Scope 1, 2 and 3 emissions explained, with all 15 Scope 3 categories
Scope 1, 2 and 3 emissions are the three groups the GHG Protocol uses to classify a company's greenhouse gas emissions. Scope 1 covers direct emissions from sources the company owns or controls; Scope 2 covers indirect emissions from the electricity, steam, heat and cooling it buys; Scope 3 covers all other indirect emissions in its value chain, split into 15 categories. For most companies, Scope 3 is the largest share.
Why emissions are split into scopes
The scopes exist to avoid double counting within one company's inventory and to show where a company has direct control. Your Scope 2 is your electricity supplier's Scope 1; your Scope 3 includes other companies' Scope 1 and 2. Across a value chain the same tonne appears in several inventories — that is intended, because each company can act on it in a different way. Within a single inventory, each tonne must sit in exactly one scope.
The rules come from the GHG Protocol Corporate Standard (Scopes 1 and 2), the Scope 2 Guidance and the Corporate Value Chain (Scope 3) Standard. The inventory covers the seven Kyoto gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride and nitrogen trifluoride, all converted to CO2-equivalent.
Scope 1: direct emissions
Scope 1 is emissions from sources owned or controlled by the company. Typical sources:
- Stationary combustion — boilers, furnaces, generators, kilns.
- Mobile combustion — company-owned or controlled vehicles, forklifts, ships, aircraft.
- Process emissions — chemical reactions, such as calcination in cement or anode consumption in aluminium.
- Fugitive emissions — refrigerant leaks from air conditioning and chillers, methane leaks, SF6 from switchgear.
Which assets count as "owned or controlled" depends on the consolidation approach you choose: equity share, financial control or operational control. Choose one and apply it consistently.
Scope 2: indirect emissions from purchased energy
Scope 2 covers emissions from generating the electricity, steam, heat and cooling a company buys and consumes. The emissions physically occur at the power plant, but the company's demand causes them.
The GHG Protocol Scope 2 Guidance requires two figures where contractual instruments exist: a location-based result using average grid emission factors, and a market-based result reflecting the contracts and certificates the company holds. We explain the difference in location-based vs market-based Scope 2. Note that the Scope 2 rules are under revision; check the latest GHG Protocol guidance before changing your approach.
What are Scope 3 emissions?
Scope 3 emissions are all other indirect emissions that occur in a company's value chain, upstream and downstream. They result from the company's activities but come from sources it does not own or control — suppliers' factories, logistics providers, customers using products, investees. The Scope 3 Standard groups them into 15 categories. Companies should assess all 15, report those that are relevant and explain any exclusions.
The 15 Scope 3 categories
| # | Category | Examples |
|---|---|---|
| Upstream | ||
| 1 | Purchased goods and services | Raw materials, packaging, IT services, professional services |
| 2 | Capital goods | Machinery, buildings, vehicles, IT hardware bought in the year |
| 3 | Fuel- and energy-related activities (not in Scope 1 or 2) | Extraction and refining of fuels bought; transmission and distribution losses |
| 4 | Upstream transportation and distribution | Inbound freight; outbound freight the company pays for; third-party warehousing |
| 5 | Waste generated in operations | Landfill, incineration, recycling and wastewater treatment of the company's waste |
| 6 | Business travel | Flights, trains, taxis, hotel stays for employees |
| 7 | Employee commuting | Travel between home and work, including remote working where included |
| 8 | Upstream leased assets | Offices or vehicles leased by the company, if not already in Scope 1 or 2 |
| Downstream | ||
| 9 | Downstream transportation and distribution | Delivery of sold products not paid for by the company; retail storage |
| 10 | Processing of sold products | Customers further processing intermediate products, such as steel into components |
| 11 | Use of sold products | Fuel burned by sold vehicles; electricity used by sold appliances |
| 12 | End-of-life treatment of sold products | Disposal and recycling of products and packaging after use |
| 13 | Downstream leased assets | Buildings or equipment the company owns and leases to others |
| 14 | Franchises | Emissions of franchisees' operations |
| 15 | Investments | Equity and debt investments, project finance — the financed emissions of banks and investors |
Category 15 is usually the dominant category for financial institutions; see our PCAF financed emissions guide.
How to measure each scope
The basic calculation is the same everywhere: activity data multiplied by an emission factor, converted to CO2e with global warming potentials. What differs is the data:
- Scope 1: fuel purchase records, meter readings, refrigerant top-up logs, process material balances.
- Scope 2: electricity, steam and heat bills or meter data, plus contracts and certificates for the market-based figure.
- Scope 3: a mix of methods — spend-based (spend × sector factor), average-data (quantity × average factor) and supplier-specific (primary data from suppliers). Most companies begin with spend-based screening and move material categories to better data over time.
For the full method, see how to calculate the carbon footprint of a company, and for supplier data, supplier engagement for Scope 3.
Which Scope 1, 2 and 3 emissions must you report?
Under the GHG Protocol Corporate Standard, Scope 1 and Scope 2 are required and Scope 3 is optional; the Scope 3 Standard sets requirements for companies that do report it. Regulation and frameworks go further. IFRS S2 requires Scope 1, 2 and 3 disclosure, with a first-year relief for Scope 3. The EU's ESRS climate standard (E1) covers all three scopes for companies in CSRD scope, with reliefs for value chain data. India's BRSR asks for Scope 1 and 2, with Scope 3 as a voluntary leadership indicator. Science-based targets generally expect Scope 3 to be covered when it is a significant share of the total. The exact rules depend on jurisdiction and size, and several were changed in 2025–26, so check the current requirements that apply to you.
How EKOTRACE helps
EKOTRACE calculates Scope 1, location- and market-based Scope 2 and all 15 Scope 3 categories in one inventory, with versioned emission factors and approvals that keep evidence attached to each entry. Suppliers submit data through the supplier portal, and supplier climate scores show where primary data would make the biggest difference.
Learn more on our GHG accounting and supplier engagement pages, or explore EKOTRACE.
Frequently asked questions
What is the difference between Scope 1, 2 and 3 emissions?
Scope 1 is direct emissions from sources a company owns or controls. Scope 2 is emissions from generating the energy it buys. Scope 3 is every other indirect emission in its value chain, from purchased goods to the use of sold products.
Are company cars Scope 1 or Scope 3?
Fuel burned in vehicles the company owns or controls is Scope 1. Employees' own cars used for business trips are Scope 3 category 6, and commuting in them is category 7. Leased vehicles depend on the lease type and your consolidation approach.
Is electricity always Scope 2?
Electricity a company buys and consumes is Scope 2. Electricity generated on site from fuel it burns is Scope 1. The upstream emissions of producing fuels and grid transmission losses fall in Scope 3 category 3.
Why are Scope 3 emissions so hard to measure?
They occur at other companies, so the data sits outside your systems. Companies usually start with spend-based estimates, then collect supplier-specific data for the categories and suppliers that matter most.