Businesses are increasingly recognising the urgent need to reduce their carbon footprint. Especially in today’s gutsy arena of sustainability. They know being a successful business is about more than just selling products.
As the World Resources Institute (WRI) said:
“Managing carbon is a key component of a successful business. And not just because it’s good for the environment. It’s also a way to save money, cut risks, and create exciting new business opportunities.”
The question is: how exactly are carbon emissions measured and managed?
Through scopes of emissions. That’s how.
WRI in partnership with the World Business Council for Sustainable Development created the Greenhouse Gas (GHG) Protocol. It categorises emissions into three scopes, each determining an organisation’s direct and indirect environmental impact.
This article looks at scopes 1, 2, and 3 emissions, from quick definitions with some examples, and why companies should care. Plus, we’ve taken a quick peek at fancy scope 4, which is swaggering round the corner.
Why are there three scopes of emissions?
Scopes of emissions rig out a comprehensive framework that helps companies assess their whole carbon footprint and allows them to embrace a more encompassing sustainability strategy.
That’s because GHG emissions act like a blanket covering Earth, trapping the sun’s heat. This then warms the planet and causes climate change.
The world is changing and businesses are expected to keep up, to keep temperatures down.
WRI says that carbon dioxide (CO2) makes up 74.1% of global GHG emissions. That mostly comes from burning fossil fuels through:
- Production of energy and heat
- Manufacturing and consuming
Deforestation is another contributor to manmade CO2 emissions.
But CO2 is not the only harmful gas. Let’s not forget the more potent gases that make up the remaining 25.9% of global emissions.
It’s critical. Understanding and reducing emissions is not just a sustainability trend.
Quick definitions of scopes 1, 2, and 3 emissions
Scope 1 emissions
- Type: direct
- From: company-owned facilities and vehicles
- Examples: Amazon-owned delivery trucks, factory boilers for textile production
- Ways to reduce: lower energy use, switch to renewable alternatives, find more fuel-efficient routes, carbon offsets (as an extra or final step)
These are the direct greenhouse gas emissions from sources a company owns or controls.
For example: on-site fuel combustion, company-owned vehicles, and other internal processes like running machinery to make products, or powering computers and local heating systems.
Companies can optimise internal operations, like making your website more eco-friendly for example, as a starting point to reduce scope 1 emissions.
Scope 2 emissions
- Type: indirect
- From: the purchase of energy for use by a company
- Example: emissions from purchased electricity used at an office building
- Ways to reduce: lower energy use, monitor and upgrade HVAC systems, choose renewable energy suppliers, become your own clean energy supplier
Scope 2 are indirect emissions created from purchased steam, electricity, heating, and cooling. It’s the environmental impact of the energy a company buys and uses. Meaning, they aren’t producing the emissions themselves.
While a company may not directly control such sources, they still impact the overall carbon footprint. Transitioning to renewable energy like solar panels and LED light bulbs are no-brainers here.
Scope 3 emissions
- Type: indirect
- From: the rest of the value chain, not included in scopes 1 and 2
- Examples: business travel, product delivery (using an outside provider), waste disposal
- Ways to reduce: collect data, work with your suppliers, use recyclable packaging, design circular products, encourage sustainable transport for employees
These are also indirect emissions.
But they differ from scope 2 in that customer use and supply chain activities produce these. If a company sells shampoo, the emissions from manufacturing, transportation, and disposal (the bottles, if they’re single-use) all count.
No wonder scope 3 emissions are often the most significant and the hardest to tackle, let alone measure.
There’s now also talk of scope 4 emissions (aka ‘avoided emissions’). As in, the emissions saved when a company’s products or services are used. Though the WRI introduced the idea a decade ago, we still don’t have any established standard for measuring and reporting scope 4.
But they matter because they force folk to be aware of a company’s environmental impact from all angles. And if you’re a company whose product actually achieves emissions reductions, well, that’s a positive story to tell. Plus they beg the question, “How can we create – or re-design – in a way that’s more energy efficient?”
Perhaps a post for another day. In the meantime, the World Economic Forum explains where the fourth scope falls on the spectrum.
How are folks even conquering this sustainability thing?
(stares pensively for several minutes)
One sensible step at a time, it turns out. Oh, and lots of reading.
Why consistent global standards matter
Imagine if everyone had their own methods for measuring and reporting emissions.
A consistent global standard is a big deal because it levels the playing field. It helps businesses understand where emissions come from and streamlines reporting to enable collective action.
Think of it as a roadmap driving the reduction of global emissions.
Yet even with global standards in place, some folks still make up their own rules and in other cases… don’t match deeds with their words.
Of the 3/4 scopes, why are scope 3 emissions so important?
Well, firstly because there’s an increased interest in scope 3 emissions compared to the other two in the triptych. Meaning, more folks care about these indirect emissions.
Also because, as Deloitte says: “Scope 3 is often where the impact is,” adding that it “accounts for more than 70% of a business’ carbon footprint.” It’s calling organisations and companies to poke at the emissions hotspots across the entire value chain (aka take full responsibility).
Scope 3 is about going beyond the superficial niceties and cutting right to the chase. It’s the badass of the three.
Scope 3 examples
Patagonia (we know, but still!) is one of those unconventional businesses that takes scope 3 seriously. They’re a landmark in sustainable clothing, as you well know.
According to Patagonia, “85% of clothing ends up in landfills or gets incinerated” adding that “one of the best things we can do for the planet is to keep stuff in use longer and reduce our overall consumption” because “a throwaway mentality doesn’t bode well for our planet”.
And so, Worn Wear was born.
By providing a marketplace for used and vintage Patagonia, they tackle the downstream emission-producing activities (scope 3), caused by the disposal of clothing – a massive issue for the fashion industry. Patagonia isn’t directly responsible for their clothing going to waste but they’re setting an example of what fashion brands should be doing: taking care of the end-of-life disposal of their products.
Another name worth mentioning is Mars Inc.
It’s not just addictive chocolate sweets they make now. The American multinational provides pet care services and manufactures pet food, snacks, and other food products. Then, the most surprising fact of all: they’re an FMCG company that’s making real progress in emissions reductions and scope reporting.
In 2017, they committed to measuring full value chain GHGs (all three scopes) against a 2015 baseline. They peaked in 2018 at 107% but brought it down in 2022 to 92%. And they’ve managed to do this over a time when the business is actually making more and more money.
There’s still plenty to go before 50% by 2030, but a 15% reduction in three years certainly shows what Mars – and other organizations – are capable of if there’s a clear roadmap. For them, it’s largely about working with major suppliers, like raw material and logistics providers, and improving recycling services for product packaging.
Their latest headline is a $1 billion investment to help achieve the net zero goal.
Now for the earth-shattering question.
Why should businesses care?
It’s simple. They risk going extinct. Not just because with a century’s worth of pollution already stuck in the atmosphere, a frightening future may lie ahead. But because companies will face dying out as more buyers boycott those firms that aren’t taking action.
Measuring emissions is the first step for companies trying to reduce their overall footprint. You need to know how much damage you’re causing before you choose the fixes. That’s why you see brands mentioning climate- or carbon-neutrality, and net-zero. Although shaky climate-neutral claims may soon be a thing of the past, measuring and tackling emissions by scope involves a robust assessment – aligning environmental initiatives with science. Just make sure you look at all 3, or maybe 4.
So, where there’s scopes there’s hope(s).
Because emissions reduction is no longer just an option for business — it’s a must.