Carbon emissions
To reduce their contributions to climate change, companies should seek to reduce their greenhouse gas emissions.
Emissions get classified into three scopes, each representing who in the corporate value chain1 “owns” or is responsible for them.
1) Scope 1
Scope 1 emissions are direct emissions from sources owned or controlled by an organisation. They include things that the organisation burns and accidental or fugitive emissions like chemical and refrigerant leaks and spills.
Examples include:
Fuel, like oil and gas, burned in buildings or equipment owned or operated by the organization. Think boilers and other fuel-powered machinery used for industrial processes.
Fuel the organization purchases for owned or leased vehicles and mobile equipment (e.g., cars, trucks, organisation vehicles, gas-powered tools).
Chemical releases from AC and refrigeration equipment the organization owns or controls.
Chemical releases from or use of building fire suppression systems or equipment like fire extinguishers that the organisation owns or controls.
2) Scope 2
Scope 2 accounts for emissions from the generation of energy that is purchased or brought into the organizational boundary of the company.
There are at least four types of purchased energy tracked in scope 2.
Electricity: This type of energy is used by almost all companies to operate machines, lighting, charge electric vehicles, and in certain types of heating and cooling systems.
Steam: Formed when water boils. It is used for mechanical work, heat or directly as a process medium in industries.
Heat: Most buildings require heat to control interior trmperatures and heat water. Many industrial processes also require heat for specific equipment. This heat may either be produced from electricity or through a non-electrical process such as solar thermal heater or thermal combustion process outside a company’s operational control.
Cooling: Similar to heat, cooling may be produced from electricity or through the distribution of cooled air or heat.
The production and distribution of electricity purchased from a utility will impact scope 2 emissions. If the electricity mix is high in fossil fuels, the scope 2 emissions will be high.
3) Scope 3
Scope 3 emissions are those that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for, up and down its value chain.
Upstream activities refer to the emissions produced by things a company buys or uses from suppliers to run its business, before those items reach the company. This includes emissions from i) a factory producing raw materials (including the waste generated), ii) trucks delivering these raw materials, iii) power plants providing electricity to a supplier, iv) employees commuting to work, and v) business travel.
Downstream activities refer to the emissions that happen after a company delivers its products or services to customers. This includes emissions from i) delivering the product to the customer, ii) how customers use the product, and iii) the product decomposing in a landfill.
For example, scope 3 emissions of a clothing brand come from various places. Vehicles that transport clothing to retailers, energy used in manufacturing in a case where facilities are not owned by the company, energy used to grow raw material, energy used by consumers to wash and dry the clothing, and greenhouse gases generated as the materials decay in a land fill.
Next: Energy consumption
Footnotes
This is a series of steps a company takes to create a product or service and deliver it to customers. It includes everything from getting raw materials, making the product, and delivering it, to activities like marketing, sales, and customer support. Each step adds value to the final product or service.↩︎