This article discusses the following aspects of starting your carbon accounting:
How to start your carbon accounting
What are scopes 1, 2 & 3 in carbon accounting
Where to find the data you need
Getting Started with Carbon Accounting: Focusing on Scopes 1, 2, and 3
Carbon accounting is the process of measuring and reporting greenhouse gas (GHG) emissions generated by an organisation's activities, both direct and indirect. It plays a crucial role in understanding your organisation’s carbon footprint and implementing strategies to reduce emissions. This guide will help you begin your carbon accounting journey, focusing on Scope 1, Scope 2, the most relevant elements of Scope 3 emissions, and how to define reporting boundaries.
What Are Scopes 1, 2, and 3 in Carbon Accounting?
Scope 1 – Direct Emissions
Scope 1 emissions are from sources that your organisation owns or controls directly. These include emissions from:Fossil fuel combustion: For example, natural gas used for heating your building.
Company vehicles: Emissions from cars or commercial vehicles owned or leased by your organisation.
Manufacturing processes: If your organisation runs any industrial processes that result in emissions.
Refrigerant gases: Leaks from air conditioning or refrigeration systems.
Data sources for Scope 1:
Gas invoices from facility or finance teams.
Fuel use data for company vehicles, which could be obtained from fleet management or operations.
Scope 2 – Indirect Emissions from Energy Purchased
Scope 2 covers emissions from the electricity, heat, or steam your organisation purchases and uses. These are not direct emissions, but they are a result of your energy consumption.Data sources for Scope 2:
Energy bills and invoices, typically tracked by facility management or finance.
On-site energy monitoring systems, if available, can help track usage more accurately.
Scope 3 – Other Indirect Emissions
Scope 3 includes all other indirect emissions that occur in your value chain, both upstream and downstream. This can be the most challenging part of carbon accounting due to the complexity and variability of your supply chain and operations. However, it's critical to focus on material Scope 3 components that significantly impact your carbon footprint.
Accounting for the Commonly Reported Components of Scope 3
Scope 3 emissions vary widely across organisations, but here are the most commonly reported categories to focus on:
Purchased Goods and Services (Scope 3.1)
Emissions from the production of goods and services that your organisation buys, such as IT equipment, office supplies, or professional services.Data source: Procurement data, supplier invoices.
Capital Goods (Scope 3.2)
These are long-term assets purchased by your organisation, such as buildings, machinery, and vehicles. Emissions are associated with the production and transport of these goods.Data source: Procurement data, capital expenditure records.
Upstream Leased Assets (Scope 3.8)
Emissions from assets that your organisation leases but does not operate. This could include office space or equipment leased from a third party.Data source: Lease contracts, supplier information.
Business Travel (Scope 3.6)
Emissions from work-related travel, such as flights, hotels, or train journeys. If your organisation reimburses employees for business travel, these emissions must be accounted for.Data source: Travel expense claims, corporate booking systems.
Employee Commuting and Homeworking (Scope 3.7)
Emissions generated from employees commuting to the office or working remotely. Tracking the modes of transport used by employees, or their energy consumption while working from home, helps in calculating these emissions.Data source: Employee surveys, HR records.
Upstream and Downstream Transportation & Distribution (Scope 3.4 and 3.9)
Emissions from transporting goods either to your organisation (upstream) or to customers (downstream). This includes logistics services, freight, and shipping.Data source: Supplier data, logistics provider records, invoices for transportation services.
Conclusion
Getting started with carbon accounting is a crucial first step in reducing your organisation’s carbon footprint and aligning with regulatory and stakeholder expectations. By understanding the differences between Scopes 1, 2, and 3, and focusing on commonly reported Scope 3 categories, you can ensure your carbon accounting efforts are comprehensive and accurate. Begin by gathering the necessary data from internal teams and suppliers, and use this guide to map your emissions to the right scopes.
To ensure you account for all entities in your organisation and properly define reporting boundaries, the next step is to map your emissions sources to their relevant scope and entity. This process is key to ensuring complete and transparent reporting. For more detailed guidance on reporting boundaries and mapping emissions to your entities, check out our next article on defining your reporting boundaries and mapping the scopes to entities below.
If you need further assistance, don’t hesitate to reach out! Our team at KEY ESG is here to help—contact us via in-platform chat or email us at support@keyesg.com for expert advice and support.