In an era of increasing environmental consciousness and the pressing need to address global warming, understanding the intricacies of greenhouse gas emissions (GHGs) is paramount for businesses striving to achieve net zero and carbon neutrality. The Greenhouse Gas Protocol (GHGP) serves as the preeminent guideline for carbon accounting, delineating GHGs into three distinct scopes:
Established independently from any government in 2001, the GHGP provides a standardized approach for businesses to manage and calculate their emissions, facilitating the creation of policies and regulations. By comprehending all scopes of emissions, companies are better equipped to devise and implement effective strategies for combating climate change and reducing GHG emissions.
It is important to note that not all GHGs are carbon dioxide (CO2), but they are all incorporated within the GHGP's carbon accounting framework. The Protocol provides a comprehensive basis for calculating and measuring emissions, as exemplified by platforms such as Net0, which utilize data supplied by businesses to inform their mitigation efforts.
As we delve into the intricacies of the three scopes of emissions, it is crucial to first distinguish between direct and indirect greenhouse gas (GHG) emissions:
Direct GHG emissions emanate from sources owned and controlled by the reporting entity, highlighting their immediate environmental impact.
Conversely, indirect GHG emissions are attributable to the reporting entity's activities, but originate from sources under the ownership or control of another entity, reflecting a broader, shared responsibility in mitigating climate change.
The classification of scopes hinges on two fundamental factors, which are instrumental in understanding a company's contribution to greenhouse gas emissions:
By discerning these elements, businesses can effectively assess their environmental impact and devise targeted strategies to mitigate it.
Scope 1 emissions are direct emissions that are made during a production process with items that are owned and controlled by a company including boilers, furnaces, emissions from machinery and equipment, and vehicles which use fuel.
Scope 2 emissions are indirect emissions that come from the generation of purchased electric, heating, cooling, gas, steam, and electric vehicles.
Scope 1 and 2 emissions are a mandatory part of reporting for many businesses around the world.
Scope 3 emissions, alternatively referred to as value chain emissions, encompass indirect greenhouse gas emissions both upstream and downstream of an organization's core operations. It is worth noting that one organization's scope 3 emissions constitute the scope 1 and 2 emissions of another entity.
While businesses may not exercise direct control over scope 3 emissions, they can still exert influence over the activities that generate these greenhouse gases. For instance, logistical responsibilities hinge on shipping agreements established between pre-production, the reporting company, and the final distribution center. Addressing scope 3 emissions, which include upstream and downstream emissions, often necessitates collaboration with various stakeholders and businesses throughout the value chain. Organizations can select suppliers and vendors based on their eco-friendly processes and practices, thereby incorporating reducing greenhouse gas strategies into their reporting.
To prevent double counting emissions across categories, the 15 distinct scope 3 categories are designed to be mutually exclusive. This framework ensures accuracy in assessing an organization's environmental impact and facilitates the development of comprehensive emissions reduction plans.
Upstream emissions originate during pre-production stages prior to reaching the reporting company's facility, encompassing materials acquisition and preliminary processing emissions.
These emissions include the following 8 categories:
Downstream emissions occur after a product departs from the reporting company's facility, encompassing aspects such as distribution, product use, and product lifecycle. These emissions predominantly relate to the goods and services sold by the company. Downstream interventions primarily hinge on product and service design, as well as modifications in consumer behavior.
These emissions include the following 7 categories:
By assessing these categories, organizations can develop a comprehensive emissions inventory to identify their total emissions and implement effective strategies for reducing greenhouse gas and process emissions.
Carbon emissions account for 81% of overall greenhouse gas emissions, with businesses being major contributors. Many organizations are mandated to report on scope 1 and scope 2 emissions, while comprehensive reporting across the entire value chain is becoming the standard.
Attaining net-zero commitments necessitates addressing scope 3 emissions, as they often represent over 70% of a company's carbon footprint for numerous businesses.
Given that scope 3 emissions constitute more than 40% of total emissions, the Science Based Targets initiative (SBTi) now requires businesses to establish targets encompassing this impact.
Globally, measuring and reporting on scope 3 presents an opportunity to accelerate environmental engagement through supply chains, international and local businesses, regional and national governments, and consumers. Reporting on scope 3 carbon emissions enables organizations to implement the changes required by the Paris Agreement and adhere to new objectives set at COP26.
Presently, most sustainability reporting frameworks encompass criteria for all emission scopes, reflecting the increasing importance of comprehensive emission assessment in addressing climate change.
To learn more about carbon emissions, managing, and reporting them, please explore our blog and downloadable resources:
• Article: How to Reduce Upstream Emissions With the Gold Standard Framework for Supplier Engagement
• Article: GHG Reporting: Everything You Need to Know
• Article: 11 Reasons Net0 Is the Best Carbon Accounting Platform
• White Paper: How Net0 Brings Businesses Towards Carbon Neutrality in 5 Steps
Gaining insight into the emissions a business is responsible for and learning how to measure, offset, and, crucially, reduce emissions will equip your company with a proactive approach to comply with mandatory regional climate regulations. Accurate reporting to stakeholders is essential to ensure your business meets the standards of local and national governments and is prepared for value chain growth in the future.
Companies proficient in reporting all three GHG Protocol scopes of emissions also gain a competitive advantage in carbon neutrality. Furthermore, several benefits of comprehensive reporting emerge on a business's sustainability journey:
By embracing comprehensive GHG accounting and addressing all aspects of a company's activities, businesses can enjoy numerous advantages and contribute to a more sustainable future.
In the pursuit of accurate and comprehensive greenhouse gas (GHG) emission measurements, businesses can utilize the Net0 carbon management tool to assess and report on all of the scopes of emissions. The Net0 tool is designed to streamline and optimize the process, making it more accessible for organizations of various sizes and industries.
By utilizing the Net0 carbon management tool, businesses can effectively measure all scopes of emissions and take the necessary steps towards a sustainable and carbon-neutral future. The tool's streamlined approach ensures that organizations can readily comply with evolving climate regulations, satisfy stakeholder expectations, and stay competitive in an increasingly eco-conscious market.
Q: Do companies have to report Scope 3 emissions?
A: Yes, companies will have to report on Scope 3 emissions under the new standard for corporate sustainability disclosure by the International Sustainability Standards Board (ISSB). Scope 3 emissions include emissions that originate along a company's supply chain and account for 90% of a company's overall emissions. To access Scope 3 data, companies need to establish transparent collaboration with suppliers and reciprocal climate data management.
Q: What are scope 4 emissions?
A: Scope 4 are described as avoided emissions, which means they are a result of the use of the product, and are now accounted for in the product carbon footprint. By considering the carbon footprint during a product's life cycle, this should drive changes in consumer behavior. Additionally, home-working emissions, which also contribute to the overall carbon footprint, are considered scope 4.
Q: How can companies ensure the accuracy of their emissions data when using the Net0 carbon management tool?
A: Companies can ensure the accuracy of their emissions data when using the Net0 carbon management tool by leveraging automation and AI to reduce the error rate by up to 45%, sourcing accurate data directly from systems via API, and collecting exact activity data at scale. This results in reliable emissions data for informed decision-making and effective carbon reduction strategies.
Q: Can Net0 help businesses set and achieve their emissions reduction goals?
A: Yes, Net0 can help businesses set and achieve their emissions reduction goals. The tool offers customized reporting and emission reduction planning features that allow businesses to devise strategies to reduce their carbon emissions and monitor progress over time. Net0's carbon management platform also allows businesses to set benchmarks for their emission reduction goals, enabling them to track progress against industry standards and competitor performance.
Q: Which types of companies can Net0 help with measuring and managing all three scopes of emissions?
A: Net0 can assist large companies, public companies, and governments with measuring and managing all three scopes of emissions. Net0 has a range of Fortune 500 clients that utilize its platform to accurately measure and reduce their carbon footprint across all scopes of emissions.
Net0 empowers businesses to accurately measure all three scopes of carbon emissions and implement strategies to reduce those emissions, ultimately achieving carbon-neutral status. Schedule a demo with us today to discover how Net0 can transform your organization's sustainability efforts.