Published: 6 Dec 2022 · Last updated: 6 Dec 2022
In an earlier blog, we introduced the concept of carbon footprints and established what we mean by scopes 1, 2, and 3 emissions. We speak to a lot of portfolio companies, and we have found that companies often struggle with more practical challenges when measuring their carbon footprint, such as collecting relevant data to measure their emissions. In this blog, we focus on the challenges faced when measuring scopes 1 and 2 emissions. Keep an eye out for our future blog articles, where we'll be separately tackling the challenges associated with scope 3.
We'll begin by recapping the definitions of Scope 1 and 2 emissions, and looking at their typical constituent emissions sources.
Direct greenhouse gas (GHG) emissions that stem from sources owned or controlled by the organisation. Typically, these emissions arise from the use of fuels, non-electric vehicles, and refrigerants.
Indirect greenhouse gas emissions that arise from the generation of purchased electricity, heating, cooling, and steam. Typically, these emissions come from use of electricity and electric vehicles.
Scopes 1 and 2 are often grouped separately from scope 3 emissions. This is because the relevant data required to monitor these metrics is generally more accessible to companies than the data required for scope 3 emissions. This is one of the reasons why many existing and upcoming Environmental, Social, and Governance (ESG) regulations often require scopes 1 and 2 emissions to be disclosed prior to scope 3.
Outlined below are three of the most common practical challenges we have seen companies encounter when measuring their scopes 1 and 2 emissions. For each one, we have provided a suggested solution.
Shared workspaces have become more common in the post-COVID working environment. This poses a problem when it comes to office-wide data points. Gas and electricity bills, for instance, contribute to scopes 1 and 2 emissions respectively.
Greenhouse Gas Protocol guidance suggests that these emissions should be broken down to the appropriate subsection applicable to the reporting company. This data should be based on the share of floor space occupied by the company in question. If it is impractical to calculate these emissions by floor space, headcount can be used to divide a company's share of electricity/gas usage.
We're often asked why emissions from air conditioning units fall under scope 1.
Although these units use electricity, for which the associated emissions fall under scope 2, the refrigerants typically found within these systems are more of a concern. This is because refrigerants can have an incredibly high impact on global warming in terms of their total contribution per emission of unit of gas.
In some cases, emitting 1 kg of refrigerant can be the equivalent to emitting over 10,000 kg of carbon dioxide into the atmosphere. It is therefore vital that any release of refrigerants during the installation, usage, repair, or disposal of air conditioning systems is carefully monitored and accounted for. These emissions are therefore separated from electricity usage emissions.
There is often confusion as to whether or not vehicle-related emissions fall under scopes 1 and 2, or scope 3.
For example, the use of vehicles for employee commuting falls under scope 3, but the use of vehicles owned or controlled by the company for the transportation of goods falls under scopes 1 or 2, for non-electric vehicles and electric vehicles respectively.
The key difference here surrounds careful consideration of the term ownership. If the vehicle in question is owned or under the control of the reporting company, then its emissions fall under scopes 1 and 2. Otherwise, the resulting emissions fall under scope 3. This can still be tricky to determine, especially if the vehicle is under a leasing agreement. When this is the case, categorisation depends on both the type of lease and the organisational boundaries set by the company. For further information, take a look at this article by the GHG Protocol.
We will be looking at the common issues faced when measuring scope 3 emissions in a future blog. However, in the meantime, if you have any questions around the issues discussed above, or if you encounter any other practical challenges when measuring your carbon footprint, please do not hesitate to contact us.
Our carbon footprint tool allows companies to enter the raw information they easily have accessible (e.g., electricity bills, vehicle mileage, etc.). This is then converted into emissions outputs, in line with GHG Protocol standards. By better understanding their emissions, businesses can more effectively reduce their impact on climate change.