Understand a carbon report: what are scopes 1, 2, 3 ?

The climate emergency is finally shaking up our society: national and international climate objectives are becoming clearer, programs aiming at carbon neutrality are multiplying and laws aiming at limiting gas emissions are appearing on all sides. The business world has not escaped this revolution. Indeed, more and more companies are committing, voluntarily or by obligation, to report their emissions and to reduce them. These carbon reports are now very frequent and standardized.

What is included in a corporate carbon report ?

The GHG Protocol, a 20-year partnership between World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) was the first organization to define reporting standards for greenhouse gas emissions, particularly for companies. All information related to corporate carbon reporting can be found here.

A company’s carbon report describes in detail all the emissions related to the company’s activities along the entire value chain. The major difficulty is to determine the boundaries of the emissions’ reporting scope and to assign responsibility to the right organization. Or put more crudely, to determine to what extent one counts and how far one is responsible. For this purpose, the GHG protocol has defined some concepts of boundaries and scopes of emissions.

“The major difficulty when it comes to carbon accounting is to determine the boundaries of the emissions reporting scope and to assign responsibility to the right organization”

What are the boundaries and scope of emissions?

Initially, an organisation has to define the organisational boundaries, which are the physical sites, goods and facilities taken into account in the carbon report. Defining the organisational boundaries can be tricky for complex organisations with, for example, shares in or control of another organisation. However, for most organisations, this part is quite intuitive. 

Then, the company has to define the sources of emissions that will be taken into account in the calculation method. These sources are divided into 3 scopes of emissions:

SCOPESDEFINITIONINCLUDED
Scope 1Direct emissions from sources owned or controlled by the organization. In concrete terms, these are the emissions that take place within the physical limits of the company as defined previously. Combustion of stationary and mobile sources, non-combustion industrial processes, ruminant emissions, refrigerant leaks, biomass, etc.
Scope 2Indirect energy emissions associated with the production of electricity, heat or steam imported for the organization’s operations.Elecricity, heat, steam.
Scope 3Other indirect emissions produced by the organization’s activities that are not accounted for in Scope 2 but are related to the complete value chain. They are believed to have the most significant impact of the three scopes in terms of quantity averaging 80% of the total emissions.Business travel, commuting, inputs, waste, inbound and outbound logistics, etc.
Tapio – Methodology

Generally, the responsibility for Scope 1 and 2 emissions is attributed to the reporting company. Responsibility for Scope 3 emissions is not attributed to the reporting company but to the company that owns these emissions within its Scope 1 and 2. However, even if a company is not responsible for its Scope 3 emissions, it can have an impact on them through various reduction levers. 

Generally, the responsibility for Scope 1 and 2 emissions is attributed to the reporting company.

For example, company X uses a third-party transportation company Y to make deliveries of its product. The emissions from the delivery trucks are part of company Y’s Scope 1 and company X’s Scope 3. The responsibility for these emissions is therefore attributed to the delivery company Y. However, Company X can reduce these transportation emissions by using less heavy and efficient packaging, choosing another greener transportation company that uses electric trucks,… It can also be pointed out that one’s scope 1 and 2 are another one’s scope 3.

The 3 scopes of emissions are themself divided into 23 emissions categories, allowing you to precisely target the GHG flows within your organization. Those categories are represented in the following figure.

The objective of scope separation is to determine who is responsible for a source of emissions. But more importantly to include all significant emissions linked to a company’s activities through the entire value chain of a product and on which it can have a reduction impact. This is the reason why it is an essential element found among all public carbon reports.

Now what? You did a carbon report and you want to make something out of it? Or you would like to start the exercise of doing a carbon report. Both subjects are addressed by Tapio. 

Tapio, an All-in-One Carbon Management Software, makes it easy and cost-effective to manage your carbon emissions by facilitating the aggregation of the data. With an overview of your carbon emissions, we give you the foundations on which to take action.

Understand the European Green Deal in 2 minutes

In 2015, the Paris Agreements set an ambitious global target to limit the increase in global temperature to less than 1.5°C above pre-industrial levels. The European Union (EU) is the first powerful economic bloc to respond by unveiling the Green Deal, the roadmap for transforming the EU into a fair and prosperous society with no net emissions of greenhouse gases by 2050.

Released in December 2019, the Green Deal (GD) is actually a 27-page document that sets out the timetable for the tasks of the Commission and its members to reduce greenhouse gas emissions by 50 to 55% in 2030 and then achieve climate neutrality by 2050. Various sectors that have a negative impact on the environment will be subject to an in-depth review. Agriculture, transport, mobility, energy, industry, food and other key sectors in the ecological transition are subject to a clear strategy and part of a systemic approach to integrate the objective of prosperity with an environmental objective.

Video from European Commission – “The European Green Deal”

The means deployed by the EU are equal to the task. The EU will deploy a minimum of 1000 billion euros. A sum that will be massively injected into European private and public sector initiatives that support the transition to a sustainable and resource-independent system. A significant part of the budget will also be used to support innovation, research and allow a fair transition for people dependent on polluting activities. With the invested budget, the EU would like to develop a resource-independent green economy.

To ensure the proper implementation of the GD, the union unveiled the climate law in March 2020. The climate law sets the legal framework for the GD by setting out, among other things, the mandatory monitoring measures to which members will be subject, as well as the obligations to integrate the GD objectives into all member states’ policies and initiatives. The Climate Act is in addition to pre-existing initiatives inherent to the GD, such as the European Trade System (ETS), which already limits the emissions of major greenhouse gas producers on the European continent.

Finally, the GD also addresses the EU’s global strategy to become a world leader in terms of climate initiatives. In order to achieve the objectives set by the Paris agreement and to avoid a simple relocation of emissions, the EU is working with other global players. Since the emergence of the green deal, other ambitious climate projects have emerged such as the American Green New Deal or China’s Great Green Reset.

The EU is dependent on its size and complexity resulting in many inconsistencies and greatly slowing down the implementation process. Although criticized, GD confirms Europe’s intention to significantly reduce its impact on the environment. In this context, many companies and organizations will have to review their operating methods in order to compensate but above all to reduce their greenhouse gas emissions. Tapio’s carbon management platform provides a simple, accessible and enjoyable way for companies to be in line with Europe’s objectives and to become a positive actor of change. 

Sources:
https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1588580774040&uri=CELEX:52019DC0640
https://www.iew.be/le-green-deal-europeen-un-changement-de-paradigme/
https://www.theguardian.com/world/2020/mar/09/what-is-the-european-green-deal-and-will-it-really-cost-1tn
https://ec.europa.eu/commission/presscorner/api/files/attachment/859152/What_is_the_European_Green_Deal_en.pdf.pdf