As the world embarks on our mission to mitigate or alleviate the effects of climate change, companies around the world are feverishly designing systems to measure and track their Greenhouse Gas (GHG) emissions – known as Scope 1, 2, 3 emissions. So what are scope 1, 2, and 3 emissions, and what are some examples of each type of scope?
Scope 1 includes direct GHG emissions from business operations, like through onsite energy production and delivery vans; scope 2 includes indirect emissions produced in generating the energy used in operations, so basically their utility bills; and scope 3 includes all other indirect emissions produced throughout a business’ value chain, like upstream and downstream activities, including emissions from your use of their products.
There’s no questioning the importance of reducing a business’ carbon footprint, and failing to do so is bad for business, not just a risk to the future of our planet. Beyond this, as consumers, we should tell whether a business is taking climate change seriously and capturing its data correctly to formulate effective emission-reducing strategies.
So, let’s look at how scope 1, 2, and 3 emissions are defined and how reducing them can go a long way towards alleviating the effects of climate change.
Scope 1 & 2 Emissions
Scope 1 and scope 2 emissions are mandatory for businesses to report and can be reduced through company policies and best practices. They are commonly targeted in strategies to achieve carbon neutrality in business operations. Let’s take a look at what these scopes entail and some examples of each:
Scope 1 includes the direct emissions produced through the resources owned and controlled by a company. These emissions are broken down into four distinct categories – stationary combustion, mobile combustion, fugitive emissions, and process emissions.
Stationary combustion includes fuels and heating sources; mobile combustion includes the burning of fuels through cars, vans, and trucks used to carry out a variety of operations. Fugitive emissions are produced from refrigeration and air conditioning units, which do more damage than CO2 emissions. Typically methane, which is over 30 times more damaging than CO2, and other super-charged greenhouse gases.
Finally, process emissions are the GHG emissions that occur due to industrial processes and on-site manufacturing. For example, manufacturing can produce CO2, chemicals, and other fumes that factories release.
Scope 2 emissions are the emissions that are indirectly produced in a utility provider’s generation of energy that is used in a business’ operations. This also includes electricity that is used by the end-user.
Also, note that if a company uses Electric Vehicles to transport goods, those emissions are not classified under mobile combustion in scope one but rather under scope 2. This makes sense because companies plug those vehicles into charging stations, which pull energy from the grid. If a company is purchasing renewable energy, then scope 2 emissions will be much lower.
Scope 3 Emissions Examples
Scope 3 emissions are the primary source of emissions that consumers “cause” when they buy stuff from companies. A company’s indirect emissions are not owned by a business and occur throughout the value chain.
Companies across the globe struggle with tracking and reporting scope 3 emissions. But generally, scope 3 emissions can be broken down into two distinct activities: upstream and downstream activities.
Where Consumers Come in: Downstream Activities
Downstream activities include the emissions that occur when a business no longer owns a product or service. These products and services sold to customers are far more difficult to track because businesses would need to report the emissions occurring in products that they cannot track.
For instance, when you throw out whatever product you bought after it’s useful life, it either gets buried or burned. This produces emissions and accelerates climate change.
Companies typically aren’t mandated to report scope 3 emissions for this reason. However, businesses can establish best practices that can aid in intervention by making changes to product or service designs and driving behavioural change.
For example, reducing the amount of plastic used to create or package a product can significantly reduce emissions in downstream activities. And, for consumers, it can be useful to identify some examples of scope 3 emissions that will help them reduce the carbon footprint of their consumption of goods and services.
It has been found that scope 3 emissions are, by far, the biggest contributor to total emissions in the value chain. Here are some examples of scope 3 emissions.
How To Reduce Scope 3 Emissions as a Consumer
While businesses can make interventions in scope 3 emissions through product and service designs changes, you may be reading this guide and asking yourself what can be done as an end-user. Considering that scope 3 emissions account for most emissions, how can businesses lobby consumers to change their behavior, and what commitments can end-users make to ensure that goods and services are used sustainably?
One obvious example would be to recycle goods – plastics in particular. For users, disposing of plastic bottles or product packaging should be done responsibly. This entails using recycling services and being diligent about it so that manufacturers can reuse these plastics.
You can also purchase products that are biodegradable or compostable. But, don’t forget to actually compost it! Purchasing compostable products and then burying them in a landfill does not help climate change.
In addition to this, supporting local businesses can help reduce the transportation costs and emissions incurred in getting the goods or services to you for purchase.
Furthermore, supporting companies that are serious about climate change and aren’t just greenwashing their businesses sends a message. Consumers can vote with their dollars.
You can also directly lobby companies and insist they make changes to their product designs, such as eliminating single-use plastics, can result in meaningful change – and, for their part, companies need to respond appropriately to this lobbying or simply make simple changes like this on their own volition.
Upstream activities include activities such as travel for business purposes – by air, railroad, buses, taxis, private vehicles, etc. It also includes the commute to and from work of a business’ employees. Upstream activities also include the waste produced in business operations sent to landfill sites, incinerators, or water treatment facilities.
Waste is particularly important due to methane and nitrous oxide emissions, as mentioned previously, these GHGs pose a greater threat to the environment than carbon dioxide.
Furthermore, the emissions produced from goods and services purchased by the business such as stationary, laptops, furniture, and materials used in the production process. This also includes the emissions released during the transportation and distribution of said goods and services.
One of the upstream activities that can be confusing for businesses is reporting the scope 3 emissions of their capital goods. What may be confusing for a company is whether they need to report the Scope 3 emissions every year or only in the year a business acquired the capital goods.
For example, if you purchase a company vehicle, you would report the emission costs for manufacturing the vehicle (i.e., the energy costs of factory machinery that built the vehicle, the costs of the materials used to build it, etc.). However, that vehicle still appears on the company’s books for several years. So, do you report the costs of its emissions (aside from the scope 1 emissions for fuel consumption, etc.) every year?
You do not have to report the scope 3 emissions costs of the upstream activities on capital goods in reports that fall outside their purchase or construction period. Businesses need not depreciate, discount, or amortize the emissions.
Examples Of Scope 3 Emissions
Scope 3 emissions that occur in downstream activities include investments, franchises, leased assets, the end-of-life treatment of products sold, the use and processing of sold and processed products, as well as the emissions released during transportation and distribution.
Scope 3 emissions from upstream activities include those resulting from purchasing goods and services that occur indirectly from the purchase or use of capital goods, fuel, and energy-related emissions, transportation, and distribution, the waste produced from operations, as well as the emissions from employee commutes and leased assets that occur outside of the business.
The three scopes of carbon emissions are incredibly important for companies to keep track of the damage that their operations have on the environment. Companies must adhere to various environmental regulation and their capacity to rectify unsustainable activities.
In the coming years, companies will make it easier for consumers to gauge the carbon footprint of their products. But you need to understand what types of emissions there are in order to be an informed consumer.
Furthermore, protecting the environment should not be considered a corporate social responsibility initiative. Failing to adapt to sustainable practices will end up being bad for business too, especially as consumers, government regulation, and the price of energy begins to make being green an imperative.