Greenhouse Gas Protocol

Corporate Standard

Greenhouse gas emissions are classified into three scopes.
Scope 1 and 2 are always obligatory to report, whereas scope 3 is optional. Additionally, the three scopes are considered as either direct or indirect.

Direct emissions (scope 1), cover emissions that a company generates while performing business activities. In general, these are emissions that occur from your owned and controlled assets. These emissions could come from driving your vehicle or burning fuel.
Indirect emissions (scope 2 & 3), cover emissions that are generated on behalf of your company. Scope 2 emissions include emissions from your purchased energy, whereas scope 3 includes indirect emissions in your value chain.

The leading international standard that introduces this terminology for measuring emissions is called the Green House Gas Protocol. Through this standard, organizations and institutions worldwide can effectively calculate and report greenhouse gas emissions in a unified way. Following this reporting framework is critical to promote transparency and comparability in the sustainability reporting space.

Scope 1, 2 & 3 value chain visualization

Direct emissions

Scope 1

Scope 1 emissions are classified as direct emissions that a company generates from company-owned and controlled resources. Activities that can contribute to scope 1 emissions can include:

Generation of electricity, heat, or steam on-site.
Manufacture materials and products.
Transportation using vehicles owned or controlled by the company.

The share of emissions originating from scope 1 usually depends heavily on the type of industry that the company operates in.

Indirect emissions

Scope 2

Scope 2 emissions are classified as indirect emissions that are generated by the production of purchased energy. Activities that can contribute to scope 2 emissions can include:

Purchased electricity
Purchased heating
Purchased cooling

In that sense, all emissions in scope 2 come using a utility provider. Scope 2 emissions are essential for all companies but the actual share of emissions varies heavily by the industry type and sustainability strategy. Many companies choose to buy ‘CO2 neutral’ electricity through Renewal Energy Certificates (RECs).

Indirect emissions

Scope 3

Scope 3 emissions are classified as indirect emission and are divided into upstream and downstream emissions. Upstream emissions refer to the supply chain and therefore originate from a company's suppliers. Downstream emissions refer to the emissions that occur after a product or service has left the door of a company.

Scope 3

Upstream emissions

The activities that can contribute to scope 3 upstream emissions are separated into 8 categories

Purchased goods and services, as example this includes the emissions from purchased raw materials, office supplies and IT services.

Capital goods, e.g. upstream emissions from any product the company uses to provide a service.

Fuel- and energy related activities (not included in scope 1 or 2), such as emissions from the extraction, production and transportation of fuels consumed by the reporting company. E.g. the mining of coal and refining of gasoline.

Upstream transportation and distribution of purchased goods and materials from the supplier to the company in vehicles not owned or operated by the company.

Waste generated in the operation of the company, includes the emissions from the disposal of both solid waste and wastewater by a third company.

Business travels from employees on behalf of the company in vehicles owned or operated by third parties, such as air travels, taxi travels and train travels.

Employee commuting between their homes and their worksites, companies may include emissions from teleworking.

Upstream leased assets, accounting for the emissions from the operation of assets leased by the company.

Scope 3

Downstream emissions

The activities that can contribute to scope 3 downstream emissions are separated into 7 categories

Downstream transportation and distribution of sold products in vehicles and facilities not owned by the company include emissions from retail and storage.

Processing of sold products by third parties, e.g. if the company produces plastic pellets that are sold and need to be further processed the emissions from the processing of the pellets belong to this category.

Use of sold products by the company, for example, the emissions from the energy used to power a cellphone sold by the company.

End-of-life treatment of sold products accounts for the emissions from the waste disposal and treatment of products sold by the company.

Downstream leased assets mean the operation of the assets that are owned by the company but leased to other entities.

Franchises account for emissions from the operation of franchises that are not included in scope 1 and 2.

Investments, applicable to investors and companies that provide financial services, account for the emissions with the company’s investments. E.g., if the company takes part in long-term financing of projects, the scope 1 and 2 emissions that occur are reported.