Since the beginning of industrial revolution in the 1850s, the world has transitioned into technological advancement, with intense use of fossil fuels as a primary energy source. Even though there was an immense development in infrastructure and machineries in a global level, pollution and global warming became a major issue worldwide, which highlighted the urgent need for tackling these issues and following sustainable management practices.

Air pollution was a major threat for global warming, as it occurred due to the extensive combustion of fossil fuels, ultimately leading to the emission of Greenhouse gases (GHG). Maintaining GHG levels in a balanced way became a responsibility, especially for businesses and industries. This led to the categorization of GHG emissions, in a business perspective, into Scope 1, Scope 2 and Scope 3 emissions.

What is Scope 1, 2 and 3 emissions?

Scope 1, 2 and 3 emissions are classified based on the source and control of GHG emissions within a company’s value chain. Let’s discuss each of them in detail:

• Scope 1:These are ‘direct emissions’ from sources that are owned or controlled by the company. This includes fuel emissions from equipment or ‘stationary combustion’, emissions from company-owned vehicles or ‘mobile combustion’, and Fugitive emissions from refrigerants or gas leaks. As the company directly operates or owns the facility, they are solely responsible for these emissions.

• Scope 2:These are ‘indirect emissions’ released into the atmosphere from the use of purchased energy. This includes energy in the form of purchased electricity, or purchased steam or heat. Even though the emissions happen at the power plant, the company is responsible for emission reporting since it uses the energy.

• Scope 3:This include all other ‘indirect emissions’ that occur across the value chain and are outside of the organisation’s direct control. It includes both upstream (supply chain) and downstream (after product use) emissions. Though the emissions occur outside the company’s direct control, they are responsible because they are connected to its activities or products. This includes emissions from purchased goods and services, waste, employee commuting, business travel, investments, capital goods etc.

Challenges in measuring Scope emissions

• Scope 1 emissions are generally easier to track, but they are often overlooked in service-based sectors where direct emissions are minimal.

• Scope 2 emissions require data from utility providers, and organizations must decide whether to use the market-based or location-based method for reporting.

• Scope 3 emissions are the most complex to measure, as they require data from suppliers, involve estimations, and depend heavily on cooperation across the entire value chain.

Scope emissions calculation: The GHG Protocol

Scope emissions are calculated worldwide based on a set of standards, known as the GHG Protocol, which is a globally acknowledged standard for measuring and managing greenhouse gas emissions / carbon footprint. It provides carbon accounting and reporting standards, sector guidance, calculation tools and trainings for businesses and local and national governments. It takes into account six greenhouse gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), and sulphur hexafluoride (SF₆).

The key steps for calculation are:

• Define organizational and operational boundaries; decide which parts of the company are included in the emissions report.

• Identify emission sources; list all activities under Scope 1, 2, and 3 relevant to your operations.

• Collect activity data; gather real quantities of substances used (fuel, electricity, raw materials etc.)

• Select appropriate emission factors (from trusted databases like IPCC, EPA, or national inventories).

• Apply calculation formula; Emissions = Activity data × Emission factor

• Aggregate and report by scope and gas, usually expressed in CO₂-equivalent (CO₂e).

• Perform quality checks and verification to ensure data accuracy and credibility.

Why Does Categorizing Emissions Matter?

• Helps to identify the major sources of emissions.

• Supports Better Climate Action Planning, and facilitates realistic and focused climate strategies.

• Improves transparency in reporting in line with international standards, building trust with stakeholders, customers and investors.

• Makes comparisons between companies and industries easier.

• Supports Regulation and Compliance.

How ARRO can help?

CeroED’s ARRO, can help companies easily categorise and report their scope emissions. The info button against each type of emission source helps users to clearly understand what kind of data should be added in each section. The platform also provides you with a template for entering bulk data, making data entry easier. ARRO follows GHG protocol for calculating emissions and the data added in verified by a set of approvers, based on the approval flow, to make sure the data provided is transparent and reliable. The calculations are AI based, which gives accurate results with minimum errors.

Want to know how ARRO operates?

Email us at info@ceroed.com
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