The Greenhouse Gas Protocol, or GHG Protocol, is the most widely used international method for measuring and reporting greenhouse gas emissions. According to this method, emissions are divided into three different categories: Scope 1, Scope 2, and Scope 3.
The classification according to the GHG Protocol reduces the risk of double counting between emission calculations and helps to understand the emission sources throughout the entire value chain of business.
GHG Protocol and Scope 1, 2, 3
According to the GHG Protocol, emissions are classified as follows:
- Scope 1 includes all direct greenhouse gas emissions resulting from the company’s operations.
- Scope 2 includes greenhouse gas emissions resulting from the production of purchased and consumed energy.
- Scope 3 includes all other indirect greenhouse gas emissions resulting from the company’s operations, but the emission sources themselves are not owned or controlled by the company. Such emission sources include, for example, emissions from the production of purchased goods and services, as well as emissions from business travel and commuting. Scope 3 emissions are further categorized into fifteen different emission categories.
Why it’s Important to Reduce a Company’s Greenhouse Gas Emissions
The EU Corporate Sustainability Reporting Directive (CSRD) reporting obligation will come into effect for the first companies in 2024. The CSRD aims to expand the scope of reporting and establish more uniform reporting standards.
The CSRD requires companies to ensure that their business aligns with the goals of the Paris Climate Agreement. Meeting this requirement necessitates companies to monitor greenhouse gas emissions with greater precision and to ambitiously and purposefully reduce emissions.
While not all small and medium-sized enterprises may face the same pressure for emission reductions, the emission reduction efforts and goals of larger companies flow down the value chain to smaller businesses. Thus, promoting climate responsibility may become a significantly more important competitive advantage for small and medium-sized enterprises in the future.
How to Get Started in Reducing Greenhouse Gas Emissions
Identifying the emission sources that are crucial to a company’s operations and calculating emissions is the first step in managing a company’s climate impact. With the identification of the most significant emission sources, a company can set appropriate and effective measures and targets for its operations.
Timely and targeted measures enable the reduction of emissions in a company’s business in both the short and long term. In the future, it will no longer suffice to manage emissions from one’s own operations (scope 1 & 2), but it will also be important to target emission reduction measures towards the emissions in the value chain (scope 3).
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