Scopes of GHG Emissions
The Greenhouse Gas (GHG) Protocol published its Corporate Standard in 2001, classifying emissions into three scopes. Each scope deals with different aspects of the production and consumption process. The different scopes have been defined and categorised in a specific way to avoid double counting.
Scope 1 GHG Emissions
Scope 1 emissions are direct emissions; they consider the emissions from sources under the ownership or control of the company. This can be divided into four categories: stationary, mobile, fugitive and process emissions.
- Stationary emissions come from the stationary combustion of fuel such as those from boilers, heaters and furnaces.
- Mobile emissions come from all vehicles a company owns that burn fuel.
- Fugitive emissions stem from gas leaks from air conditioning units and refrigerators
- Process emissions derive from industrial processes like chemical production or cement manufacturing that are part of the company’s operations.
Scope 2 GHG Emissions
Scope 2 emissions are indirect emissions caused by the generation of purchased electricity consumed by an organisation. For instance, during the consumption of purchased heat, cooling, electricity or steam in powering a company’s factory, scope 2 emissions are emitted.
Scope 2 emissions are physically released at the place where they are generated. Managing these emissions involves strategies like improving energy efficiency, purchasing renewable energy, and engaging with energy suppliers to reduce the carbon intensity of the energy they provide.
Scope 3 GHG Emissions
Scope 3 emissions, however, deal with resources that are not owned or controlled by the respective company but occur due to the consequences of the company’s operations.
Scope 3 emissions are also indirect; they are released from upstream and downstream activities throughout the value chain. The most polluting upstream activities include travel, employee commuting, waste disposal, transportation and distribution. Downstream activities include the running of franchises, the usage of sold products and their end-of-life treatment.
There has been criticism regarding the optionality of reporting scope 3 emissions, as these emissions are usually the largest. For example, scope 3 emissions in 2019 accounted for about 88% of emissions from oil and gas and 75% of emissions from the electric utility sector.
Not reporting this information may lead to investors making misinformed investment and voting decisions. The requirement to report scope 3 emissions depend on the reporting frameworks ascribed to by the corporation.
According to Science-Based Targets Initiative (SBTi) standards, the reporting of scope 3 emissions is mandatory if the emissions account for more than 40% of their total GHG emissions. Bursa Malaysia has deemed it mandatory for listed companies to include reporting on scope 3 emissions related to employee commute and travel.
Whereas for the Greenhouse Gas (GHG) Protocol and Carbon Disclosure Project (CDP), while it is not explicitly mandatory to report scope 3 emissions, they highly encourage all corporations to do so.
Interesting Facts About GHG Emissions
- According to the Greenhouse Gas (GHG) Protocol, Scope 1 and 2 emissions are mandatory to report, while Scope 3 emissions aren’t. Nonetheless, all corporations are still encouraged to monitor and report their Scope 3 emissions.
- Scope 3 emissions usually have the largest emissions of any scope, which are indirect greenhouse gas emissions that occur in a company’s value chain, both upstream and downstream.
- The Greenhouse Gas Protocol Initiative was launched in 1998 and published its Corporate Standard in 2001. This standard provides a comprehensive, standardized framework for measuring and managing greenhouse gas (GHG) emissions from private and public sector operations, value chains, and mitigation actions.
- Around 99% of Apple’s carbon emissions are Scope 3 emissions. Scope 3 includes emissions from the production, transportation, and end-of-life processing of its products, which are largely outside of its direct control but result from its operations and supply chain.
- GHG emissions not covered by the Kyoto Protocol, such as CFCs, NOx, etc. are not counted as Scope 1 emissions but may be reported separately.
The transition from reporting only Scopes 1 and 2 emissions to the reporting of all scopes of emission is gradual, but necessary. The categorization, monitoring and reporting of these greenhouse gas emission scopes serve to aid corporations to gain better visibility on their sources of emissions.
With the visibility and awareness towards their source of emissions, corporations can get a clearer direction towards reducing their carbon footprint and achieving carbon neutrality.