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🔎 Key takeaways
The historical pillars of carbon accounting: Derived from the international standard of the GHG Protocol, Scopes 1, 2, and 3 allow companies to universally classify their various sources of greenhouse gas emissions.
From direct to indirect: The method distinguishes between direct emissions generated on-site (Scope 1: heating, vehicle fleet) and indirect emissions related to purchased energy (Scope 2: electricity, heating or cooling networks).
Scope 3, the hidden giant of the value chain: Although complex to evaluate, this third scope encompasses all other indirect emissions (purchased services, business travel, end-of-life of products) and very often represents the overwhelming majority — up to over 90% — of an organization's actual carbon footprint.
Towards a global vision beyond Scopes: Given the limitations of this classification, which overlooks positive external actions, new frameworks such as the Net Zero Initiative incorporate concepts of avoided emissions or carbon sequestration (sometimes referred to as Scope 4) to drive effective collective neutrality.
What is the origin of Scopes 1, 2, and 3?
Measuring corporate greenhouse gas emissions is the prerequisite for taking action. However, this measurement and its analysis can be tedious. Today, there are various carbon accounting methodologies that serve as benchmarks and hold the status of norms or standards.
Among these, we can cite the Bilan Carbone® methodology, the BEGES methodology, the GRI 305 standard, the GHG Protocol methodology, and the ISO 14064 standard. These various methodologies for accounting for GHG emissions are constantly evolving and generally tend to converge to facilitate the completion of CO2 emissions assessments.
The categorization of emission sources into 3 scopes was initially proposed by the methodology developed by the GHG Protocol.
Established in 1998, the GHG Protocol or the "Greenhouse Gas Protocol Corporate Accounting and Reporting Standard" aims to establish an international standard for carbon accounting and to provide the associated tools, guides, and training to accelerate the low-carbon transition for businesses and governments.
The GHG Protocol is the result of a close collaboration between the World Business Council for Sustainable Development (WBCSD), the World Resources Institute (WRI), several businesses, governments, and NGOs.
Scope 1, 2, 3: Definition
In its methodology, the GHG Protocol categorizes anthropogenic greenhouse gas (GHG) emissions into 3 scopes :
- Scope 1 includes all direct greenhouse gas emissions from the company, such as heating of premises and emissions from company vehicles.
- Scope 2 covers indirect emissions related to energy consumption (electricity, steam, heat, cooling, compressed air, etc.) during the production of a product or service.
- Scope 3 encompasses all other indirect emissions from the company, such as the purchase of goods and services, the use of sold products, upstream and downstream transportation of goods and raw materials, etc. Scope 3 generally represents the majority of a company's total emissions. Up to over 98% for some Tennaxia clients, for example.
Initially, the GHG Protocol methodology only mentioned Scopes 1 and 2. It was not until 2011 that Scope 3 GHG emissions were specified, thereby broadening the analysis of emission sources.
A globally recognized scope categorization
Many international regulatory and/or non-regulatory frameworks are based on the GHG Protocol's scope categorization:
- The Carbon Disclosure Project (CDP)
- The Corporate Sustainability Reporting Directive (CSRD)
- The Science Based Targets initiative (SBTi)
The ISO 14064 standard published in 2006, the Bilan Carbone® methodology developed by the Association Bilan Carbone or even the V5 of the methodology BEGES offer different categorizations of greenhouse gas emissions than those of the GHG Protocol. However, they are now tending to harmonize and generally link their emission categories to the GHG Protocol scopes, as shown in this comparative infographic of methodologies:
Comparative table of categories and items defined by the national standard, Bilan Carbone®, and the GHG Protocol - Source: ADEME
Scopes 1, 2, and 3 in detail
What is Scope 1? Direct Emissions
Scope 1 includes greenhouse gas emissions related to product manufacturing, such as the combustion of fossil fuels, CO2, and methane emissions. These are referred to as direct emissions.
The GHG Protocol has identified five categories of direct emissions:
- Stationary combustion sources
- Mobile combustion sources
- Non-energy related processes
- Direct fugitive emissions
- Emissions from biomass (soils and forests)
What is Scope 2? Indirect Emissions Related to Energy Consumption
Scope 2 includes greenhouse gas emissions resulting from a company's energy consumption. Indeed, electricity generation varies in emissions intensity depending on the energy mix of its country of origin. Indirect emissions related to energy consumption are recorded under Scope 2.
The GHG Protocol has identified two categories of indirect emissions related to energy consumption:
- GHG emissions from electricity consumption
- Emissions related to steam, heat, or cooling consumption
What is Scope 3? Other indirect emissions
Finally, Scope 3 encompasses all greenhouse gas emission sources not directly linked to the company's activities. These are generated throughout the value chain.
For example, the raw materials needed to manufacture a product are extracted, processed, and transported to the production plant. Each of these steps emits greenhouse gases, which are included in the Scope 3 of the GHG inventory.
The GHG Protocol has identified sixteen main categories of indirect emission sources:
- Energy-related greenhouse gas emissions not included in Scopes 1 and 2
- Purchased goods and services
- Capital goods
- Waste
- Upstream transportation of goods
- Business travel
- Upstream leased assets
- Company investments
- Transportation of visitors and customers
- Downstream transportation of goods
- Use of sold products
- End-of-life treatment of sold products
- Downstream franchises
- Downstream leased assets
- Commuting
- Other indirect emissions.
The limitations of Scope 1, 2, 3 categorization
The definition of the three scopes does not allow for the accounting of emissions or emission reductions achieved outside the company's operational boundaries. Thus, avoided or negative emissions, such as participation in carbon contribution projects, are not taken into account.
Various frameworks have begun to account for these emissions and propose accounting methods. However, as these methods rely on reference scenarios as assumptions, the various organizations advise caution regarding their use.
Limitations addressed by the NZI framework
The Net Zero Initiative project is a new emissions categorization method launched in June 2018 and led by the specialized consulting firm Carbone 4 in collaboration with companies and a high-level scientific council. This carbon accounting approach has the advantage of taking into account not only induced emissions (Scopes 1, 2, 3) but also avoided and negative emissions. This is to provide a framework for a carbon neutrality collective
Negative emissions correspond to carbon sequestration, and avoided emissions to the financing or sale of "low-carbon" services and products.
This approach allows organizations to obtain a more relevant carbon footprint for their activities and investments and to maximize their contribution to climate action.
The 10 Net Zero Initiative principles structure this methodology and ensure ambitious and effective climate action. Discover the 10 NZI principles here.
This methodology encourages organizations to look beyond the GHG Protocol methodology by measuring not only Scopes 1, 2, 3 but also their climate actions. Indeed, Principle No. 3, which states that to structure its climate action, a company must distinguish three different, non-fungible types of action: emission reduction, avoidance, and sequestration, is based on 3 pillars:
- Pillar A - Reduce one's own direct and indirect emissions, i.e., Scope 1, 2, and 3 emissions.
- Pillar B - Reduce others' emissions:
- By marketing low-carbon solutions, such as bicycle sales and/or rentals.
- By financing low-carbon projects outside its value chain
- Pillar C - Increase carbon sinks:
- By developing carbon sequestration within one's own operations and value chain
- By financing sequestration projects outside its value chain.
Thus, the NZI project complements the calculation of Scope 1, 2, 3 emissions by filling a significant gap: the accounting of negative and avoided emissions.
Can we talk about a Scope 4?
The GHG Protocol has also addressed this topic by defining a Scope 4 that would account for avoided emissions. Scope 4, as discussed by the GHG Protocol, has a narrower view of avoided emissions than that of ADEME or the Carbon Footprint method. It therefore does not include the financing of sequestration projects.
The GHG Protocol includes in this Scope 4 products or services whose use has a lower carbon impact than the alternative used in the reference scenario. For example, employees who would prioritize carpooling over individual car use or an electric car over a fossil fuel car for their home-to-work commutes.
Avoided emissions related to product recycling are also taken into account in this Scope 4.
This approach therefore requires the creation of the most reliable possible reference scenarios to measure avoided emissions with sufficient precision. It also banks on the development of new technologies that enable less carbon-intensive practices.
The GHG Protocol, however, remains cautious about these analyses and specifies that this type of evaluation should neither take precedence over nor undermine efforts to calculate and reduce Scope 1, 2, and 3 emissions.
ADEME, relying on ISO 14064-1, also recommends publishing this information separately from the company's greenhouse gas inventory.
Scope 3: A priority for many companies
Currently, only Scope 1 and 2 emissions reporting is mandatory under the GHG Protocol methodology, reducing Scope 3 measurement to a mere recommendation. This is the most significant limitation of the GHG Protocol methodology. Indeed, according to the CDP, the value chain accounts for, on average, 92% of companies' carbon footprint. This is why conducting a Scope 3 carbon assessment to reduce it represents the best climate action a company can take today.
This is notably why, with the entry into force of the European CSRD (Corporate Sustainability Reporting Directive), companies must now mandatorily integrate all three emission scopes into their sustainability report, thereby extending the obligation already applicable in France for the regulatory BEGES.
At Tennaxia, we are very familiar with the challenges and limitations of Scope 3 carbon footprints. We have notably developed within our carbon footprint platform a module dedicated to managing environmental impact and supplier engagement to provide companies with an effective tool for a comprehensive corporate carbon footprint and to tackle the decarbonization of their procurement and the implementation of a responsible purchasing policy.
If you want to learn more about decarbonization and the limitations of Scope 3, we invite you to download our webinar in partnership with the specialized firm Magelan on "How to Accelerate Decarbonization of Your Value Chain".