Understanding GHG Emissions
When companies talk about cutting their carbon footprint, it all starts with understanding where their emissions come from and which direct and indirect activities are material to their business. That’s where the GreenHouse Gas (GHG) Protocol comes in, sorting emissions into three main categories: Scope 1, Scope 2, and Scope 3. Think of these as different layers of responsibility for the GHG emissions that a business is connected to.
Let’s break it down in simple terms.
Scope 1 covers direct emissions. These are carbon emissions a company creates through activities it controls directly, like running its own vehicles or burning fuel in its own factories. If smoke is coming out of their own chimneys or car exhausts, that’s Scope 1.
Scope 2 is about indirect emissions from the energy that a company buys. For example, if their office runs on electricity from a coal-powered grid, the associated GHG emissions from generating that power count as Scope 2, even though they happen off-site.
Scope 3 is usually the biggest and broadest, as it includes all other indirect emissions up and down the company’s value chain. That means everything from how its suppliers produce raw materials, to how customers use and dispose of its products. For many companies, Scope 3 makes up the majority of their total carbon footprint and this is why a correct materiality assessment is fundamental to determine which activities need to be included in the GHG emissions’ calculation.
It would be unfair to forget about a fourth category, recently introduced in the industry: Scope 4 emissions. Also known as “avoided emissions“, the terms refers to those carbon emissions that are prevented or reduced outside a company’s value chain as a result of its products or services.
So why does this matter?
Knowing your Scope 1, 2 and 3 GHG emissions gives you a clear map of your climate impact. Without this assessment, you are only seeing part of the picture. While Scope 1 and 2 are easier to measure and control, it’s Scope 3 that offers the greatest opportunity to drive systemic change across supply chains and customer use.
In today’s ESG-driven world, companies that transparently address all scopes of emissions position themselves as sustainability leaders and build stronger trust with stakeholders, regulators, and the market.
The better you understand your emissions, the better you can reduce them. And that’s not just good for the planet, it’s good for yours and your stakeholders’ businesses too.
