Greenhouse Gas Emissions and The Three Scopes

Before diving into the complexities of scope 3 emissions, it’s vital to understand the fundamentals of greenhouse gas (GHG) emissions.

A GHG is any gas that traps heat in the atmosphere. As more GHGs are emitted, they trap more heat in the atmosphere, intensifying climate change in what is known as the Greenhouse Gas Effect. 

The GHG Protocol covers the accounting and reporting of the seven greenhouse gases covered by the UNFCCC and Kyoto Protocol.‍ The table below provides information about the seven GHGs and their sources:

As businesses carry out routine operations, such as transporting goods or manufacturing materials, they release greenhouse gases into the atmosphere. On a global scale, this contributes to the Greenhouse Effect and intensifies climate change. The Greenhouse Gas Effect intensifies climate change by trapping heat in the Earth's atmosphere from added greenhouse gases.

The Greenhouse Gas Protocol (GHG Protocol) sets widely recognized standards for GHG accounting, also known as carbon accounting. These standards are employed by various entities, including organizations and governments, to manage, measure, and report their GHG emissions. The GHG Protocol classifies emissions into three distinct categories:

• Scope 1: Direct emissions emanating from activities under an organization's control. This includes on-site fuel combustion from buildings and company vehicles, manufacturing and process emissions, and direct emissions from agriculture.

• Scope 2: Indirect emissions from electricity, heat, or steam purchased and utilized by the organization. Although not directly produced by the organization, these emissions are indirectly linked to its energy usage.

• Scope 3: These emissions are a catch-all category, including all other indirect emissions (not included in scope 2) that occur throughout the value chain of the reporting company. The GHG Protocol's Scope 3 Standard organizes these emissions into 15 categories, encompassing various business activities commonly encountered by organizations, including purchased goods and services, business travel, waste generated during operations, leased assets, transport and distribution, the use and disposal of sold products, and the impact of any investment activity. Scope 3 emissions are difficult to measure due to the challenge of obtaining activity data from complex supply chains. For example, there may be multiple tiers of suppliers upstream, or it may be time-intensive to predict customer-use trends for products.

While many organizations are looking to reduce their operational emissions, they won’t be able to meet the full scale of their climate ambitions and targets by ignoring their value chain's carbon impact. 

Scope 3 emissions arise from activities associated with an organization but not directly owned or controlled by it. These emissions result from various sources, including supply chain operations, transportation, product usage, and disposal. 

Scope 3 Emissions Example: Throughout this course, we will use a fictional computer manufacturing company, Agora, to walk through different scope 3 examples and scenarios. Agora designs, manufactures, and distributes its products to stores where customers purchase them, bring them home (or have them shipped), and use them. 

Stephanie, Agora’s sustainability manager, is facing investor pressure to measure its scope 3 emissions ahead of pending legislation. Even without data to back this conclusion, based on its industry, it can be inferred that Agora’s value chain emissions comprise most of its carbon footprint.