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!
Here’s an outline of the questions covered in this article:
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.
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.
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.
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.
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.
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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.
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Why should a company measure its Scopes 1, 2, 3 emissions?
Companies in general, and food companies in particular, should measure their Scope 1, 2, and 3 emissions for several important reasons:
1. Understand emissions
A company with scope 1, 2, 3 emissions calculated can understand what its climate impact is in absolute terms, i.e. how it contributes to climate change. Moreover, with the scope categorization, the company can understand which parts of its operations or value chain are hotspots and should be prioritized in sustainability initiatives.
2. Climate mitigation
If a company doesn’t know where its emissions are generated and how many, it cannot take the right steps to reduce its climate impact. A comprehensive calculation of scope 1, 2, 3 emissions will show you where to act first and forcefully, what to do to mitigate these emissions and how to budget for them.
3. Environmental responsibility
These days, knowing and managing corporate emissions is simply good business contact. Corporations worldwide acknowledge their contribution to climate change and own up to the responsibility to mitigate it. Knowledge of Scope 1, 2, 3 emissions is central and the first step to own up to this responsibility.
4. Supply chain management
Scope 3 emissions, particularly for food companies, involve the entire value chain, including suppliers, at-farm emissions, and transportation. Measuring these emissions enables companies to understand and address the climate impacts associated with their supply chain. It helps identify high-emitting activities, collaborate with suppliers to improve sustainability, and make informed decisions about sourcing and logistics.
5. Regulatory compliance
Measuring Scope 1, 2, and 3 emissions helps ensure compliance with environmental regulations and reporting requirements. Scope 1, 2, 3 emissions are ubiquitous in ESG reporting and frameworks. Many jurisdictions and regulatory bodies now require companies to disclose their emissions and set reduction targets. Measuring emissions ensures compliance with these regulations and enhances transparency.
How can a company measure its Scopes 1, 2, 3 emissions?
To measure Scope 1, 2, and 3 emissions, follow these 9 steps incrementally and meticulously:
1. Set Boundaries
Determine the organizational and operational boundaries for emissions measurement, including owned or controlled sources (Scope 1), purchased electricity (Scope 2), and the value chain (Scope 3).
2. Identify Emission Sources
Conduct a comprehensive assessment to identify and categorize emission sources within each scope. For Scope 1, this may include direct emissions from combustion processes or refrigerant leaks. For Scope 2, it involves indirect emissions from purchased electricity. Scope 3 includes emissions from activities like transportation, procurement, and waste management.
3. Collect Data
Collect relevant data for each emission source, considering factors such as fuel consumption, energy usage, transportation distance, and supplier information. Utilize utility bills, invoices, records, and other available data sources. At this stage, ensure you have ESG software to better manage your data and the collection process as well as to set your company up for success with scaling up.
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4. Apply Emission Factors
Calculate emissions by multiplying activity data (e.g., fuel consumption) with appropriate emission factors (e.g., kg CO2e per unit of fuel). Emission factors can be obtained from industry-specific databases, emission inventories, or emission calculation tools. If you have selected ESG software, you can skip this step. CarbonCloud applies compliant emission factors to your data automatically.
Wondering how to scale your Scope 1, 2,3 emissions work? Check out our guide How to set up a pilot for Scope 1, 2,3 emissions!
5. Calculate Scope Totals
Sum the emissions from all sources within each scope to determine the total emissions for Scope 1, 2, and 3. This step provides a comprehensive overview of the company’s carbon footprint. Here again, the right software, like CarbonCloud, will do the calculations automatically for you!
6. Verify and Validate
Consider engaging third-party auditors or sustainability consultants to verify and validate the emissions data and calculation methodology. This step enhances credibility and ensures accuracy.
7. Continual Improvement
Regularly review and update the emissions measurement process as the company evolves. Implement strategies to reduce emissions, set emission reduction targets, and monitor progress over time.
8. Engage Stakeholders
Communicate the results and efforts to stakeholders, including employees, customers, investors, and supply chain partners. Engage in dialogue, seek feedback, and collaborate to improve your climate data and drive collective action towards sustainability.
By following these steps, you can effectively measure your company’s Scope 1, 2, and 3 emissions, gain insights into your climate impact, and establish a foundation for informed decision-making and emission reduction strategies.
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