Scope 1, 2, and 3 Emissions: What Every Business Needs to Know

Global greenhouse gas emissions have surged by 60% since 1990, and they continue to rise. In today’s climate-conscious world, businesses are digging into every part of their product life cycle to figure out where carbon emissions are coming from and how to cut them down. Being transparent about emissions is becoming a major expectation from investors, customers, and regulators. Today, sustainability isn’t just about a greener future – it’s a smart, competitive move.

To take meaningful action, businesses first need a clear picture of their emissions. That’s where emission scopes come in. Once you know what you’re dealing with, you can build a smart, realistic strategy to reduce your impact and stay ahead of the game.

Let’s break Scope 1, 2, and 3 emissions down in simple terms.

Companies leave behind a footprint with every product they produce and every service they offer. The footprint is what we call greenhouse gases or emissions. The footprint can be direct or indirect. They are grouped into three main “scopes.” These three scopes cover various stages of a product’s life cycle. From cradle to grave, one could say.

But why should we know about them? Understanding Scope 1, 2, and 3 is at the heart of something called GHG accounting - the process companies use to measure and report their greenhouse gas emissions. It helps businesses see exactly where their emissions come from, set goals that actually make sense, and take real steps toward being greener.

Picture Earth as a cosy home wrapped in a delicate yet powerful blanket. This blanket, woven from greenhouse gases like carbon dioxide and methane, traps just enough warmth from the sun to keep the planet habitable. Without it, Earth would be an inhabitable cold place. Over time, the balance of life shifted, and the number of greenhouse gases shot up. With more and more industries leaving behind their footprint up in the blanket, the blanket became crowded with greenhouse gases, trapping heat that could no longer escape into space. As emissions rose, so did the temperature. Global warming happened, shifting weather patterns, melting ice caps, and elevating sea levels. With nature struggling to restore balance, it became essential for industries and individuals to be mindful of their impact.

Let’s take a look at the difference between Scope 1, 2, and 3 emissions, which represent direct and indirect emissions of an organisation.

This is the easiest of the three emissions to track and control because they originate directly from sources owned by an organisation. It’s like turning on a gas stove at home.

These emissions come from on-site fuel combustion, company-owned vehicles, and industrial processes that release greenhouse gases directly into the atmosphere. Small changes, like improving heating and cooling systems or using solar panels can make a big difference.

Let us look at an example. Steel production plants use huge furnaces that consume coal or natural gas to liquefy raw materials. This process generates extensive carbon dioxide emissions. In response, many companies are now switching to greener solutions, such as electric arc furnaces fuelled by renewable energy.

Just like us humans, every business depends on energy to function - whether it’s powering offices or running machinery. Different from Scope 1, Scope 2 emissions are produced outside of an organisation. These are indirect emissions resulting from the electricity, steam, heating, and cooling that a company purchases from external providers.

Consider a corporate office buzzing with activity. Computers humming, air conditioning keeping things cool, lights brightening the workspace. Now, if all that electricity is coming from a coal-powered grid, the company isn’t directly burning fossil fuels, but it's still responsible for the emissions produced to generate that energy.

Scope 3 emissions are the hardest to track because they happen outside a company’s direct operations.McKinsey & Company reports that Scope 3 emissions often account for as much as 90% of a company's overall carbon footprint. They come from suppliers, product transportation, employee commuting, and even the way customers use and dispose a product. Businesses can lower their Scope 3 emissions by selecting sustainable suppliers and optimising their transportation systems.

Scope 3 emissions consist of embodied carbon, which leading organisations are increasingly prioritising.Learn more about embodied carbon and its significance here.

For Scope 3 emissions example, imagine a smartphone company. While the company itself may not be burning fossil fuels, its suppliers mine raw materials and factories assemble devices. And eventually, we, the customers, use electricity to charge them.

Yes, Scope 3 is complicated - but that’s exactly whatKarbonWise is built for. Our end-to-end solution weaves sustainability into your core business model, so carbon reduction isn’t an afterthought. It’s a built-in strategy.

Breaking down emissions into Scope 1, 2, and 3 helps companies understand the framework of their corporate carbon footprint. It’s vital to determine where the problem lies, for a solution to be born.

Take Riya, she works for a logistics company managing delivery trucks. At first, she focused on direct emissions (Scope 1) and electricity used in warehouses (Scope 2). But soon, she realised the bigger challenge was emissions from vehicle manufacturing and global supply chains. To tackle this, she pushed for electric trucks and partnerships with suppliers using renewable energy.

Tracking carbon emissions is a key step in tackling climate change. The way emissions are measured affects everything, from how the policies are shaped to the strategies businesses use to reduce their footprint.

There are different ways to measure carbon emissions, and each one has its own pros and cons:

Each approach has strengths and limitations, but integrating multiple methods improves reliability.

Obtaining precise emissions data may seem simple, but it's actually a challenging puzzle. One big problem? Reports from different industries are inconsistent. Different sources contribute to emissions, and not all companies have access to real-time monitoring technologies. Not every business can afford the cooperation and equipment needed to collect accurate data. Transparency is further complicated by the fact that Scope 3 emissions frequently involve several third parties. In order to resolve this, industries must collaborate, use more transparent tracking techniques, and support laws that enable data collecting. It’s a challenge, but better data means smarter climate strategies.

Now that we understand the framework for emissions, the methods to collect data, and the regulations, the next step is reduction.

Explore different ways to cut emissions and choose a realistic plan that helps you reach Net Zero before 2050. 

Net zero is a state of equilibrium where the amount of carbon emitted into the environment is equal to the amount removed. Achieving this balance requires a strategic approach that addresses emissions across all greenhouse gas emission scopes – direct, indirect, and supply chain-related.

Trying to reach net zero without breaking emissions into Scope 1, 2, and 3 is like trying to navigate with your eyes closed. Without this clear categorisation, companies can’t see the full picture of where their emissions are coming from. That means efforts get unfocused. Businesses might tackle only what’s obvious, missing bigger, hidden sources of emissions. When that happens, true net zero becomes nearly impossible to achieve. As the World Economic Forum emphasises, “Urgent and coordinated global action is needed within the next decade to combat the growing climate change threat.”

Categorising anything improves efficiency, and emissions are no exception. Dividing GHG protocol emissions into Scope 1, 2, and 3 gives businesses the clarity they need to tackle their carbon footprint effectively. Each scope tells a different part of the story, and all are critical in their own way.

Of course, making sense of all that data, and turning it into measurable action, can be complex. KarbonWise makes it easier. With our integrated tools, you can simplify emissions tracking, improve data accuracy, and build a strategy-aligned path to net zero.

Ready to see the difference organised, reliable data can make?