Why organizations divide emissions into scopes
When a company, city or institution reports its greenhouse gas emissions, a single total would hide a lot. Some emissions come from equipment it owns, some from the electricity it buys, and some from activities across the long chain of suppliers and customers. A widely used accounting convention sorts these into three groups called scopes, so that readers can see where emissions arise and who has the most direct control over them.
The scope system is a reporting framework, not a law of nature. Organizations choose their boundaries, follow methods that have some flexibility, and may report in different ways. This article describes the general idea. It does not describe any particular company.
Scope 1: direct emissions
Scope 1 covers greenhouse gases released directly from sources that the organization owns or controls. Typical examples are:
- fuel burned in boilers, furnaces and on-site generators
- fuel burned in vehicles the organization owns
- emissions from industrial processes, such as chemical reactions in manufacturing
- leaks of gases such as methane or refrigerants from equipment
Scope 1 is usually the easiest to measure because it relies on the organization’s own fuel records and operations.
Scope 2: purchased energy
Scope 2 covers emissions from the generation of electricity, steam, heating or cooling that the organization buys and uses. The emissions physically occur at the power plant, not at the buyer’s site, but they are counted here because the buyer’s demand causes them.
Two methods are commonly reported. A location-based figure uses the average emissions of the local electricity grid. A market-based figure reflects the specific contracts and energy purchases the organization has chosen, such as a renewable power agreement. The two can give different totals for the same year, and reports often show both for this reason. Whether a market-based claim reflects a real change in what is generated is debated.
Scope 3: everything else in the value chain
Scope 3 covers all other indirect emissions that occur in the organization’s value chain, both upstream (before it) and downstream (after it). A common framework divides Scope 3 into fifteen categories. Examples include:
- Upstream: purchased goods and services, the extraction and production of raw materials, transport of inputs, business travel, employee commuting, and waste generated in operations.
- Downstream: transport of products to customers, the use of sold products, and what happens to products at the end of their life.
Scope 3 is often the largest share of an organization’s total. For a clothing retailer, most emissions may come from making the garments. For a maker of cars or appliances, a large share may come from customers using the product. For a fuel producer, the burning of sold fuel by customers can be large, which is part of why Scope 3 is a topic of debate in the oil, gas and coal sectors.
The categories that matter most depend heavily on the business, so the framework asks organizations to identify which are relevant.
How scopes avoid double counting, and where they do not
The scopes are designed so that one organization’s Scope 1 is another’s Scope 2 or 3. A power company’s fuel burning is its Scope 1, and it appears as the Scope 2 of its customers. This arrangement helps each party see its own responsibility. It also means that totals cannot simply be added across companies, because the same ton may appear in several reports.
Why Scope 3 is hard
Data quality. Scope 1 and 2 rely largely on records of fuel and electricity use. Scope 3 depends on information from suppliers and customers, or on averages and estimates. Spend-based estimates are rough, and supplier-specific data is better but harder to obtain.
Boundary choices. Organizations differ in which categories they include and how they allocate shared emissions, making comparison between companies uncertain.
Influence. An organization has more direct control over Scope 1 than over how customers use a product. Responsibility and influence are not the same thing, which is a central argument in discussions about target-setting.
Changes over time. Switching suppliers, changing methods or improving data can alter reported figures even when real-world emissions are unchanged.
How scopes appear in targets and policy
Many organizations that announce net zero targets or other climate goals say which scopes they cover. A target that covers only Scope 1 and 2 is narrower than one that includes Scope 3, and neither is automatically better. What matters is whether the target is clear about boundaries, base year and methods. Regulators in some jurisdictions require or are considering requirements for emissions disclosure, and the details differ by region and are changing, so current rules should be checked directly.
Reading a report with care
A few questions help when you look at an organization’s emissions disclosure. Which scopes are included, and are all relevant Scope 3 categories covered? Are Scope 2 figures location-based, market-based or both? Is the data measured or estimated? Has the method changed since last year? Is the result independently reviewed? Answers to these usually say more about the quality of a report than the headline number does, and they connect to the broader question of how a carbon footprint is calculated.