Companies talk a lot about “Scope 1, 2, and 3” emissions, but what do those actually mean, and why does the distinction matter?
The GHG Protocol is the global standard most companies use to measure and report their greenhouse gas emissions. It splits emissions into three categories, based on where they come from.
Scope 1: Direct Emissions
Emissions a company creates directly, think fuel burned in company-owned vehicles, or natural gas burned on-site for heating. If you own or control the source, it’s Scope 1.
Scope 2: Indirect Emissions from Purchased Energy
Emissions created on a company’s behalf by the energy it buys, mainly electricity, but can also include steam and cooling from central sources. You don’t burn the fuel yourself, but your energy use causes emissions somewhere else in the grid.
Scope 3: Everything Else in the Value Chain
This is the big one, and usually the hardest to measure. Scope 3 covers emissions from a company’s entire value chain: supplier manufacturing, employee commuting, business travel, product use, and disposal. For most organisations, Scope 3 represents the largest share of their total footprint, often over 70%.
Why the Distinction Matters
Regulators, investors, and frameworks like CDP and SBTi increasingly expect companies to report on all three scopes, not just the emissions within their own four walls. A company can look “clean” on Scope 1 and 2, while its Scope 3 footprint tells a very different story. Getting an accurate picture means going beyond what’s easy to measure and tackling what’s actually significant.
The Practical Challenge
Scope 1 and 2 data is relatively straightforward — you control the sources and can usually get hard numbers. Scope 3 is different: it depends on data from suppliers, estimates, and industry averages, which makes it both harder to measure and harder to reduce. This is where most of the real strategic work in corporate sustainability actually happens.