Kiwi businesses are increasingly being expected to understand the impact they have on the environment, whether that is through changing consumer patterns, alignment to a standard (e.g. B-Corp), or through legislation, such as the XRB in New Zealand.
Commonly, impact is measured in terms of various emissions “scopes”, namely Scope 1, 2 and 3. But what are those scopes and why does that matter? First, let’s talk about some background.
The Greenhouse Gas Protocol (GHG) is an international standard for measuring and reporting greenhouse gas (GHG) emissions. It provides a framework for businesses, governments and other organisations to measure, manage and report their GHG emissions. The protocol defines three categories of emissions – Scope 1, 2 and 3 – to enable organisations to differentiate between direct and indirect emissions.
Let’s dive into each of those scopes to understand what they mean, what's included, and how you can measure them.
Scope 1 Emissions
Scope 1 emissions are those that are directly produced by an organisation. These emissions include those resulting from burning fuel for heating, on-site transportation, and other activities.
For example, a small business that uses an on-site generator to provide power would have Scope 1 emissions from the generator.
Or, you have a fleet of vehicles, for example as a delivery company, another possible Scope 1 emission source is your fuel.
Common Scope 1 Emissions Sources:
- On-site combustion of fossil fuels (e.g. from boilers or generators)
- On-site vehicle fuel combustion (e.g. from company cars or delivery vans)
- Fugitive emissions from fuel storage or handling
- Refrigerant leakage from air conditioning or refrigeration
The most accurate way of measuring Scope 1 emissions is to use direct monitoring systems and sensors, such as those that measure the amount of fuel being used or the amount of carbon dioxide being produced.
Organisations can also use ‘proxy’ methods such as fuel consumption records, emission factors, and emission calculations based on activity data.
For example, a business that uses an on-site generator can use fuel consumption records to calculate their emissions, or alternatively calculate their emissions using an emission factor for diesel generators.
Scope 2 Emissions
Scope 2 emissions are those that are produced from the energy that an organisation uses, but are not produced directly by the organisation. These emissions include those from electricity and other forms of energy used by the organisation.
A small business that purchases electricity from a utility would have Scope 2 emissions from the electricity it uses.
Common Scope 2 Emissions Sources:
- Purchased electricity
- Purchased heat or steam
Using your bill / invoice, you can understand the kilowatt hours of a given emissions source, and use a calculation to get an emissions estimate.
Scope 3 Emissions
Scope 3 emissions are those that are produced from activities that are not directly associated with the organisation, but are still associated with the organisations operations.
These emissions include those from transportation of goods and services, waste disposal, and other activities.
For example, a small business that purchases materials from an external source and transports them to its own facility would have Scope 3 emissions from the transportation. Another example would be a small business that disposes of its waste in a landfill, which would produce Scope 3 emissions from the waste disposal.
Common Scope 3 Emissions Sources:
- Business travel
- Purchased goods and services
- Employee commuting
- Upstream transportation and distribution
- Downstream transportation and distribution
- Lease and rental activities
- Waste disposal and treatment
It can be difficult for businesses to account for all of their Scope 3 emissions as these emissions are often indirect and not directly associated with the organisation's operations. Additionally, as these emissions are not produced directly by the organisation, it can be difficult to track and measure them - this is where CarbonTrail comes in!
CarbonTrail can manage all scopes of emissions, including the more complex job of reconciling scope 3 emissions.
In conclusion, understanding Scope 1, 2, and 3 emissions is essential for businesses to meet their sustainability goals and stay in compliance with environmental regulations.
By understanding the different categories of emissions and with the help of CarbonTrail, you can manage all scopes of emissions and accurately track and measure your organisations impact on the environment, and make informed decisions to reduce your carbon footprint and help create a greener future.
If you’re interested in finding out more, just click here to book a call with our founder, Tom.