Scope 1, 2 and 3 emissions explained, with a worked bakery example

What are scope 1, 2 and 3 emissions?

Scope 1 is what a company emits itself, scope 2 is the emissions from the energy it buys, and scope 3 is everything else caused by its value chain, from the farms and factories that supply it to the customers who use and throw away what it sells. The three scopes come from the Greenhouse Gas Protocol, the accounting standard behind almost all corporate climate reporting.

Take a small bakery with two shops, gas ovens and a delivery van. The gas burned in the ovens and the diesel in the van are scope 1. The electricity for mixers, fridges and lights is scope 2, because it is generated at a power station somewhere else. The flour, butter, sugar and packaging it buys, and the bread customers throw away, are scope 3.

This guide goes deeper into the scopes themselves. For the step-by-step process of collecting data and choosing emission factors, see our broader guide on how to track carbon emissions.

Why the GHG Protocol uses scopes

The GHG Protocol is a partnership convened by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It launched in 1998, published its Corporate Standard in 2001 and a revised edition in 2004, and added the Scope 3 Standard in 2011. According to the GHG Protocol, 97% of S&P 500 companies that disclosed to CDP in 2023 used its methods.

Scopes answer two practical questions: who controls this emission, and could it be counted twice inside one report. Splitting direct from indirect emissions shows what a company can cut with its own equipment, what depends on its energy choices, and what depends on suppliers and customers.

Before assigning scopes, a company sets its boundary: which subsidiaries, sites and joint ventures count. The Corporate Standard allows three approaches (equity share, financial control or operational control), and the choice can move an asset between scopes. Inventories cover seven gases: carbon dioxide, methane, nitrous oxide, HFCs, PFCs, sulphur hexafluoride and nitrogen trifluoride, all converted to CO₂-equivalent (CO₂e).

Scope 1: direct emissions

Scope 1 covers greenhouse gases released from sources the company owns or controls. They fall into four groups:

• Stationary combustion: gas ovens and boilers in the bakery; a gas-fired furnace or kiln in a factory; a backup diesel generator in an office.
• Mobile combustion: the bakery’s delivery van, a manufacturer’s forklifts and lorries, company cars.
• Process emissions: gases released by chemical reactions rather than burning fuel, such as CO₂ from limestone in cement making.
• Fugitive emissions: leaks, above all refrigerant escaping from the bakery’s fridges or an office’s air-conditioning. Many refrigerants are potent HFCs, so small leaks matter.

The data usually sits in records the company already has: gas bills, fuel cards and refrigerant service logs.

Scope 2: purchased electricity, heat, steam and cooling

Scope 2 covers the emissions from generating the electricity, steam, heat and cooling a company buys and uses. The gas is released at the power station or district heating plant, not at the bakery, which is why it is indirect. For many offices, scope 2 is the larger of the two operational scopes.

Since the GHG Protocol’s 2015 Scope 2 Guidance, companies operating in markets with energy contracts or certificates report scope 2 in two ways, side by side:

A worked example with illustrative numbers: the bakery uses 50,000 kWh a year on a grid averaging 0.25 kg CO₂e per kWh. Its location-based scope 2 is 50,000 × 0.25 = 12,500 kg, or 12.5 tonnes. If it switches to a tariff backed by certificates that meet the Guidance’s quality criteria, its market-based figure can fall close to zero, while the location-based figure stays at 12.5 tonnes because the grid has not changed.

Upstream emissions from producing the fuels that power stations burn, and electricity lost in the wires before it reaches you, do not go in scope 2. They belong in scope 3, category 3.

Scope 3: the 15 categories, upstream and downstream

Scope 3 covers all other indirect emissions in the value chain. The Scope 3 Standard groups them into 15 categories: eight upstream, linked to what the company buys, and seven downstream, linked to what it sells. Companies report the relevant categories and explain any they leave out.

Which categories dominate depends on the business. For the bakery it is almost certainly category 1, because farming wheat and dairy is emissions-intensive. For a car or appliance maker it is usually category 11; for a bank, category 15.

Why scope 3 is usually the largest share, and the hardest to measure

Scope 3 is large because it contains other companies’ scope 1 and 2. Every supplier’s furnace and every customer’s car sits somewhere in it. In a 2024 analysis of data disclosed to CDP, the supply-chain (upstream scope 3) emissions companies disclosed in 2023 averaged 26 times their operational scope 1 and 2 emissions. The same report found companies were twice as likely to measure operational emissions as supply-chain ones, and only 15% of disclosing companies had set a target for upstream scope 3.

It is hard to measure because the data belongs to someone else. The GHG Protocol’s calculation guidance describes a ladder of methods; the main ones are:

1. Spend-based: money spent per category × an average emission factor per euro or dollar. Quick, but a pricier bag of flour looks more polluting even if it isn’t.
2. Average-data: physical quantities, such as tonnes of flour, × an industry-average factor.
3. Supplier-specific: the supplier’s own measured emissions for the product. Most accurate, and the only method that shows the effect of choosing a lower-carbon supplier.

Most companies start with spend-based screening across all 15 categories, then move their largest categories up the ladder.

Double counting between companies is expected

The bakery’s purchased flour (its category 1) is the mill’s scope 1 and 2 plus the farm’s emissions. The bakery’s electricity (its scope 2) is the power station’s scope 1. The same tonne of CO₂ therefore appears in several inventories, and the GHG Protocol accepts this by design: it gives each company in the chain a reason to act, from the farmer to the retailer.

What must be avoided is double counting within one inventory, such as counting the bakery’s own van in scope 1 and again in category 4, and adding different companies’ inventories together to get a total. National totals, like those in our CO₂ emissions by country ranking, are built differently: each country counts emissions released on its territory once, which is how the live global counter can add them up.

How scopes relate to your personal carbon footprint

Scopes are a company tool, but the logic carries over to a household:

• Like scope 1: petrol or diesel in your car, gas or oil in your boiler.
• Like scope 2: the electricity you buy, and district heating if you have it.
• Like scope 3: food, clothes, electronics, flights and services, all made or delivered by someone else.

The overlap runs both ways: the petrol you burn is also category 11 for the car maker and the oil company. You can estimate all three parts of your own footprint with our carbon footprint calculator.

Common misconceptions about scopes

• “Scope 1 is just CO₂ from burning fuel.” It covers all seven gases, including refrigerant leaks and process emissions.
• “Renewable certificates make our electricity zero-carbon.” They can lower the market-based figure. The location-based figure still reflects the grid, and both must be reported.
• “Grid losses and upstream fuel emissions are scope 2.” They are scope 3, category 3.
• “Scope 3 is optional, so it doesn’t matter.” It is optional under the Corporate Standard, but for most companies it is where most emissions are, and disclosure rules such as IFRS S2 ask for it.
• “Scope 3 is someone else’s problem.” A company cannot cut it alone, but it decides what it buys, how products are designed and which suppliers it uses.
• “Scope 4 is the emissions a product helps avoid.” There is no scope 4 in the GHG Protocol. Avoided emissions are reported separately, never subtracted from scopes 1 to 3.

Are the scope rules changing?

Yes, gradually. The GHG Protocol is revising its Corporate Standard, Scope 2 Guidance and Scope 3 Standard, overseen by an Independent Standards Board. A public consultation on Scope 2 ran from 20 October 2025 to 31 January 2026; its proposals keep dual reporting but would require market-based contracts to be matched to consumption hour by hour and to come from generation that can be delivered to the consuming grid, with relief for smaller companies and a phased start.

None of this is final: the first consultation has closed, a further round is expected, and new standards are not expected before 2027. Until revised standards are published, the 2004 Corporate Standard, 2015 Scope 2 Guidance and 2011 Scope 3 Standard apply, and this guide follows them.