What are Scope 1, 2, 3, and 4 Emissions?

Emission reporting frameworks categorize emissions into four types: Scope 1, Scope 2, Scope 3, and an emerging area called Scope 4 emissions. These categories help companies measure, report, and reduce their environmental footprint while meeting regulatory requirements. As global reporting standards evolve, Econic remains committed to supporting transparency and sustainability through these frameworks.

What are Scope 1 emissions?

Scope 1 emissions refer to direct emissions from sources owned or controlled by a company. These include fuel combustion in company vehicles or manufacturing plants. Companies are responsible for tracking and reporting their Scope 1 emissions under many current and upcoming regulations. In some cases, by capturing and embedding CO₂ into products and reducing fuel combustion, companies can lower their scope 1 emissions. 

For businesses looking to measure and manage their Scope 1 emissions, the U.S. Environmental Protection Agency (EPA) offers the Simplified GHG Emissions Calculator, a free tool that helps organizations estimate and inventory their annual GHG emissions. Designed primarily for small- and medium-sized organizations in the early stages of emissions tracking, the calculator guides users through defining organizational boundaries, collecting relevant data, and quantifying emissions.

What are Scope 2 emissions?

Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating, or cooling. Although companies do not directly control these emissions, they occur from the energy they consume.  Regions are moving towards mandatory reporting of Scope 1 and 2 emissions. For example, the European Union has adopted the Corporate Sustainability Reporting Directive (CRSD) which means companies will need to report on their environmental, social, and governance performance. This includes disclosing their greenhouse gas emissions, starting with scope 1 and 2. 

As Joe Evans, Econic’s Environmental Technologist, explains, “Monitoring carbon footprints is a complex yet essential task for businesses. Small and medium-sized companies can gain a competitive advantage by starting early and fine-tuning their strategies as they grow.”

What are Scope 3 emissions?

Scope 3 emissions cover indirect emissions throughout a company’s value chain, including both upstream and downstream activities. Examples include raw material extraction, business-related travel (including transport and hotel stays), product transportation, and end-of-life disposal. Scope 3 emissions often represent the largest share of a company’s carbon footprint. 

According to the UN Global Compact, “Scope 3 emissions usually account for more than 70% of a business’s carbon footprint, making it crucial for companies to address them in order to meet stakeholder expectations for meaningful climate action.” Measuring Scope 3 emissions helps businesses identify emission hotspots internally and throughout their supply chain, assess supplier sustainability performance, uncover energy efficiency and cost-saving opportunities, engage stakeholders in sustainability initiatives, and ultimately lower emissions. 

Source: WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (PDF), page 5.

What are Scope 4 emissions?

Scope 4 is an emerging concept focused on avoided emissions—reductions enabled by a company’s products or services beyond its direct operations. This scope reflects how innovations can drive emissions savings across industries. Reporting these emissions is not a regulatory requirement but serves as a valuable metric for companies seeking to highlight how their innovations reduce carbon footprints across industries.

The World Economic Forum provides examples of Scope 4 emissions, such as energy-saving batteries that reduce electricity consumption or teleconferencing services that lower travel-related emissions. The raw materials of products can also play a role. For example, adopting more sustainability technologies such as CO₂ polymers may reduce a company’s Scope 4 emissions. These “avoided emissions” occur outside a product’s direct lifecycle but result from its use, contributing to a broader positive climate impact.

“The recent introduction of Scope 4 emissions highlights a shift in how we approach sustainability, emphasizing the importance of environmentally conscious decision-making and recognizing its broader impact,” says Evans.

In summary, the evolution of emission reporting frameworks—from the direct emissions of Scope 1 to the potential of Scope 4—illustrates a transformative approach to sustainability. By tracking direct, indirect, and value chain emissions, companies not only adhere to regulatory standards but also unlock opportunities for efficiency and competitive advantage. 

This integrated framework of emissions reporting not only drives transparency but also paves the way for innovative solutions that can significantly reduce global carbon footprints, ultimately fostering a more sustainable future for all.

Econic’s technology helps reduce the carbon footprint of a variety of products. To learn more click here.