Scope 1, 2, and 3 Emissions: What Are They and Why Should You Care? | Zion Garcia

Sustainability is not just about adopting the latest energy-efficient technologies or turning to renewable sources of power. Sustainability is the responsibility of every individual every day. It is about changing our behavior and mindset to reduce power and water consumption, thereby helping to control emissions and pollution levels.

As more and more investors, consumers, and general citizens alike become interested in the sustainability credentials of the companies they support, it's more important than ever for businesses to be able to measure and report their greenhouse gas (GHG) emissions. But what exactly are Scope 1, 2, and 3 emissions?

Here's a quick overview:

Scope 1 emissions are direct GHG emissions from company-owned or -controlled sources. These would include emissions from things like company-owned vehicles, boilers, or manufacturing processes. Anything that emits GHGs and that the company has direct control over falls under Scope 1.

Scope 2 emissions, on the other hand, are indirect GHG emissions that result from the generation of electricity, heat, or steam that the company consumes. So if your company buys electricity from the grid, those emissions would be considered Scope 2.?

Finally, Scope 3 emissions are all other indirect emissions that are a result of activities related to the company's operations but which occur outside of its direct control. These would include things like employee commuting, waste generated by the company's customers, and business travel.

While some companies choose to only report their Scope 1 and 2 emissions (since they have more direct control over these), it's generally accepted that a complete picture of a company's GHG footprint can only be obtained by including all three Scopes.?

So why does all this matter?

Well, as mentioned before, an increasing number of consumers are interested in supporting sustainable businesses. What's more, many large institutional investors are now incorporating environmental, social, and governance (ESG) considerations into their investment decisions. In other words, they're looking at more than just financial performance when deciding where to put their money.?

By understanding what Scope 1, 2, and 3 emissions are and ensuring that your company is measuring all three, you'll be in a better position to not only accurately report your GHG footprint but also address any sustainability concerns that your stakeholders might have.?

As awareness of climate change continues to grow and pressure on businesses to operate sustainably increases, it's more important than ever for companies to understand and measure their Scope 1, 2, and 3 emissions. Luckily, with a little bit of knowledge about what these Scopes represent, any business can get started on the path toward responsible disclosure of their GHG footprint.

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