Scope 1 emissions come from sources a company owns or controls, such as its boilers and vehicles. Scope 2 emissions come from the electricity, heat or steam it buys. Scope 3 covers every other indirect emission in its value chain, from suppliers to business travel to how customers use its products.
The three scopes come from the GHG Protocol, the accounting standard developed by the World Resources Institute and the World Business Council for Sustainable Development. Nearly every carbon reporting rule in force today is built on it. This guide explains each scope, shows where common activities belong, and sets out which parts a small business should measure first.
Why emissions are split into scopes
The scopes answer one question: how directly is the company responsible for this emission? Direct emissions, which come out of the company’s own equipment, are separated from indirect ones, which happen somewhere else because of what the company buys or sells.
The split also prevents double counting inside a single report. Without it, a company might count the same tonne twice, or leave it out because it assumed someone else was counting it. With it, every emission has exactly one place in a company’s inventory.
The three scopes at a glance
| Scope | What it covers | Typical examples |
|---|---|---|
| Scope 1 | Direct emissions from things you own or control | Gas boiler, company vans and cars, generators, refrigerant leaks |
| Scope 2 | Indirect emissions from energy you buy | Grid electricity, district heating, purchased steam or cooling |
| Scope 3 | All other indirect emissions in your value chain | Purchased goods, flights, commuting, waste, deliveries, product use |
Scope 1: fuel you burn yourself
If the fuel is burned in equipment you own or control, the emission is yours directly. The GHG Protocol groups Scope 1 into four types:
- Stationary combustion: boilers, furnaces and generators.
- Mobile combustion: company cars, vans, trucks and forklifts.
- Fugitive emissions: leaks, mainly refrigerant gas from air conditioning and refrigeration.
- Process emissions: gases released by industrial processes such as cement or chemical production.
For most small businesses Scope 1 means heating fuel and vehicle fuel. Refrigerant leaks deserve attention too, because those gases are far more potent than carbon dioxide and a single top-up can equal months of other emissions.
Scope 2: energy you buy
When you use electricity, the emissions happen at a power station, not in your office. They are still caused by your demand, so they are reported as Scope 2. The same applies to heat, steam or cooling bought from a network.
Scope 2 can be calculated in two ways, and companies are expected to report both where they can:
- Location-based: uses the average emission factor of the grid where you operate. It reflects the physical electricity you draw.
- Market-based: uses the factor of the specific electricity you have contracted for, such as a renewable tariff backed by certificates. It reflects your purchasing choices.
A company on a certified renewable tariff may report zero market-based Scope 2 emissions while still showing a location-based figure. Both numbers are valid. They answer different questions.
Want the number without the spreadsheet? Enter four figures from your bills and get your monthly CO₂e split by scope. Open the free Business Carbon Calculator
Scope 3: everything else
Scope 3 is usually the largest share of a company’s footprint and the hardest to measure, because the data sits with other organisations. The GHG Protocol divides it into 15 categories. The first eight are upstream, meaning they relate to what the company buys. The last seven are downstream, relating to what it sells.
- Purchased goods and services
- Capital goods
- Fuel- and energy-related activities not in Scope 1 or 2
- Upstream transportation and distribution
- Waste generated in operations
- Business travel
- Employee commuting
- Upstream leased assets
- Downstream transportation and distribution
- Processing of sold products
- Use of sold products
- End-of-life treatment of sold products
- Downstream leased assets
- Franchises
- Investments
A small business rarely needs all 15. Many do not apply at all: a consultancy has no sold products to process, and a café has no franchises.
Which scope is it? Common cases
| Activity | Scope |
|---|---|
| Diesel in a company-owned van | Scope 1 |
| Gas for the office boiler | Scope 1 |
| Refrigerant top-up for the air conditioning | Scope 1 |
| Charging a company electric car at the office | Scope 2 |
| Electricity in a rented office where you pay the bill | Scope 2 |
| An employee driving their own car to a client | Scope 3 (business travel) |
| Staff travelling to work | Scope 3 (employee commuting) |
| A flight to a conference | Scope 3 (business travel) |
| A courier delivering your products | Scope 3 (transportation and distribution) |
| Laptops and furniture you buy | Scope 3 (purchased or capital goods) |
The test in each case is ownership and control. The same litre of fuel is Scope 1 in a van the company owns and Scope 3 in a courier’s van.
How the scopes look in different businesses
The balance between scopes depends heavily on what a company does.
- A delivery firm is dominated by Scope 1, because it burns fuel in its own vehicles all day.
- An office-based consultancy has little Scope 1. Its footprint is mostly electricity, business travel, commuting and the services it buys.
- A café or restaurant has gas for cooking and electricity for refrigeration, but the food it buys is usually the largest part, and that sits in Scope 3.
- A manufacturer often has significant Scope 1 and 2 from its processes, and even larger Scope 3 from raw materials and from the use of its products.
Where a small business should start
Start with Scope 1 and 2. The data is on your own bills, the calculation is simple, and these are the figures customers ask for first. Our step-by-step guide to calculating a business carbon footprint covers the method.
Then add the Scope 3 categories that are easy to measure and likely to matter: business travel, employee commuting and waste. For purchased goods and services, a rough screen is enough at first. List your largest suppliers by spend and ask the top few whether they can share their own emissions. That tells you where the big numbers are before you invest in detailed data.
Why the split matters to your customers
One company’s Scope 1 and 2 are part of another company’s Scope 3. The electricity you use is your Scope 2 and the power company’s Scope 1. The products you make are your customer’s purchased goods. This is why large companies increasingly send carbon questionnaires to their suppliers: they cannot complete their own Scope 3 without your numbers. Having your Scope 1 and 2 ready makes you an easier supplier to work with.
Frequently asked questions
Is employee commuting Scope 1 or Scope 3?
Scope 3. The company does not own or control the vehicles staff use to get to work.
Are Scope 3 emissions mandatory to report?
It depends on the rule that applies to you. Many frameworks require Scope 1 and 2 first and phase in Scope 3 later. See carbon reporting requirements for small businesses.
Can one emission be in two scopes?
Not within one company. Across companies it is normal and intended: the same emission appears as Scope 1 for the company that produces it and as Scope 2 or 3 for the companies that cause it.
Which scope do leased vehicles and offices fall under?
It depends on who has operational control. If you operate a leased van day to day and buy its fuel, the fuel is normally your Scope 1. If you rent a serviced office and never see an energy bill, the energy is usually treated as Scope 3.
Is working from home Scope 2?
No. The company does not buy that electricity, so home working emissions are Scope 3, usually reported with employee commuting.
What is Scope 4?
It is an informal name for avoided emissions, the reductions a product enables for its users. It is not part of the GHG Protocol’s three scopes and is reported separately, never subtracted from them.
Sources
- GHG Protocol Corporate Accounting and Reporting Standard
- GHG Protocol Corporate Value Chain (Scope 3) Standard
- GHG Protocol Scope 2 Guidance
About the author
Georgi Todorov is an eco activist and entrepreneur. He runs Ecoki, where he builds free tools and guides that help small businesses measure and cut their carbon footprint.