February 8, 2024
Many organizations are actively working to diminish their greenhouse gas emissions. When tracking and reporting progress, the terms ‘Scopes 1, 2, and 3 emissions’ are frequently used. But what do these designations truly signify?
On the journey to achieving net zero emissions, organizations measure and assess their greenhouse gas emissions through three distinct ‘scopes.’ The existence of these three scopes serves a crucial purpose in understanding and addressing the sources of emissions. The three scopes categorize different types of emissions an organization generates, encompassing both its internal operations and its broader ‘value chain,’ which includes suppliers and customers. While the choice of the term ‘scopes’ may not be immediately intuitive, it stems from the Greenhouse Gas Protocol, the globally recognized standard for greenhouse gas accounting.
As stated by the Greenhouse Gas Protocol, “Developing a full greenhouse gas emissions inventory – incorporating Scope 1, Scope 2, and Scope 3 emissions – enables companies to understand their full value chain emissions and focus their efforts on the greatest reduction opportunities.”
Let’s delve into the definitions of scope 1, 2, and 3 emissions:
Scope 1 emissions:
These are direct emissions owned or controlled by a company, such as those from burning fuel in the company’s fleet of vehicles.
Scope 2 emissions:
Indirect emissions caused by a company that arise from the production of energy it purchases and uses. For example, emissions generated when producing the electricity used in company buildings fall into this category.
Scope 3 emissions:
These encompass emissions not directly produced by the company but are indirectly linked to its activities up and down its value chain. An example is the emissions associated with buying, using, and disposing of products from suppliers. Scope 3 emissions include all sources beyond the scope 1 and 2 boundaries.
Reducing scope 1, 2, and 3 emissions involves various considerations beyond emissions alone, including cost and practicality. While organizations can exert more control over scopes 1 and 2, scope 3 emissions, often representing the largest proportion of total emissions, are typically more challenging to minimize. Collaborating with suppliers, partners and customers on emission reduction solutions is one way organizations can address scope 3 emissions, recognizing the interconnected nature of the broader value chain.
For those aiming to align with the evolving priorities of the federal government, the focus must extend beyond current compliance, encompassing a proactive anticipation of forthcoming requirements. Significant contractors may find themselves obligated to conduct an inventory and report following the GHG Protocol Corporate Accounting and Reporting Standard (https://ghgprotocol.org/corporate-standard). For those Government Contractors, establishing a FAR-compliant ESG program becomes pivotal.
With a global emphasis on Environmental, Social, and Governance (ESG)-focused reporting, organizations must prepare for the potential impact of these proposals by understanding requirements, assessing personnel needs, and adjusting processes related to data collection, reporting, and control activities.