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What is the origin of scopes 1, 2 and 3?
Measuring a company's greenhouse gas emissions is a prerequisite for taking action . But measuring and analyzing them can be a tedious business. Today, there are a number of carbon accounting methodologies that are used as benchmarks and standards.
These include the Bilan Carbone® methodology, the BEGES methodology, the GRI 305 standard, the GHG Protocol methodology and the ISO 14064 standard. These different GHG emissions accounting methodologies are constantly evolving, and are tending to converge in order to facilitate the production of CO2 emissions reports.
The categorization of emissions into 3 scopes was initially proposed by the GHG Protocol methodology.
Created in 1998, the GHG Protocol or "Greenhouse Gas Protocol Corporate Accounting and Reporting Standard" aims to establish an international carbon accounting standard and provide the associated tools, guides and training to accelerate the low-carbon transition of companies and governments.
The GHG Protocol is the result of close collaboration between the World Business Council for Sustainable Development (WBCSD), the World Resources Institute (WRI), several companies, governments and NGOs.
Scope 1, 2, 3: definition
In its methodology, the GHG Protocol categorizes anthropogenic greenhouse gas (GHG) emissions into 3 scopes:
- Scope 1 includes all the company's direct greenhouse gas emissions, such as space heating and emissions from company vehicles.
- Scope 2 includes indirect emissions linked to energy consumption (electricity, steam, heat, cold, compressed air, etc.) during the production of a product or service.
- Scope 3 covers all the company's other indirect emissions, such as the purchase of goods and services, the use of products sold, upstream and downstream transport of goods and raw materials, etc. Scope 3 generally represents the majority of a company's total emissions. Up to 98% for some Traace customers, for example.
Initially, the GHG Protocol methodology only mentioned scopes 1 and 2. It was only in 2011 that Scope 3 GHG emissions were specified, enabling a broader analysis of emission sources.
World-renowned scope categorization
Many international regulatory and non-regulatory frameworks are based on the GHG Protocol's scope categorization:
- The Carbon Disclosure Project (CDP)
- The Corporate Sustainability Reporting Directive (CSRD)
- The Sciences Based targets Initiative (SBTi)
The standard ISO 14064 published in 2006, the Bilan Carbone® methodology promoted by the Association Bilan Carbone or the V5 of the BEGES METHODOLOGY offer different categorizations of greenhouse gas emissions from those of the GHG Protocol. However, they are now tending to harmonize, and generally link their emissions items to the GHG Protocol scopes, as this comparative infographic shows:
Scopes 1,2,3 in detail
What is Scope 1? Direct emissions
Scope 1 includes greenhouse gas emissions linked to product production, such as fossil fuel combustion, CO2 and methane emissions. These emissions are referred to as direct emissions.
The GHG Protocol has identified five categories of direct emissions:
- Stationary combustion sources
- Mobile heat-powered sources
- Non-energy processes
- Direct fugitive emissions
- Emissions from biomass (soil and forests)
What is Scope 2? Indirect emissions related to energy consumption
Scope 2 includes greenhouse gas emissions resulting from a company's energy consumption. Electricity production is more or less emissive, depending on the energy mix of the country of origin. Indirect emissions linked to energy consumption are recorded in scope 2.
The GHG Protocol has identified two categories of indirect emissions linked to energy consumption:
- GHG emissions linked to electricity consumption
- Emissions related to the consumption of steam, heat or refrigeration
What is Scope 3? Other indirect emissions
Finally, scope 3 covers all greenhouse gas emissions not directly linked to the company's activities. They are generated throughout the value chain.
For example, the raw materials needed to manufacture a product are extracted, processed and transported to the production plant. Each of these stages emits greenhouse gases, which are included in Scope 3 of the GHG balance.
The GHG Protocol has identified sixteen main types of indirect emissions sources:
- Energy-related greenhouse gas emissions not included in scopes 1 and 2
- Purchase of products and services
- Fixed assets
- Waste
- Inbound freight
- Business travel
- Upstream leasing assets
- Company investments
- Visitor and customer transport
- Downstream freight transport
- Use of products sold
- End of life of sold product
- Downstream franchise
- Downstream leasing
- Commuting to work
- Other indirect emissions.
The limits of scopes 1,2,3 categorization
The definition of the 3 scopes does not include emissions or emission reductions achieved outside the company's scope of activity. Thus, avoided or negative emissions, such as participation in carbon contribution projects, are not taken into account.
Various reference systems have begun to take these emissions into account and propose accounting methods. However, since these methods rely on reference scenarios as assumptions, the various organizations advise caution in their use.
The NZI standard addresses these limitations
The project Net Zero Initiative is a new emissions categorization method launched in June 2018 and led by specialist consultancy Carbone 4 in collaboration with companies and a high-level scientific advisory board. The advantage of this approach to carbon accounting is that it takes into account not only induced emissions (scopes 1,2, 3), but also avoided and negative ones. The aim is to provide a benchmark for collective carbon neutrality.
Negative emissions correspond to carbon sequestration and avoided emissions to the financing or sale of "low-carbon" products and services.
This approach enables organizations to obtain a more relevant carbon footprint of their activities and financing, and maximize their contribution to the fight against climate change.
The 10 Net Zero Initiative principles, of which Traace is a signatory, structure this methodology and guarantee ambitious and effective climate action. Visit the 10 principles of the NZI here.
This methodology encourages organizations to look beyond the GHG Protocol by measuring not only scopes 1, 2 and 3, but also their climate actions. Indeed, Principle 3, which states that to structure its climate action, a company must distinguish between three different types of non-fungible action: emission reduction, avoidance and sequestration, is based on 3 pillars:
- Pillar A - Reduce your own direct and indirect emissions, i.e. Scope 1, 2 and 3 emissions.
- Pillar B - Reducing the emissions of others:
- By marketing low-carbon solutions, such as bicycle sales and rentals.
- By financing low-carbon projects outside its value chain.
- Pillar C - Increasing carbon sinks:
- By developing carbon absorption at home and in the value chain
- By financing absorption projects outside the value chain.
In this way, the NZI project complements the calculation of Scopes 1, 2 and 3 emissions, filling an important gap in the accounting of negative and avoided emissions.
Can we talk about a scope 4?
The GHG Protocol has also taken an interest in the subject, defining a scope 4 that would account for avoided emissions. Scope 4, as defined by the GHG Protocol, takes a narrower view of avoided emissions than that of ADEME or the Bilan Carbone method. It does not take into account the financing of sequestration projects.
The GHG protocol includes in this scope 4 products or services whose use has a lower carbon impact than the alternative used in the reference scenario. For example, employees who would prefer carpooling to private cars for their home-to-work journeys.
Scope 4 also includes emissions avoided through product recycling.
This approach therefore requires the most reliable reference scenarios possible, so that avoided emissions can be measured with sufficient precision. It also relies on the development of new technologies to enable less carbon-intensive practices.
The GHG Protocol is cautious about these analyses, however, and specifies that this type of assessment should neither take precedence over nor detract from efforts to calculate and reduce Scope 1, 2 and 3 emissions.
ADEME, based on the ISO 14064-1 standard, also recommends publishing this information separately from the company's greenhouse gas balance sheet.
Scope 3, a priority for many companies
Today, the GHG Protocol methodology only requires the assessment of Scope 1 and 2 emissions, restricting the measurement of Scope 3 to a mere recommendation. This is the most important limitation of the GHG Protocol methodology. According to the CDP, the value chain accounts for an average of 92% of a company's carbon footprint. This is why the best climate action a company can take today is to carry out a carbon assessment of its scope 3 in order to reduce it.
This is one of the reasons why, in France, since January 1, 2023, companies subject to the Declaration of Extra-Financial Performance (DPEF) must include all 3 emission scopes in their greenhouse gas emissions balance sheet (BEGES).
At Traace, we know all about the challenges and limits of scope 3 carbon footprinting. In particular, we have developed a module dedicated to monitoring the environmental impact and commitment of suppliers, to provide companies with an effective tool for tackling the decarbonization of their purchasing and implementing a responsible purchasing policy.
If you'd like to learn more about decarbonization and the limits of scope 3, we invite you to download our webinar in partnership with specialist consultancy Magelan on. "How to accelerate the decarbonization of your value chain"..
