How to Calculate Corporate Emissions: Scopes 1, 2, & 3 Explained

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Corporate scope 1 2 3 greenhouse gas emissions

According to the United Nations, emissions must drop 7.6% per year from 2020 to 2030 to keep global temperatures from exceeding 1.5°C (2.7°F).

“Our collective failure to act early and hard on climate change means we now must deliver deep cuts to emissions – over 7 percent each year if we break it down evenly over the next decade” – Inger Andersen, UNEP Executive Director

Hence, the pressure mounts for businesses to take action and lower their carbon footprint. This begins with measuring, reporting, and managing corporate emissions.

In this Green Business Bureau article, we’ll take a brief look at how you should account for business emissions at the corporate and product level, using the GHG Protocol’s scope emission classification system. We’ll run through two examples to help you understand how to apply scope emissions in your business.

Categorizing corporate emissions into 3 scopes

If you read our previous article Scope 1 2 3 Explained: Understanding the GHG Protocol’s Emission Classification System then you’ll understand that it’s best practice to categorize corporate emissions using three scopes. To recap, we’ve defined each scope below:

Scope 1: Are corporate emissions released directly from an organization due to business operations burning fossil fuels on-site.
Scope 2: Are the indirect corporate emissions released from the energy purchased by an organization. For instance, the electricity that’s purchased from an electricity provider (it’s the energy provider that has the scope 1 emissions here).
Scope 3: Are the indirect corporate emissions released across a business’s value chain, accounting also for upstream and downstream product/service emissions.

How to calculate corporate GHG emissions at the corporate level

To give you a better idea of scope emissions and how they apply to your business, let’s work through two basic examples. First, we’ll account for business emissions at the corporate level.

Referring to another one of our previous articles, How to Calculate Your Carbon Footprint, we’ll expand on the example used in this piece:

“Let’s say you wanted to calculate the greenhouse gas impact from two main activities associated with your business:

Heating office spaces
Running five fleet vehicles

Heating the office space and running five fleet vehicles uses 5000 liters of diesel fuel each year. We can look up the emission factors associated with burning diesel to find it is 2.66 kg CO_2e /liter. From this we can estimate the GHG emissions associated with heating the office space and running the five vehicles, as follows:

(5000 + 5000) × 2.66 = 26,600 kg CO_2e /year”

For a better understanding of how this calculation works, please refer to our previous article here.

SCOPE 2 EMISSIONS

In the above example, we’ve calculated business scope 1 emissions. Now, let’s expand on this by considering scope 2 emissions.

Suppose the same company uses 20,000 kWh of electricity per year.

The US Environmental Protection Agency estimates the average emission output rate for generated electricity in 2019 was ~0.4kg CO_2e/kWh. Using this figure, we can estimate the annual emissions released from using 20,000 kWh of electricity via the calculation below.

20,000 kWh × 0.4 kg CO_2e/kWh = 8,000 kg of CO_2e

SCOPE 3 EMISSIONS

Next, we come to scope 3 emissions. To calculate scope 3 emissions, we’d need to:

Carry out an inventory of all business travel using vehicles not controlled by a company,
Identify all purchased goods and services across the supply chain,
Carry out life cycle assessments of these purchased goods and services,
Identify total emissions from commuting,
…plus more.

You’d then need to find the emission factors associated for each of the above business activities, which can be found in the IPCC emission factor database.

As you can tell, when addressing scope 3 emissions things can get a little complicated. This is why many organizations turn to carbon footprint calculator software, which automates a lot of the process for you.

What we do know, however, is that on average, scope 3 emissions account for 70% of an organization’s total yearly emissions.

Total emissions from scopes 1 and 2 in this example equal 34,600 kg of CO_2e (30%). A very crude estimate of scope 3 emissions would give us 80,733 kg of CO_2e (70%). With total yearly business emissions (accounting for scopes 1, 2 and 3) being 115,333 kg of CO_2e.

Despite the rough figures, this example highlights the importance of accounting for scope 3 emissions, as scopes 1 and 2 are a fraction of an organization’s climatic impact. It also shows you how you can estimate rough business emission figures, to guide your carbon reduction strategy while you work to measure and report more comprehensive measurements.

How to calculate GHG emissions at the product level

The notion of operational boundaries (scopes) can also be applied to products. To explain, let’s take the example of a car.

Carmakers have to disclose scope 1 emissions, that is, a car’s fuel consumption. Yet, manufacturers don’t have to report emissions linked to the manufacture, transportation, and storage of vehicles. The reason being is that many subcontractors are involved during the manufacturing process – car parts are often manufactured across multiple assembly points – meaning the methodology behind calculating scope 3 emissions for a vehicle can become quite complex.

Nevertheless, we’ll do our best to show how scope emissions can be accounted for at a product level.

VEHICLE EMISSIONS CALCULATION EXAMPLE

Let’s say a vehicle emits 140g of C0_2e per km. That car then travels 160,000km during its service life. And so, direct scope 1 emissions equal 22.4 tonnes of CO_2e in the vehicle’s lifetime (140g C0_2e × 160,000km).

Next, we’d need to consider the car’s scope 2 and 3 emissions. The main scope 2 and 3 emissions come from the materials used (steel, plastics, tires, electrical components), logistics, end-of-life processing, and energy to power assembly (manufacturing and maintenance).

Let’s say we’re talking about the manufacturing and maintenance of a medium spec Ford Mondeo. The approximate CO2e emissions associated with the manufacture and maintenance of this car is ~17 tonnes of C0_2e.

Combining the emissions from product car usage with the emissions from maintenance and manufacture gives the total scope 1,2, and 3 emissions, which equals 39.4 tonnes of C0_2e.

Yet we haven’t fully accounted for scope 3 emissions here. Downstream, end-of-life emissions will also impact a car’s overall CO_2e emissions. For instance, car renewal rates (scrappage) of less than 15 years will significantly increase total emissions during the product’s lifetime. It’s optimal to replace vehicles after 19 years (it’s a balance between technology efficiency and product reuse rate).

Use the Green Business Bureau to measure, manage and reduce your business emissions

We hope this article has helped you understand business scope emissions better, and how this concept can be applied to account for corporate level and product level emissions.

At the Green Business Bureau, we want to help you measure, manage and reduce your business emissions to lower your carbon footprint. This is why we’ve introduced our carbon footprint calculator software, which will automate a lot of the process for you. You can access our carbon footprint calculator here.

Once more, by following GBB’s EcoAssessment and EcoPlanner, you’re guided through initiatives that build sustainable practices into the core of your business. This includes initiatives that will lower your organization’s carbon footprint. This could include initiatives like switching to a green energy supplier, or improving building insulation.

Sign up for the Green Business Bureau today to lower your business emissions, both at the corporate and at the product level.

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