Beginner’s Guide to Scope 1, 2, and 3 Emissions

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Introduction

The world of sustainability can feel overwhelming. In this beginner’s guide to Scope 1, 2, and 3 emissions you will discover that your business only needs two pillars to begin its journey:

  1. The willingness to take climate action
  2. A clear understanding of your emission sources

At Greengency, we can help you identify and understand your emission sources. This starts with carbon accounting, specifically, understanding Scope 1, Scope 2, and Scope 3 emissions.

In the sections below, you willl learn how to categorize emissions and how to use this framework to measure your company’s carbon footprint. We also include guidance from the GHG Protocol (begin you sustainability journey with our GHG Protocol article if you are new) and examples from an agrifood company and a SaaS company to make the content practical and relatable.

Scope 1: Direct Emissions from Company-Owned Sources

Definition

Scope 1 emissions are direct greenhouse gas emissions from sources your company owns or controls. These include emissions from company-owned vehicles, boilers, furnaces, and any on-site equipment that burns fuel.

GHG Protocol Categories under Scope 1:

  • Stationary combustion (e.g., natural gas for heating)
  • Mobile combustion (e.g., company fleet vehicles)
  • Fugitive emissions (e.g., refrigerant leaks)

FoodCo – Agrifood Example

FoodCo, a global agrifood company (think Nestlé or General Mills), emits Scope 1 emissions from its factory boilers and delivery truck fleets. With numerous manufacturing sites worldwide, FoodCo’s Scope 1 footprint is substantial, mainly due to the energy required for production.

Softcom – SaaS Example

Softcom is a local SaaS provider. Its Scope 1 emissions come primarily from a backup generator used at its main office during power outages. Compared to other sources, these emissions are minimal.

Scope 2: Indirect Emissions from Purchased Energy

Scope 2 emissions are indirect emissions from the generation of purchased energy, such as electricity, steam, heating, or cooling. These emissions occur off-site, but they’re attributed to your company because your operations depend on that energy.

GHG Protocol Categories under Scope 2:

  • Purchased electricity
  • Purchased steam, heating, or cooling

FoodCo – Agrifood Example

FoodCo’s Scope 2 emissions include electricity and heating consumed in its offices and factories. Given its global operations, electricity use is high, making energy efficiency and renewable sourcing a priority.

Softcom – SaaS Example

Softcom operates its own datacenters to ensure data confidentiality. The electricity used to run servers, cooling systems, and lighting in these datacenters falls under Scope 2 emissions.

Scope 3: Indirect Emissions Across the Value Chain

Scope 3 emissions include all other indirect emissions that occur in your company’s value chain. These are the most complex to measure, as they involve both upstream (e.g., suppliers) and downstream (e.g., product use) activities. The GHG Protocol defines 15 categories to consider.

To manage Scope 3 emissions effectively, you must first set clear boundaries for your carbon accounting.

GHG Protocol Categories under Scope 3:

  • Purchased goods and services
  • Capital goods
  • Fuel- and energy-related activities (not in Scope 1 or 2)
  • Upstream transportation and distribution
  • Waste generated in operations
  • Business travel
  • Employee commuting
  • Upstream leased assets
  • Downstream transportation and distribution
  • Processing of sold products
  • Use of sold products
  • End-of-life treatment of sold products
  • Downstream leased assets
  • Franchises
  • Investments

FoodCo – Agrifood Example

FoodCo’s Scope 3 emissions span its entire value chain. These include agricultural emissions from suppliers (e.g., dairy farming), transport of ingredients, production of packaging materials, and even the disposal of its products by consumers.

Softcom – SaaS Example

Softcom’s Scope 3 emissions are also extensive. They include purchased IT equipment, employee business travel, and the energy used by customers when running its software.

Why It Matters: The Importance of Measuring All Scopes

Measuring emissions across all scopes is essential to build an effective carbon reduction strategy. While Scope 1 and Scope 2 emissions are relatively easier to track, Scope 3 often makes up the majority of a company’s footprint and should not be ignored.

In many cases, more than 90% of a company’s emissions come from Scope 3. Focusing on the categories from this scope offers the greatest potential for reducing your total emissions.

Steps to Get Started with Carbon Accounting

  1. Identify Emission Sources Map all potential sources of Scope 1, 2, and 3 emissions. Engage departments, suppliers, and partners to gather data.
  2. Collect Data For Scope 1 and 2, track fuel use, energy bills, and other direct inputs. For Scope 3, collaborate with suppliers or use reliable industry averages.
  3. Calculate Emissions Use the GHG Protocol’s tools to convert data into CO₂-equivalent. For guidance, check our post on Emission Factors, which includes a curated list of emission factor database to help you get started.
  4. Set Targets Define clear, science-based targets that align with limiting global warming to 1.5°C.
  5. Implement Reduction Strategies Reduce emissions by investing in energy-efficient technologies, switching to renewables, improving logistics, and working with suppliers to cut upstream emissions.
  6. Monitor and Report Track your progress and report it transparently. Follow frameworks like the GHG Protocol and CDP to structure your disclosures.

Conclusion: Start Small, Think Big

Getting started with carbon accounting may feel daunting, especially with Scope 3. But by starting with Scope 1 and 2, you can build a strong foundation.

Even the largest companies have successfully measured their emissions. Your business can too.

By understanding your carbon footprint across all three scopes, you’ll strengthen your sustainability performance, build trust with stakeholders, and improve your business’s long-term resilience.

Ready to begin? Start by mapping your emissions sources today, and take your first step toward a low-carbon future.

Next stop is our Emission Factors Made Easy post to continue learning.

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