Ivo Bozukov is the founder of TrakiaBioProduct, a company he launched in 2007. Ivaylo Bozoukov also serves on the board of several companies, including Forum Energy Technologies, having been appointed the company’s vice president of energy transition. This article will look at the ever-increasing impetus for companies to reduce their greenhouse gas emissions, providing an outline of the definitions of scope 1, 2 and 3 carbon emissions.
Companies all around the world today are seeking to reduce their carbon footprint. When it comes to reporting progress, terminology like ‘scope 1, 2 and 3 emissions’ is often used, but what do those numbers actually mean?
In the journey to net zero, one of the main ways that companies are measuring and assessing their greenhouse gas emissions is by categorising them into three different ‘scopes’.
Scientists have warned for decades that, with regard to carbon emissions and climate change, inaction will lead to disastrous consequences, including mass migration due to flooding and other natural disasters, drastic hunger levels, the collapse of financial markets and a variety of other socio-economic catastrophes. Businesses were impacted by COVID-19 like no other event in modern history. Nevertheless, experts warn that the very worst consequences of climate change are even more alarming.
Today, forward-looking companies are increasingly prioritising sustainability and finally treating it as a business imperative rather than a mere tick box for CSR policies. Businesses all over the world are coming under increasing pressure from governments and consumers alike to reduce their environmental impact. One of the most significant ways they can achieve this is by lowering their carbon footprint, and this starts with monitoring and reducing their carbon emissions.
Announcements recently made by GAFA and other world-leading companies illustrate just how significant carbon footprints have become for businesses. For example, Apple has committed to making its entire supply chain carbon-neutral by 2030, with the likes of Nike, Microsoft, Starbucks and Unilever joining in the mission to accelerate their transition to a net-zero carbon economy.
Research shared by SaaS platform Plan A suggests that carbon emissions are responsible for around 81% of all greenhouse gas emissions, with businesses responsible for a large proportion of that figure. The other most common greenhouse gases are methane, accounting for 10% of greenhouse gases, nitrous oxide at 7% and fluorinated gases at 3%.
To take tangible action to reduce their emissions, companies need to understand and measure where those emissions are created in the production chain. The three scopes provide a means for companies to categorise the different emissions they create in operations and the wider value chain, i.e. via customers and suppliers.
The concept of the three scopes was first mentioned in the Greenhouse Gas Protocol, the world’s most widely used greenhouse gas accounting standard. Developing an emissions inventory incorporating scope 1, 2 and 3 emissions helps companies to understand and measure emissions created by their value chains, enabling them to focus their efforts on the greatest emission reduction opportunities.
Businesses have a responsibility to monitor and report their CO2 emissions, an important first step in terms of reducing their carbon footprint. To do this, companies must first classify their carbon footprint in terms of the three scopes.
Scope 1 emissions are created directly by company-owned and controlled resources, meaning that they are released into the earth’s atmosphere as a direct result of the company’s activities. This category is further divided into four subcategories: stationary combustion, e.g. heating sources and fuels; mobile combustion, e.g. cars, trucks and vans owned by the company; process emissions, which are released during industrial processes; and fugitive emissions, which are leaks of greenhouse gases, such as those produced by air conditioning and refrigeration units.
Scope 2 emissions are indirect emissions created through the generation of energy purchased by the company from a utility provider. In other words, scope 2 emissions cover greenhouse gas emissions released into the atmosphere due to the company’s consumption of purchased electricity.
Scope 3 emissions are all indirect emissions not included in scope 2 that occur in the value chain of the company, including both downstream and upstream emissions. In other words, scope 3 emissions include those linked to the company’s operations. Under Greenhouse Gas Protocol, scope 3 emissions are categorised in 15 subcategories, including travel, employee commuting, waste generated, purchased goods and services, transportation and distribution, fuel and energy-related activities, capital goods, investments, franchises, leased assets and use of sold products.
First published in 1998, the Greenhouse Gas Protocol established a standard framework for monitoring and managing greenhouse gas emissions created by both public and private sector operations. Formed through a collaboration between the World Business Council for Sustainable Development and the World Resources Institute, the Greenhouse Gas Protocol created tools, training and accounting standards to help companies measure and manage emissions, as well as providing requirements and guidelines to help them prepare emissions inventories, including the calculation of their total corporate carbon footprint.