Image Commercially Licensed From: Unsplash
Are you a business that wants to understand the different types of greenhouse gas emissions (GHG) and how they impact your operations? If so, then you have come to the right place! In this blog post, we will explore GHG emission scopes 1, 2, and 3 — breaking down what each means and how they affect businesses.
We’ll also explore what it means to operate with corporate responsibility and sustainability in mind. This means understanding the importance of GHG emission data collection, analysis, and reporting for businesses and why this is so pivotal in today’s society.
After all, knowing the potential ramifications of these emissions can help you take meaningful steps toward reducing them for greater sustainability in your organization. Let’s jump into it!
What are greenhouse gas emissions scopes 1, 2, and 3?
Greenhouse gases are atmospheric gases that trap heat and contribute to global warming. Carbon dioxide, methane, and water vapor are the most prevalent GHGs. The most common sources of GHG emissions from businesses are energy use, transportation, waste, and industrial processes.
These emissions contribute to climate change and require monitoring and reduction efforts. For example, transportation contributes to approximately 27% of total GHG emissions in the US, while buildings generate about 12.5% of emissions.
By implementing sustainable practices and reporting emission data, businesses can mitigate climate risks and become leaders in sustainability. Comprehensive reporting includes both direct and indirect emissions, known as scopes 1, 2, and 3, respectively.
Scope 1 emissions
Scope 1 emissions are the direct emissions caused by business operations. As such, these are the easiest emissions to control within a business. Examples of scope 1 emissions include:
- Fuel combustion – fuels used on site, such as oil and natural gas, for stationary combustion
- Onsite power generation – any energy made and used by businesses independent of the grid
- Vehicle fleet emissions – most commonly calculated as CO2 emissions from fuel use
- Fugitive emissions – caused by gas, commonly as a result of leaks or irregular emissions
Scope 2 emissions
Scope 2 emissions are the indirect emissions caused by an organization’s energy consumption. These are most commonly the purchased energy relating to electricity, steam, heat, or cooling. It’s vital to record scope 2 emissions, as although they are not direct sources from a business, they are caused as a result of running the business.
Scope 3 emissions
Scope 3 emissions result from activities from assets not directly controlled by the business. However, they still occur as a result of business operations. Examples of scope 3 emissions include:
- Transport and distribution
- Purchased goods and services
- Waste generation and operations
- Business travel and employee commuting
- End-of-life treatment of products sold
What’s GHG posting, and why is this important when it comes to ESG?
GHG reporting is particularly relevant for businesses in light of the growing focus on Environmental, Social, and Governance (ESG) issues. Accurate GHG reporting is crucial in clearly understanding a company’s carbon footprint and developing strategies for reducing emissions, managing risk, and enhancing sustainability.
GHG posting
GHG reporting is the process of measuring and disclosing the release and impact of these gases. It allows businesses to assess their environmental impact and identify areas for improvement. Reporting can also help businesses reduce risks related to regulation, reputation, and supply chain.
Accurate and transparent GHG reporting is becoming increasingly important for companies to demonstrate environmental responsibility and meet stakeholder expectations.
Why is ESG so important?
In today’s socially and environmentally conscious world, ESG is crucial for businesses seeking sustained success. Business owners can demonstrate a commitment to sustainability by implementing ESG practices, which not only contribute to climate change mitigation but also enhance brand reputation, attract investors, and reduce operational costs.
For example, big businesses that bid on OASIS+ get 1 credit for disclosing scopes 1 and 2 GHG emissions to the public, made according to the GHG Protocol. Also, the Alliant 3 RFP (GWAC) rewards 3,500 points for disclosing greenhouse gas emissions of Scopes 1, 2, and 3, making sustainability a top priority.
Increasingly, governments and consumers demand transparency about ESG principles, making compliance essential for businesses to maintain competitive advantage. Furthermore, integrating ESG into core business strategies can result in better financial performance, risk mitigation, and long-term growth.
For example, companies need to ensure their products and services meet GHG requirements to score government contracts by providing relevant information.
How Aprio can help
Knowing where to begin when creating and implementing an ESG strategy is hard. You don’t have the right people, processes, or technology to ensure your company meets its ESG needs. You might even risk missing out on opportunities that can make a difference for your business and the world. You could also be open to costly fines or penalties due to non-compliance with ESG standards and GHG reporting.
This is where Aprio can help you navigate these challenges and ensure compliance with the highest industry standards. Aprio’s ESG consulting team provides comprehensive resources so you can develop a strategic approach tailored to your company’s needs. With Aprio’s help, you can confidently create, implement and advance your ESG strategy.
Collect emissions data
Aprio’s ESG team assists in compiling a GHG emissions inventory for scopes 1, 2, and 3, utilizing data from all relevant facilities and locations. They will also produce a GHG baseline following GHG Protocol standards.
Calculate and measure
Aprio’s ESG advisors can assist you in measuring GHGs resulting from your operations, customizing calculations for unique categories, and verifying and validating the data.
Manage and report
Aprio can securely store all your data and create an audit trail. Get a detailed report of your GHG emissions, including a URL for public disclosure.
Final thoughts
Breaking down the GHG emission scopes is a great starting point for understanding how your activities may impact your business and the environment. Moving forward, measures like setting carbon reduction goals are simple steps businesses must take to remain competitive in today’s ESG-focused market.
After all, knowing and understanding these scopes is fundamental to identifying opportunities to reduce energy use, become more sustainable, and in doing so, improve your business finances. If you’d like further help developing your business’s ESG strategies and GHG reporting, contact Aprio, who can streamline the whole process for you.
With ever-growing concerns about climate change, sustainability is more important than ever. Businesses must equip themselves with knowledge of GHG emission scopes and have efficient monitoring and reporting methods in place.
