Scope 1, 2 and 3: the differences explained with real examples
The three GHG Protocol categories explained through the eyes of an 80-employee manufacturing SME, with the most common mistakes.
The GHG Protocol divides a company's emissions into three categories, the famous Scopes. The logic is simple: to distinguish what you emit directly, what you emit through the energy you buy and what you emit through your value chain. Let's look at them through the eyes of a manufacturing SME with 80 employees.
Scope 1: what you burn yourself
These are the direct emissions from sources you own or control. For our SME: the methane of the boiler and of the painting oven, the diesel of the two company vans, the LPG of the forklift. The starting data are the invoices of the fuel suppliers: cubic metres, litres, kilograms.
Scope 2: the energy you buy
These are the indirect emissions of purchased energy, in practice electricity. Here there are two calculation methods: location-based, which uses the average factor of the national grid, and market-based, which considers the specific contract, for example a supply with renewable guarantees of origin. The VSME asks to indicate both when relevant. The starting data are the bills: the kWh consumed per POD and per period.
Scope 3: the value chain
Everything else: the raw materials purchased, the transport outsourced to third parties, business travel, waste, the use of the products sold. For most SMEs Scope 3 is the largest slice, often over 70% of the total. The good news: it is not necessary to calculate all 15 categories of the GHG Protocol, you need those relevant to your business.
The most common mistakes
- Counting electricity twice: the kWh go in Scope 2, not also in Scope 1.
- Forgetting long-term rental vehicles: if you control them, the fuel is Scope 1.
- Using old emission factors: the electricity grid factor changes every year, and the difference shows.
- Estimating when the document exists: if you have the bill, use the bill. Estimates are hard to defend before a bank.
The golden rule: every number in the report must be traceable to a document. It is the principle on which Envify is built, and it is what makes a report defensible in an audit.
