Emissions

Scope 1, 2, and 3 emissions at a glance

A sound understanding of emissions in the various scopes is essential for companies that want to minimize their impact on climate change.

• Scope 1: Covers the direct release of climate-damaging gases within a company. This includes, for example, emissions from the operation of boilers or the company's own vehicle fleet.
  
  
• Scope 2: Covers the indirect release of climate-damaging gases through the use of externally purchased energy. This includes, for example, the company's electricity consumption or the use of heating and cooling. If a company generates its own energy, related emissions are accounted for under Scope 1.
  
  
• Scope 3: Covers the indirect release of climate-damaging gases in the company's upstream and downstream value chain. This can result from activities such as business travel or waste management. The disclosure of Scope 1 and Scope 2 emissions is now very common, while many companies still fail to account for their Scope 3 emissions. However, the European Corporate Sustainability Reporting Directive (CSRD) and climate-related reporting rules in other countries increasingly require companies to also disclose their Scope 3 emissions.

The use of the above categories allows for a precise distinction between different emission sources and helps companies to assess their emissions in line with international standards.

Relevance of Scope 1, 2 and 3 emissions for corporate sustainability

Calculating and reporting Scope 1, 2, and 3 emissions is fundamental to a company's overall sustainability performance. The importance of the different scopes can vary significantly depending on the business model and industry. In order to develop an effective climate protection strategy, companies must first understand their own emissions. As a second step, they should determine emissions in their value chains (Scope 3), including for their suppliers, and identify emission hotspots. These insights enable them to set and track meaningful reduction targets and ultimately mitigate their own carbon footprint.

Laws and regulations in the area of Scope 1, 2 and 3 emissions

Various laws and regulations require companies to measure their emissions, including along the value chain, set reduction targets and monitor their progress. They include, for example, the CSRD's European Sustainability Reporting Standards (ESRS), in particular ESRS E1 on climate change, and similar provisions in many other jurisdictions.

Challenges for companies

Overall, Scope 1, 2, and 3 emissions are critical for companies that want to make an effective contribution to reducing greenhouse gas emissions. Compliance with international standards and transparent reporting are not only legal requirements, but also important steps towards a more sustainable future.

A major challenge for companies is to measure and monitor supplier emissions to meet regulatory expectations and international standards. Given the diversity and complexity of supply chains, companies often solicit support from specialized service providers to help them collect and analyze large amounts of supplier data.

IntegrityNext can help you manage greenhouse gas emissions along your supply chain with minimal effort. Contact us now to learn more.