Why Scope 1, 2, and 3 Emissions Matter
Organizations use the Scope classifications to report GHG emissions. Learn why these categories of direct and indirect emissions matter.
By GreenPortfolio Team
June 21, 2023
Scope 1, 2, and 3 emissions are categories of greenhouse gas (GHG) emissions that are classified under the Greenhouse Gas Protocol, a widely-used international accounting tool that helps organizations measure and manage their GHG emissions. You can track global emissions here.
There are two sources of emissions we’ll explore today: emissions from companies and emissions from consumers.
Organizations use the Scope 1, 2, and 3 classifications to identify, quantify, and report their GHG emissions. By understanding these categories, companies can target emission reduction efforts more effectively, mitigate climate change risks, and contribute to global sustainability goals.
Scope 1 emissions
Scope 1 emissions are direct emissions originating from sources owned or controlled by an organization. These include on-site fuel combustion, company-owned vehicles, and industrial processes. Examples are emissions from burning natural gas for heating or carbon dioxide released during cement production.
Scope 2 emissions
Scope 2 emissions are indirect emissions generated by the production of electricity, heat, or steam purchased by an organization. They represent the GHG emissions resulting from the energy used to power facilities or operations. For example, emissions produced by a power plant generating electricity for a company's office building would be considered Scope 2 emissions.
Scope 3 emissions
Scope 3 emissions are all other indirect emissions that occur throughout an organization's value chain. These include emissions from upstream and downstream activities, such as raw material extraction, transportation, waste disposal, and employee commuting. They are often the largest source of an organization's emissions and can be more challenging to measure and manage.
Corporate emissions reporting requirements
Although government policy mandating corporate reporting of emissions is limited, some companies are required to report emissions, at least in part. The US Environmental Protection Agency (EPA) requires large emitters to report their Scope 1 and 2 GHG emissions annually through the Greenhouse Gas Reporting Program (GHGRP). In addition, a proposal last year by the Securities and Exchange Commission (SEC) will require corporations to step up reporting of Scope 1, Scope 2, and relevant Scope 3 emissions over the next few years. Some states, such as California, have implemented their own reporting requirements for Scope 3 emissions.
While GHG emissions from companies are categorized by Scope, for consumers emissions fall into the broader parallel categories of direct (similar to Scope 1) and indirect (similar to Scopes 2 and 3).
Read on to learn how these categories differ and review some of the actions you can take as a consumer to reduce your carbon impact.
Direct emissions
Direct emissions are those that come directly from sources you own or control, such as a personal vehicle or home. Do you drive to work? Use a gas stove? Both of these lifestyle choices contribute to your direct emissions.
Indirect emissions
Indirect emissions are emissions related to your activities that originate with sources controlled by another entity. Examples of indirect emissions are emissions related to the production of the energy you use, the goods you purchase, or the services you use. This may include food, clothing, travel, and where you bank and invest.
Even where you live – a city or suburb; the US or Canada – contributes to your indirect emissions. The average carbon footprint for a person in the United States is 16 tons, one of the highest rates in the world. To better understand your carbon footprint, The Nature Conservancy has a carbon emissions calculator, so you can quantify your impact and take action to change it.
4 ways to reduce your emissions
Ready to take charge of your carbon impact? Here are 4 ways to reduce your emissions.
#1: Switch your transportation
To reduce your direct emissions, you can switch to more sustainable modes of transport. Try using public transportation, cycling, or walking. Enlist your employer to provide incentives for using these climate-friendly choices during your daily commute.
#2: Update your home energy use
You can also opt for energy-efficient appliances and lighting – the Inflation Reduction Act may help lower the cost of upgrading – and reduce your overall energy consumption. To further reduce your indirect emissions, consider switching to a renewable energy provider. Another option is to purchase renewable energy certificates (RECs), which offset electricity usage with renewable energy. If you need help getting started, Wildgrid can help you improve the energy efficiency of your home.
#3: Reconsider your purchasing
Be thoughtful about your purchasing habits. When you can, choose more sustainable and locally-sourced products, reduce waste, cut down on single-use plastics, and participate in the circular economy!
#4: Beware of greenwashing
Keep an eye out for greenwashing, which is when an organization represents its practices as more environmentally friendly than they are. As an example, banks have provided trillions in funding to fossil fuel projects since 2016, despite making claims of caring for the planet. GreenPortfolio can help you choose financial products that don’t fund fossil fuels.
Join our waitlist to learn more about how your money can have a positive impact on climate change.
More articles you'll find interesting
Quick Links
Contact
Disclaimer: GreenPortfolio aims to keep all information on the site current and accurate. However, you may find differences between information listed here and information listed on a financial product provider’s website. Opinions expressed here are not those of any bank, credit card issuer or financial institution, and have not been reviewed, approved, or otherwise endorsed by any of these entities. Please complete your own due diligence before making any financial decisions.
Advertising Disclosure: This article/post may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services but this compensation does not influence our reviews or opinions. Read about our methodology to learn how we choose financial products to include on our platform.
©2023 GreenPortfolio Inc.