for a company’s logistics: The transportation of goods and services is a significant contributor to Scope 3 emissions. This includes the emissions generated by third-party transportation providers engaged in delivering raw materials to the company and distributing finished products to customers. Whether by road, air, sea, or rail, the energy consumption and emissions associated with the logistics network play a crucial role in the overall carbon footprint of the company.

Examples of Scope 3 Emissions

Scope 3 emissions are broken down into 15 categories, outlined by the GHG Protocol.

Upstream Emissions

• Purchased goods and services
• Capital goods
• Fuel and energy related activities
• Upstream transportation and distribution
• Waste generation in operations
• Business travel
• Employee commuting
• Upstream leased assets

Downstream Emissions

• Downstream transport and distribution
• Processing of sold products
• Use of sold products
• End-of-life treatment of sold products
• Downstream leased assets
• Franchises
• Investments

Within each category, further information is required, again reiterating the fact that Scope 3 is widely recognised as the most difficult to report on. For example:

• Waste disposal and recycling services: Proper waste management involves not only the disposal of waste but also its recycling or treatment. Scope 3 emissions encompass the environmental impact of waste disposal practices, including the energy consumed and emissions generated during waste transportation, landfill usage, and recycling processes. Companies aiming to reduce their carbon footprint must consider sustainable waste management practices as part of their broader environmental strategy.
• Employees commuting to work: The daily commute of employees contributes to the carbon footprint of an company, falling under Scope 3 emissions. This category includes the emissions produced by employees’ use of personal vehicles, public transportation, or other modes of commuting. Companies promoting sustainable commuting options, such as public transportation incentives, remote work policies, or carpooling initiatives, can mitigate these emissions and contribute to overall environmental responsibility.

Breakdowns of each category can be found on the GHG Protocol website.

Using technology to aid in your Streamlined Energy & Carbon Reporting

A lot of time, money and resource goes into reporting on an companys carbon emissions. Our AI-driven platform aids in producing reports in a timely manner, along with creating roadmaps for your future carbon emissions usage, so you can plan out reduction before the new tax year even begins. Gone are the days of manual reporting, especially with the Scope 3 deadline looming.

For a complimentary consultation, book in with our team to see how we can change the way you produce your carbon reports.

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