Every time a company makes a statement about reducing or offsetting their carbon emissions, it is a good idea to check what types of emissions they are talking about. There are three scopes of emissions and each company can define the scopes they choose to offset.
So how can we understand what they mean? According to the GHG Protocol corporate standard, a company’s greenhouse gas emissions are classified in three different scopes.
Scope 1: Direct emissions
Scope 1 includes direct emissions from the company’s activities and resources they own and control. The types of emissions that fall into this category are the emissions produced by the company’s own facilities and vehicles (though electric vehicles do not fall into this scope).
Scope 2: Indirect emissions from electricity purchased and used
Scope 2 emissions are created during the production of the energy eventually used by the company. For example, those could be greenhouse gas emissions released in the atmosphere from the consumption of heat and cooling or from coal combustion when generating electricity for industrial processes.
Scope 3: Other indirect emissions
Scope 3 are indirect emissions from sources not controlled by the company, but arising from its activities. These are upstream and downstream emissions that occur in the company’s value chain associated with areas such as business travel, procurement, transportation, waste and water.
Why do we need to measure all three scopes?
Emissions of Scope 1 and 2 are relatively easy to calculate as they are under the company’s control. For the same reason, it is easier to manage and reduce them. Therefore, a lot of companies that make statements on carbon neutrality or carbon footprint reduction take into account those emissions that are under their control. Moreover, in many countries, Scope 1 and 2 are mandatory to report, whereas Scope 3 is voluntary.
There are many companies that cannot afford to lose sight of Scope 3. Sometimes this happens due to pressure from stakeholders and sometimes it is essential to consider Scope 3 because of the business structure. For a large IT or consulting company, for example, Scope 1 and 2 could be almost zero, while most of the emissions would come within Scope 3 (according to various estimates, from 75% to 85%).
Emission reduction throughout the entire product or service life cycle is an important component of achieving global climate goals. Companies need to assess their entire value chain emissions impact and identify where to focus their reduction activities in order to get a truly meaningful outcome.
Vlinder is about to launch the Earth Positive initiative that will allow companies to take a holistic view of their emissions and ensure that the offsets are of the highest quality and create a positive impact. Stay tuned!