What are Scope 1,2,3 emissions?

All emissions that occur from an activity related to a service or item a company buys to produce its own products. For our example company, all ingredients used to create the finished products classify as purchased goods and services.

All emissions from capital goods purchased by the company.

What’s the difference from the previous category? Capital goods usually have a longer shelf life, so if our example company bought 5 new trucks for their fleet, the emissions from these would be categorized under capital goods, whereas the carrots the company buys as ingredients for their packaged products would fall under purchased goods and services.

This category can be confusing to differentiate from Scope 2 emissions. Emissions from fuel and energy-related activities cover everything energy-related that isn’t scope 2, such as emissions from generating the final form of fuel or energy a company is using, transmission, and distribution losses until the energy source reaches the company.

Transportation and distribution encompass emissions from transporting products purchased by the company (downstream) or products from the company further down the value chain (upstream).

Our example company would account transportation of ingredients or other purchased products to their locations for upstream transportation and distribution. Since our example company owns its own fleet, transportation of its products to the retailer storage would fall under Scope 1 but emissions from distribution of their products from the retailer storage to the store and from the store to the consumer’s home would be Scope 3, downstream transportation and distribution.

Emissions from waste treatment disposal generated within a company’s operations but treated elsewhere, i.e. in a landfill, are categorized as Scope 3, waste generated in operations.

Emissions from a company’s employees traveling for business-related activities in vehicles not owned by the company itself are considered Business travel. For our example company, this would mean any trips for business.

Since our example company owns its own fleet, emissions from its own distribution would not fall in this category.

The Employee commuting category captures emissions from the employees’ trips to and from their workplace.

This category covers all emissions from leased locations (upstream) or leasing locations (downstream), like energy used or fugitive emissions in these assets.

Processing of sold products mostly applies to intermediary products and it refers to the greenhouse gas emitting activities that occur at potential processing after the product is sold – but before consumer use. Processing of sold product emissions are attributed at a per-product basis.

If our example company is also providing deli meat to retailers, the emissions that occur at the retail store from the slicing machine or from warming a panini in the deli, are categorized as processing of sold products.

Emissions that occur from activities of the end-users of a product categorize under Use of sold products.

For our example company, this category would include emissions from consumers refrigerating and cooking the product.

Any emissions generated from waste disposal and treatment including recycling fall under the End-of-life treatment of sold products category.

The emissions from recycling the tin and carton of a product of our example company or any material sent to a landfill are reported under Scope 3, End-of-life treatment of sold products category.

Franchises, as businesses operating under a company’s license, are outside the boundaries of the licensing company’s Scope 1 and 2 so any emissions from franchise activities have their own Scope 3 category.

This category applies mostly to investment and financial services companies as the provided capital is deemed as a provided service. Investments are also considered subsidiary companies where the mother company owns over 50% or associated companies where the mother company has influence but not financial control (Ownership between 20%-50%). Any emissions that occur from activities of the invested companies classify as Scope 3, investments.