What are Scope 1, 2 and 3 Emissions and Their Role in Fighting Climate Change

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What are Scope 1, 2 and 3 Emissions and Their Role in Fighting Climate Change

Scope 1, 2 and 3 categorise a company's direct and indirect greenhouse gas emissions. Reducing all three is essential for net zero.

17 April 2023 – by Evelyn Smail   Comments (0)

Scope 1, 2 and 3 emissions is a classification system for the greenhouse gas (GHG) emissions generated from the different stages of business operations — from direct emissions and energy usage to broader value chains. 

The Greenhouse Gas Protocol developed the system, designed to measure progress towards the vast emissions reductions required to limit warming to 1.5°C from pre-industrial times. As global temperatures continue to rise, companies are under increasing pressure to slash emissions from all three categories to remain on the safe path to net zero.

Why Are Scope 1, 2 and 3 Emissions Important?

Unabated GHG emissions will continue to produce increasingly “unpredictable and dangerous” climate impacts. As significant sources of global emissions, companies and organisations have a fundamental responsibility to mitigate these impacts through climate leadership and innovation. 

Without mitigating action, not only are companies exposed to increasing climate-related risk, but customers, employees and shareholders are increasingly expecting responsible business practices too. As the GHG Protocol highlights: “By addressing GHG emissions, companies can identify opportunities to bolster their bottom line, reduce risk, and discover competitive advantages.”

Scope 1, 2 and 3 Emissions Examples

The Scope 1, 2 and 3 emissions framework includes the GHGs carbon dioxide, methane, nitrous oxide and fluorinated gases. Scope 1 emissions refer to the “direct” GHGs a company emits, for example, by running its machinery and vehicles. Scope 2 emissions are the “indirect” emissions generated by the production of the energy an organisation buys, such as for heating and cooling its buildings. Lastly, Scope 3 emissions also fall under “indirect” GHG emissions. However, these refer to the emissions along a company’s entire upstream and downstream value chain of customer and supplier-produced emissions.

Deloitte says Scope 3 is nearly always the largest category, often accounting for more than 70% of the organisation’s total emissions. For example, a product manufacturing company would likely incur significant emissions from raw materials extraction, processing and manufacturing.

The Complexities in Measuring and Managing Indirect Emissions

Scopes 1 and 2 are mostly within an organisation’s control. This is because companies tend to have the data available to convert their direct energy purchases into GHG emissions volumes.

Scope 3 emissions, on the other hand, are often more difficult to measure and control. They require tracking activities across the entire value chain and “intensive collaboration” with suppliers and customers to reduce emissions.

While Scope 3 emissions often have the largest climate impact, the complexity of measuring and mitigating this category means it is often neglected in climate plans. “Only 9% of companies worldwide are really tracking Scope 3 emissions, ” says Julie Gerdeman, CEO of Everstream Analytics.  

How Is the Technology Industry Tackling Its Scope 1, 2 and 3 Greenhouse Gas Emissions

The technology industry is responsible for 2% to 3% of global emissions, according to the UN. This percentage is equivalent to the world’s aviation industry. The industry, therefore, is under pressure to dramatically and rapidly mitigate its emissions. 

A 2022 analysis by Tech Monitor on 30 of the world’s largest technology companies revealed mixed progress on containing emissions. While many have succeeded in cutting their direct GHGs by switching to clean energy sources, they often have “carbon hot spots” in Scope 3, says Laura Tedeschi, ICT sector lead at Carbon Trust. She added that supplier engagement, sector collaboration and early-stage product innovation are “the only way to solve these industry-wide issues”. 

Apple is one company taking specific steps to tackle its Scope 3 emissions. In October 2022, the company released a statement outlining its plans to make its global supply chain carbon-neutral by 2030. “We’re determined to be a ripple in the pond that creates a bigger change,” said CEO Tim Cook. The statement also highlights that Apple’s corporate operations have been carbon neutral since 2020. 

Last year, Samsung also announced its plans to invest over USD 5 billion by 2030 to achieve net zero direct and indirect emissions by 2050. This would reduce 17 million tonnes of carbon dioxide-equivalent emissions based on 2021 figures, the company said. 

However, setting and meeting emissions abatement targets are two very different things. Accurately monitoring and effectively mitigating emissions across value chains is complex and expensive – but must now underpin all business activities from now and into the future to keep 1.5°C alive. 

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