What are Scope 1, 2, and 3 emissions?

Whether your organisation is required to report on your emissions under a set framework such as the National Greenhouse Emissions Reporting (NGER) or the upcoming Climate-Related Financial Disclosure (CRFD), or for voluntary purposes under programs such as Climate Active or SBTi Net Zero, a clear understanding of emission scopes is imperative.

So, what are Scope 1, 2 and 3 emissions defined as?

Let’s start with an example:

Imagine you and your family are going on a holiday. The emissions that come from the car you are driving are like Scope 1 emissions. These are the emissions that come directly from the things you control, like the car you’re driving.

Scope 2 emissions are like the emissions that come from the electricity you use in your hotel room at night. You don’t control the power plant that makes the electricity, but you use the electricity, so it’s still important to think about these emissions.

Scope 3 emissions are like the emissions that come from things you use or do that you don’t control directly. The sandwich you’re eating on your holiday was made with ingredients grown on a farm, so the emissions from the farm are like Scope 3 emissions because you didn’t control the farm, but you still used the food from the farm.

When translating this to an organisation, the principles remain and may be defined further by the below. 

• • Scope 1 emissions are released directly by a company’s own activities – burning fuel in their facilities and vehicles, or through industrial processes they control.
  • Scope 2 emissions are indirect. They result from the company’s energy use, but the actual emissions happen at the power plant where the electricity is generated.

Both Scope 1 and Scope 2 emissions are essential parts of a company’s environmental impact and need to be addressed for effective reduction strategies.

• • Scope 3 emissions encompass all indirect greenhouse gas (GHG) emissions within an organisation’s value chain that are not generated from the company’s own operations (those are covered in Scopes 1 and 2). These emissions come from sources the company doesn’t directly own or control. Scope 3 emissions are divided into Upstream emissions, which are indirect emissions that occur before the company’s own operations, and Downstream emissions, which are routinely emissions associated with the activities that occur after the company sells a product or service.

The below table outlines the most prominent Australian reporting frameworks, and the requirement to report on each scope of emissions.