Scope 1, 2, 3: What You Actually Need to Measure
Carbon accounting has three tiers. Most businesses over-complicate the first two and avoid the third entirely.
At a Glance
▸ Scope 1 (direct emissions) is the floor - mandatory everywhere, data is accessible
▸ Scope 2: GHG Protocol requires both location-based and market-based methods
▸ Scope 3 is 70-90% of total emissions but start with your top 3 material categories
▸ Essential first, advanced later - measuring everything on day one produces unusable data
Every carbon accounting conversation starts with Scope 1, 2, and 3. Most explanations make it sound simple. The boundaries are contested, data requirements vary by jurisdiction, and the gap between what regulators require and what best practice demands is where most businesses get stuck.
Scope 1: Your Operations
Direct emissions from sources you own or control. Fuel in vehicles. Gas in boilers. Diesel in generators. Refrigerant leaks.
This is the floor. Every mandatory regime - AASB S2, SECR, NGER - requires Scope 1. If you're not measuring this, you're not in the game.
Data is typically accessible - fuel invoices, fleet records, utility bills. Most businesses produce reasonable Scope 1 figures within weeks. Where it gets complicated: operational control vs equity share boundaries, fugitive emissions from refrigerants, and process emissions in manufacturing.
Scope 2: Your Grid Dependency
Indirect emissions from purchased electricity, heat, steam, or cooling.
Two methods. Location-based uses grid-average emission factors. Market-based reflects purchasing decisions - renewable energy certificates, power purchase agreements, green tariffs.
GHG Protocol requires both methods. AASB S2 and ISSB S2 mandate location-based reporting with market-based as additional disclosure. Best practice: report both for a complete picture.
The trap: companies buy RECs and report a low market-based figure while location-based stays high. Both numbers tell a story. Stakeholders need both.
Scope 3: Where 80% of Emissions Live
Fifteen categories spanning upstream and downstream. For most businesses, Scope 3 is 70-90% of total emissions. Start with the categories material to your industry.
| Industry | Primary Scope 3 Category | % of Total Emissions |
|---|---|---|
| Logistics | Cat 3: Fuel & energy activities | 60-75% |
| Financial Services | Cat 15: Investments | 85-95% |
| Retail | Cat 1: Purchased goods | 70-85% |
| Manufacturing | Cat 1: Purchased goods + Cat 4: Transport | 50-70% |
| Tech / SaaS | Cat 2: Capital goods + Cat 1 | 40-60% |
What To Measure First
| Essential (1A) | Advanced (1B) | Best Practice | |
|---|---|---|---|
| Scope 1 | All direct sources | Fugitive + process | Continuous monitoring |
| Scope 2 | Location-based | \+ Market-based | RE procurement strategy |
| Scope 3 | Top 3 material categories | All material categories | Supplier-specific data |
Start with Essential. Get it right. Get it auditable. Then expand. Most businesses that try to measure everything on day one produce data that is neither accurate nor useful.
Carbon accounting that scales with you.
✔ Structured Essential (1A) and Advanced (1B) data tiers - start right, expand when ready
✔ Automated Scope 1, 2, and 3 calculations with GHG Protocol methodology built in
✔ Industry-specific emission factors (DEFRA, EPA, NGA) updated automatically
✔ Most competitive pricing in market - tiered for SME through enterprise
See how SustainQ handles your scopes → | contact@sustaintrue.com