Insights · ESG Foundations
What are Scope 1, Scope 2, and Scope 3 Emissions?
Straight talk on the three scopes of greenhouse gas emissions — aligned to the Greenhouse Gas Protocol with examples, the 15 Scope 3 categories, and primary sources.
· Updated
TL;DR: The Greenhouse Gas Protocol defines three scopes: Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (all other value‑chain emissions). Many companies find Scope 3 is the largest share. See the 15 Scope 3 categories and primary sources below.
Definitions
Scope 1 — Direct emissions
Emissions from sources owned or controlled by the company (e.g., stationary combustion, process emissions, company‑owned vehicles).
Scope 2 — Purchased energy
Indirect emissions from the generation of purchased electricity, steam, heating or cooling consumed by the company.
Scope 3 — Value‑chain emissions
All other indirect emissions occurring upstream and downstream (e.g., purchased goods and services, logistics, use of sold products, end‑of‑life).
Why it matters
- Completeness: Including all relevant scopes yields a truer picture of climate impact and risk.
- Strategy: Value‑chain (Scope 3) insights often reveal the biggest and most cost‑effective reduction levers.
- Comparability: Common standards enable apples‑to‑apples dialogue with investors, customers and regulators.
Scope 2: location‑based vs market‑based
- Location‑based: reflects average grid emissions where consumption occurs.
- Market‑based: reflects emissions associated with electricity chosen via contractual instruments (e.g., supplier‑specific factors, energy attribute certificates).
The 15 Scope 3 categories
Upstream (1–8)
- Purchased goods & services
- Capital goods
- Fuel‑ and energy‑related activities (not in Scope 1 or 2)
- Upstream transportation & distribution
- Waste generated in operations
- Business travel
- Employee commuting
- Upstream leased assets
Downstream (9–15)
- Downstream transportation & distribution
- Processing of sold products
- Use of sold products
- End‑of‑life treatment of sold products
- Downstream leased assets
- Franchises
- Investments
Sector example (beverage company)
- Scope 1: On‑site natural‑gas boilers; refrigerant leaks; company‑owned delivery trucks.
- Scope 2: Purchased electricity for bottling lines and cold storage.
- Scope 3 (upstream): Agriculture (sugar, grains), packaging (aluminum, PET), inbound logistics.
- Scope 3 (downstream): Retail refrigeration, consumer use where relevant, and end‑of‑life for packaging.
Standards & frameworks
- GHG Protocol — Corporate Standard; Corporate Value Chain (Scope 3) Standard; Scope 2 Guidance; Scope 3 Calculation Guidance.
- Science Based Targets initiative (SBTi) — 1.5°C‑aligned target‑setting criteria and sector guidance.
- IFRS S2 (ISSB) — Climate‑related disclosures (Scope 1, 2 and material Scope 3).
- ISO 14064 — Quantifying and reporting GHG emissions.
Notes on regulations
Rules evolve by jurisdiction. Examples include the EU’s CSRD (ESRS) and California’s SB 253. The U.S. SEC 2024 climate rule does not mandate Scope 3 for all registrants; some companies will still disclose Scope 3 if material or expected by investors.
Glossary
- GHGP — Greenhouse Gas Protocol
- Location‑based / Market‑based — two Scope 2 accounting methods
- Value‑chain emissions — Scope 3
- EACs — Energy Attribute Certificates (RECs, GOs, I‑RECs)
References (primary sources)
- GHG Protocol — Corporate Standard
- GHG Protocol — Corporate Value Chain (Scope 3) Standard
- GHG Protocol — Scope 2 Guidance (PDF)
- GHG Protocol — Scope 3 Calculation Guidance (PDF)
- Science Based Targets initiative — How it works
- IFRS S2 — Climate‑related Disclosures (PDF)
- EU CSRD — Commission overview
- California SB 253 — Official bill page
- US EPA — Scope 3 inventory guidance
How to cite
“What are Scope 1, Scope 2, and Scope 3 Emissions?” Veerless Insights. https://veerless.com/insights/scope-1-2-3-emissions (accessed August 21, 2025).