What are Scope 1,2,3 emissions?

The terms Scope 1,2,3 emissions are casually thrown around in the sustainability space – a bit too casually if you ask us. If you didn’t Google it the first time you heard it, you probably have an idea of what Scopes 1,2,3 mean out of frequent usage. Let’s untangle them so that you can confidently share your point of view on “the challenge of Scope 3 emissions in food” during the next meeting!

First, let’s add meaning to each Scope individually.

What is Scope 1?

Scope 1 emissions cover the greenhouse gas emissions from the operations and activities that the company owns and directly controls.

For example, for a food-producing company with 2 corporate offices, 3 factories, and its own distribution fleet, its Scope 1 emissions would cover all greenhouse gas-emitting activities and operations that occur within these boundaries.

What is Scope 2?

Scope 2 emissions come from the energy used for the operations and activities that the company owns and directly controls. More specifically -and relevantly to food companies- Scope 2 emissions come from electricity, cooling, steaming, and heating.

For the same food-producing company example as above, Scope 2 emissions would come from the electricity used in the corporate offices and factories, and from heating, steaming of refrigerating products and ingredients in their factories.

What is Scope 3?

Scope 3 emissions is the most complex category to grasp but often the most significant one, particularly for food and beverage producers and retailers. Scope 3 emissions refer to all the greenhouse gas emitting activities that occur across the entire value chain, both before (upstream) and after (downstream) the company’s operations.

Every greenhouse gas-emitting activity outside the management of our example food-producing company is its Scope 3. This includes activities in the supply chain before and after our example company such as emissions from ingredients, other purchased goods as well as activities after the product hits the retail shelf sale: Refrigeration at the retailer, use and disposal of the products from consumers.

Since Scope 3 emissions cover such a broad spectrum of activities, scope 3 has 15 different subcategories:

1. Purchased goods & Services + -

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.

2. Capital goods + -

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.

3. Fuel- and energy-related activities + -

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.

4, 5. Transportation and distribution – Downstream & Upstream + -

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.

6. Waste generated in operations + -

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.

7. Business travel + -

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.

8. Employee commuting + -

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

9, 10. Leased assets – Upstream and downstream + -

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

11. Processing of sold products + -

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.

12. Use 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.

13. End of life treatment of sold products + -

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.

14. Franchises + -

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.

15. Investments + -

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.

How are Scope 1, 2, 3 emissions categorized?

In broad strokes, the 3 Scopes categorize a company’s emissions based on whether the source of the emissions is under the company’s control or not. Under this premise, Scope 1 and Scope 2 emissions fall under the company’s control, and Scope 3 are the emissions that occur outside of the company’s control, both before and after the company’s operations.

Another categorization that applies to Scope 1, 2, 3 emissions refers to the source of emissions. Direct emissions fall within the boundaries of a company’s Scope 1 and indirect emissions classify as Scope 2 and 3, depending on the activity.

Where do Scopes 1, 2, 3 come from?

Scopes 1, 2, 3 are categories that the GHG Protocol rolled out in its different emissions reporting standards. Scope 1 corresponds to the GHG Protocol Corporate Standard, Scope 2 has its own GHG Protocol Scope 2 Guidance and Scope 3 is explained and standardized in the GHG Protocol Corporate Value Chain (Scope 3) Accounting & Reporting Standard. All of these standards and the Scope categorization encompass product emissions as reported in the GHG Protocol Product Life Cycle Accounting and Reporting Standard. The GHG Protocol standards are the most ubiquitously accepted standards in emissions reporting, with many frameworks referring to and being compatible with to them.

Curious about GHG Protocol?

You're right to be, it's everywhere! Skip the long standard reading and catch up with the GHG Protocol standards in our 5' explainer