GHG Protocol Scope 1, 2 and 3: drawing the boundaries correctly

The common language of corporate carbon accounting is the GHG Protocol. It splits emissions into three scopes, and the split is not arbitrary: each scope is defined by the company’s degree of control over the emission and by the need to avoid double counting. Confusing the scopes destroys the inventory’s comparability.

Organisational boundary first

Before talking about scopes you have to settle what “the company” means. In a group, which subsidiaries’ emissions enter the inventory? The GHG Protocol recognises two approaches. Under equity share, each facility’s emissions enter in proportion to your ownership. Under the control approach, facilities you control enter in full and those you do not control do not enter at all.

The control approach splits again into operational and financial control. Most companies choose operational control, because covering facilities where they can enforce operating policies makes more managerial sense. The choice is free but consistency is mandatory — switching approach between years requires recalculating the base year.

Scope 1 — direct emissions

Scope 1 covers emissions from sources the company owns or controls: boilers and furnaces on site, process emissions, the company vehicle fleet and fugitive emissions. Fugitives are the most commonly missed line; refrigerant leakage, SF₆ switchgear and methane leaks are low in mass but can be very high in GWP.

Scope 2 — purchased energy

Scope 2 covers emissions from generating purchased electricity, steam, heating and cooling. The emission physically occurs at another facility, but because the consumption is yours it enters your inventory. The GHG Protocol Scope 2 Guidance requires reporting this scope under both methods: location-based and market-based.

Scope 3 — the value chain

Scope 3 covers all other indirect emissions in the value chain, split into fifteen categories: eight upstream (supply side) and seven downstream (use and end-of-life side). For most manufacturers, 70 to 90 per cent of the total inventory sits in Scope 3 — which is where the real size of a corporate footprint is decided.

• Upstream: purchased goods and services, capital goods, fuel- and energy-related activities, upstream transport, operational waste, business travel, employee commuting, leased assets
• Downstream: downstream transport, processing of sold products, use of sold products, end-of-life treatment of sold products, leased assets, franchises, investments
• Category 1 (purchased goods and services) alone exceeds half the total for most manufacturers
• Category 11 (use of sold products) dominates for energy-consuming products

Where Scope 3 and LCA intersect

Scope 3 Category 1 intersects directly with product-level life cycle assessment. The cradle-to-gate emissions of every material you buy correspond to that supplier’s A1–A3 modules. A company collecting EPDs from its suppliers therefore raises its Scope 3 quality and produces its own product EPD from the same data.

The difference is the accounting unit. A corporate inventory is annual and company-wide; LCA is per functional unit. Converting between them means multiplying by production or sales volume — but for that, the product footprint has to reflect your actual production route, not a sector average.