Scope 1, 2 and 3 Emissions

The Greenhouse Gas Protocol standard helps measure greenhouse gas emissions within a value chain and it divides the emissions into 3 scopes. Scope 1 are emissions directly emitted by the company. Scope 2 are indirect emissions related to energy production and Scope 3 are indirect emissions generated upstream or downstream from the company's boundaries.

The Greenhouse Gas Protocol (GHG Protocol) provides a standard for measuring greenhouse gas emissions from corporate and public sector value chains. The GHG Protocol covers the Kyoto Protocol regulated greenhouse gasses carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).

Direct and indirect emissions

To determine the emissions of a value chain, the organizational boundaries of the company responsible for the value chain need to be defined. If a company consists of several subsidiaries, the emissions of the subsidiaries are either allocated proportionately to the shareholding of the parent company (equity share approach) or the emissions are allocated in full to the parent company if it has control (control approach).

The emissions of the three subsidiaries and the parent company are combined

Once a company's accounting limit is set, it can determine its emissions. To do this, the emission sources that are directly under company control are identified within the company. These include, for example, the heating or air conditioning systems of company-owned buildings or the vehicles in their fleet. These emissions are called direct emissions. All other emissions occurring in the value chain that are not directly under the control of the company are called indirect emissions.

The 3 Scopes

In addition to the distinction between direct and indirect emissions, the GHG Protocol distinguishes emissions into 3 different scopes.

Scope 1: All emissions a company directly emits

Scope 2: All indirect emissions caused by energy consumption

Scope 3: All indirect emissions caused by the upstream and downstream supply chain

The three scopes of GHG emissions

Scope 1

Scope 1 are all emissions from resources controlled directly by the company. They can be further divided into 4 subcategories:

• Stationary combustion (e.g. heating systems running on fossil fuels)

• Mobile combustion (vehicles owned or controlled by the company that run on gas or diesel)

• Fugitive emissions (leakage from GHGs, for example from air conditioning systems)

• Process emissions (emissions from industrial processes)

Scope 2

Scope 2 emissions are indirect emissions that occur in connection with energy generation in any form. This can be electricity generation, but also heat or steam generation.

Scope 3

Scope 3 covers all indirect emissions that do not fall into the Scope 2 category. However, these emissions are also subdivided into two subcategories:

• Upstream emissions

• Downstream emissions

Upstream Emissions

Upstream emissions are indirect emissions of the company that result from the purchase of goods and services. They can be divided into eight categories:

• Purchased goods and services

• Capital goods

• Fuel & energy-related activities

• Upstream Transportation and Distribution

• Waste generated in operations

• Business travel

• Employee commuting

• Upstream leased assets

Downstream Emissions

Downstream emissions are indirect emissions from the company that result from the sale of the goods and services produced. They can be divided into seven categories:

• Downstream transportation and distribution

• Processing of sold products

• Use of sold products

• End-of-life treatment of sold Products

• Downstream leased assets

• Franchises

• Investments