Scope 1, 2 and 3 Emissions Explained: A Business Guide
Understanding scope 1 2 3 emissions is essential for credible carbon emissions reporting in the UK. These GHG emissions categories—defined by the Greenhouse Gas Protocol—form the basis of SECR disclosures, TCFD metrics, UK SRS S2 climate reporting, and customer supply chain questionnaires. This guide explains what each scope covers, what is scope 3 emissions, and how to approach emissions measurement practically.
Direct Answer
Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by the company (e.g. gas boilers, company vehicles). Scope 2 emissions are indirect emissions from purchased electricity, heat, or steam. Scope 3 emissions are all other indirect emissions in the value chain (e.g. purchased goods, business travel, waste, product use). Together, scope 1, 2 and 3 emissions provide a full carbon emissions reporting picture when material categories are included.
Key Takeaways
- Scope 1 = direct emissions; Scope 2 = purchased energy; Scope 3 = value chain (15 categories).
- UK SECR requires energy-associated emissions on the applicable boundary. That is not every possible Scope 1 source, and it is not all supply-chain Scope 3. Unquoted reporters include purchased or reimbursed transport fuel where it applies.
- TCFD and UK SRS S2 expect Scope 3 disclosure when material.
- Scope 3 often represents the largest share for many businesses—especially in supply chains.
- Use GHG Protocol Corporate Standard and Scope 3 Standard for methodology.
- Start with Scope 1+2, then prioritise material Scope 3 categories incrementally.
Definition Table: Scope 1 vs Scope 2 vs Scope 3
| Scope | Definition | Who controls source? | Examples |
|---|---|---|---|
| Scope 1 | Direct GHG emissions | Company owns/controls | Gas heating, diesel fleet, on-site generators, refrigerant leaks, industrial processes |
| Scope 2 | Indirect from purchased energy | Company buys energy | Electricity, district heating, steam |
| Scope 3 | Other indirect value chain emissions | Third parties, but linked to company activities | Purchased goods, logistics, commuting, business travel, waste, product use, investments |
Scope 1 Emissions: Direct Emissions
What counts as Scope 1
- Combustion of fuels in boilers, furnaces, kilns
- Fuel in company-owned or controlled vehicles
- Fugitive emissions (refrigerants, SF₆, methane leaks)
- On-site manufacturing process emissions
- Emissions from company-owned generators
How to measure Scope 1
- Identify emission sources within organisational boundary
- Collect activity data (litres fuel, m³ gas, kg refrigerant)
- Apply emission factors (UK Government GHG Conversion Factors or IPCC)
- Sum tCO₂e (tonnes carbon dioxide equivalent)
UK context
SECR requires reporting Scope 1 emissions for in-scope companies. Use consistent DEFRA/DESNZ conversion factors updated annually.
Scope 2 Emissions: Purchased Energy
Location-based and market-based Scope 2
| Method | What it uses | Status |
|---|---|---|
| Location-based | The average emission factor of the grid where the electricity is used | Reported by everyone. UK environmental reporting guidance encourages it for SECR. |
| Market-based | Factors from contractual instruments, such as certificates, supplier-specific rates or a residual mix | Also reported where operations are in markets with contractual instruments, which includes the UK |
The GHG Protocol Scope 2 Guidance (2015) asks companies with operations in markets that offer contractual instruments to report two Scope 2 totals, one location-based and one market-based. UK environmental reporting guidance encourages location-based grid-average factors and, where a market-based figure is given, showing it alongside the location-based one. These are different documents: the Scope 2 Guidance is the GHG Protocol text in effect, and the GHG Protocol’s 2025 to 2026 consultation on revising it is a proposal, not the current text.
Quality criteria and fallback data
A contract can set the market-based figure only when the instrument meets all the applicable Scope 2 Quality Criteria in Table 7.1 of the Scope 2 Guidance for the period, market and quantity of electricity. The criteria include that the instrument carries the emission-rate claim, is the only instrument carrying it, is tracked and retired for you, matches the period of use, and comes from the same market.
A completed renewable tariff evidence log records what a contract covers. It leaves accounting qualification as not assessed, and it does not settle the criteria. Assessing them needs the instrument’s emission-rate data, the volume and period it covers, the market it comes from, and what happens to electricity nobody has claimed.
An instrument that fails is not counted as zero. Its electricity falls back to other data in Table 6.3 of the guidance, such as a supplier-specific rate, a residual mix or, where no residual mix is available, a grid average. A residual mix is one fallback, not the only one. Companies should not calculate their own residual mix. Where an adjusted residual mix is not available, the guidance asks you to say so and to note that double counting between electricity users may result.
How to measure Scope 2
- Collect electricity and purchased heat consumption (kWh)
- Apply the grid emission factor for the reporting year (location-based). For UK electricity in 2026, convert UK electricity kilowatt-hours on the location-based calculator
- For market-based, apply factors from instruments that meet the quality criteria, and fallback data for the rest
Scope 3 Emissions: Value Chain
What is scope 3 emissions?
Scope 3 emissions are indirect greenhouse gas emissions that occur in your upstream and downstream value chain—not from assets you own, but from activities your business depends on. For many organisations, scope 3 emissions represent 70–90%+ of total footprint.
Why Scope 3 matters for UK reporting
While SECR does not mandate Scope 3, stakeholders increasingly expect it:
- UK SRS S2 — disclose when material
- SBTi — typically required for validated targets
- Customer questionnaires — especially categories 1, 4, 6, 7
- CDP — supply chain modules score Scope 3 completeness
- Public sector procurement — PPN 006 carbon reduction plans for procurements advertised on or after 24 February 2025; keep PPN 06/21 for earlier commenced procurements. Check CRP readiness if a government request arrives.
Treating Scope 1+2 as a “complete carbon footprint” when Scope 3 is material creates greenwashing exposure.
The 15 Scope 3 categories (GHG Protocol)
Upstream
- Purchased goods and services
- Capital goods
- Fuel- and energy-related activities (not in Scope 1 or 2)
- Upstream transportation and distribution
- Waste generated in operations
- Business travel
- Employee commuting
- Upstream leased assets
Downstream 9. Downstream transportation and distribution 10. Processing of sold products 11. Use of sold products 12. End-of-life treatment of sold products 13. Downstream leased assets 14. Franchises 15. Investments
Prioritisation approach
You do not need all 15 categories in year one:
- Screen all categories and record each source’s status in the footprint data pack
- Identify largest/most material categories
- Quantify material categories with improving data quality over time
- Disclose methodology and exclusions transparently
Measurement methods
| Method | Accuracy | Effort |
|---|---|---|
| Spend-based | Low–medium | Low |
| Average-data | Medium | Medium |
| Supplier-specific | High | High |
| Hybrid | Medium–high | Medium |
Supply chain detail: sustainable supply chain management
Organisational and Operational Boundaries
Organisational boundary
Defines which entities are included—typically aligned with financial consolidation (equity share or control approach per GHG Protocol).
Operational boundary
Defines which emission sources are included per scope. Document exclusions clearly.
Consistency with SECR boundary is essential for UK reporters.
Reporting Requirements: SECR, TCFD, UK SRS
| Framework | Scope 1 | Scope 2 | Scope 3 |
|---|---|---|---|
| SECR | Energy-associated on the applicable boundary | Purchased electricity on that boundary | Unquoted purchased or reimbursed transport fuel where it applies; not all supply-chain Scope 3 |
| TCFD | Required | Required | Encouraged when appropriate |
| UK SRS S2 | Required | Required | Required when material |
| CDP | Required | Required | Increasingly expected |
| SBTi | Part of inventory | Part of inventory | Usually required for target validation |
See SECR reporting guide, TCFD reporting guide, UK SRS.
Practical Measurement Workflow
Phase 1: Scope 1 and 2 (months 1–3)
- Map sites and energy sources
- Collect 12 months utility and fuel data
- Apply government conversion factors
- Calculate intensity metrics
- Include in SECR if in scope
Phase 2: Scope 3 screening (months 3–6)
- List all 15 categories
- Estimate each using spend-based or proxy data
- Rank by magnitude and influence
- Select top 3–5 categories for improvement focus
Phase 3: Scope 3 refinement (months 6–18)
- Engage suppliers for category 1 data
- Improve business travel and commuting data from expense/HR systems
- Model product use emissions if relevant (category 11)
- Document uncertainty and improvement plan
Link to carbon footprint guide and net zero guide.
Worked Calculation Examples
The examples use fictional activity data for calendar year 2026 with the 2026 government conversion factors.
Example 1: Scope 1 — Company diesel fleet
| Input | Value |
|---|---|
| Annual diesel consumption | 45,000 litres of forecourt diesel |
| Emission factor | 2.58354 kg CO₂e per litre (2026 Fuels sheet, Diesel (average biofuel blend)) |
| Calculation | 45,000 × 2.58354 ÷ 1,000 |
| Scope 1 result | 116.25930 tCO₂e |
Worked example: two cells, one not assessed
Fictional Northgate Services buys electricity in calendar year 2026 under a supplier’s green tariff.
| Input | Value |
|---|---|
| Annual electricity | 200,000 kWh |
| UK grid factor (location-based) | 0.13096 kg CO₂e per kWh (2026 UK electricity sheet, Electricity generated) |
| Calculation | 200,000 × 0.13096 ÷ 1,000 |
| Location-based result | 26.19200 tCO₂e |
| Market-based result | Not assessed. The supplier's green-tariff letter has not been checked against the quality criteria, so the cell is not set to zero and not copied from the location-based line. |
Convert UK electricity kilowatt-hours on the location-based calculator. For other years, use the factors published for that reporting year on gov.uk. Then return to the organisational method after the two Scope 2 cells.
Example 3: Scope 3 Category 6 — Business travel (spend-based screening)
| Input | Value |
|---|---|
| Annual air travel spend | £320,000 |
| Spend-based factor | None copied. It needs a sector mapping, the same currency and a stated price year. |
| Output | No tonnes. The row stays blocked until those match; flight-level distance data can replace it. |
Record the method choice for each source in the method matrix. Spend-based methods can help screening; move to activity data for the largest categories before setting reduction targets.
Biogenic Emissions and Renewable Energy
Biogenic carbon
Biomass combustion may produce biogenic CO₂ tracked separately from fossil Scope 1 in some frameworks. SECR and GHG Protocol have specific rules—document treatment clearly.
Renewable electricity
- Location-based Scope 2 uses the grid average factor regardless of tariff
- Market-based Scope 2 uses instruments such as REGOs, PPAs and supplier-specific rates only when they meet the Scope 2 Quality Criteria, with fallback data for the rest
- Report both where your operations are in markets with contractual instruments; UK guidance encourages showing the location-based figure
UK Business Examples
Office-based services company
- Scope 1: Minimal gas heating, company cars
- Scope 2: Electricity for offices
- Scope 3 (material): Business travel, employee commuting, purchased IT services
Manufacturing company
- Scope 1: Gas, on-site fuel, process emissions, fleet
- Scope 2: Electricity for plant
- Scope 3 (material): Purchased raw materials, upstream logistics, waste, product use
Retailer
- Scope 1: Refrigerant leaks (significant), delivery fleet
- Scope 2: Store electricity
- Scope 3 (material): Purchased goods, downstream logistics, product end-of-life
Scope 3 Category Detail: Where to Start
Category 1: Purchased goods and services
Usually the largest Scope 3 category for manufacturers, retailers, and services firms buying significant materials. Start with:
- Spend-based estimate using EEIO factors
- Focus on top 20 suppliers by spend
- Request supplier-specific data for critical items
Links to sustainable supply chain management.
Category 6: Business travel
Common priority for professional services. Data sources:
- Travel management company reports
- Expense system flight and rail bookings
- CO₂e from DEFRA factors per km or spend
Category 7: Employee commuting
Record reported commuting legs with the employee commuting survey, with returns entered explicitly and missing replies left missing. Including teleworking in Category 7 is optional; if you include it, estimate homeworking from hours worked at home.
Category 11: Use of sold products
Material for product manufacturers (energy-using products). Requires use-phase assumptions—document clearly to avoid overstating precision.
Carbon Emissions Reporting Standards Cross-Reference
| Standard / framework | Scopes required |
|---|---|
| GHG Protocol Corporate Standard | 1, 2; 3 voluntary but recommended |
| SECR (UK) | Quoted: global energy and associated GHG. Unquoted/LLP: UK purchased energy and associated emissions, including purchased or reimbursed business fuel where it applies. Broader supply-chain Scope 3 is not a SECR mandate. |
| TCFD | 1, 2; 3 when appropriate |
| UK SRS S2 | 1, 2, 3 when material |
| SBTi | 1, 2, 3 (most targets) |
| ISO 14064-1:2018 | Organisation-level quantification and reporting; not treated here as a copied clause set |
Maintain one master inventory mapped to each framework’s presentation requirements. Record whether a customer asked for the GHG Protocol, ISO 14064-1, or both. Choosing a reference is not verification.
Common Mistakes and Greenwashing Risks
| Mistake | Risk |
|---|---|
| Reporting Scope 1+2 only as “full footprint” | Misleading if Scope 3 is material |
| Excluding refrigerants | Under-reported Scope 1 |
| Wrong organisational boundary | Invalid comparisons |
| Outdated emission factors | Inaccurate inventory |
| Scope 3 claimed without methodology | Low credibility with investors |
| Double counting across scopes | Inflated or inconsistent totals |
Frequently Asked Questions
What are scope 1, 2 and 3 emissions?
The three categories of greenhouse gas emissions in the GHG Protocol: direct (1), purchased energy (2), and value chain (3).
What is scope 3 emissions?
Indirect emissions in the upstream and downstream value chain—such as suppliers, transport, travel, and product use—not from owned sources.
Which scope is usually largest?
Often Scope 3, especially purchased goods and services for manufacturers and retailers.
Does SECR require scope 3?
SECR does not mandate a full supply-chain Scope 3 inventory. Unquoted reporters must still include purchased or reimbursed business-mileage fuel where it applies. Other Scope 3 categories may be required by customers or other frameworks.
How do I calculate scope 1 and 2 emissions?
Collect activity data (fuel, kWh), multiply by official emission factors, sum tCO₂e. UK Government conversion factors are standard for SECR.
What emission factors should UK companies use?
DESNZ/DEFRA GHG conversion factors for company reporting—updated annually on gov.uk.
When must scope 3 be reported?
Under UK SRS S2 when material; TCFD encourages when appropriate; SBTi typically requires for science-based targets.
What is the greenhouse gas protocol?
The most widely used global standard for corporate GHG accounting—Corporate Standard (Scope 1+2) and Scope 3 Standard.
Restatements and Base Year Recalculation
Under Chapter 5 of the GHG Protocol Corporate Standard, recalculate base year emissions when:
- Structural changes, such as acquisitions, divestments, outsourcing or insourcing, have a significant effect on base year emissions
- Changes in method or data accuracy have a significant effect
- Significant errors, or several errors that are significant together, are found
Your organisation sets and discloses its own significance threshold; the Corporate Standard does not set one. Organic growth or decline, and acquiring operations that did not exist in the base year, do not trigger recalculation. Record each decision in the baseline decision record.
Document restatements in ESG reporting with explanation—stakeholders prefer transparent restatement to silent correction.
Tools and Support for UK Businesses
- DEFRA/DESNZ conversion factors — free annual updates
- GHG Protocol calculation tools — free guidance and spreadsheets
- SECR-compliant templates — Big 4 and specialist consultancies
- Carbon accounting software — scales multi-site data collection
Start with spreadsheets and government factors; invest in software when site count or Scope 3 complexity grows.
Emissions Intensity Metrics
Intensity ratios normalise absolute emissions for business activity:
| Intensity metric | Formula | Common use |
|---|---|---|
| Carbon intensity | tCO₂e / £m revenue | SECR, investor comparison |
| Energy intensity | kWh / unit output | Manufacturing |
| Emissions per FTE | tCO₂e / employee | Services |
Choose intensities relevant to your sector and disclose denominator clearly.
FAQ: Scope 3 Categories at a Glance
| Category | One-line description |
|---|---|
| 1 | Purchased goods and services |
| 2 | Capital goods |
| 3 | Fuel/energy not in Scope 1 or 2 |
| 4 | Upstream transport and distribution |
| 5 | Waste from operations |
| 6 | Business travel |
| 7 | Employee commuting |
| 8 | Upstream leased assets |
| 9 | Downstream transport |
| 10 | Processing of sold products |
| 11 | Use of sold products |
| 12 | End-of-life of sold products |
| 13 | Downstream leased assets |
| 14 | Franchises |
| 15 | Investments |
Screen all 15; deep-dive the material few.
Conclusion
Scope 1, 2 and 3 emissions are the foundation of UK carbon emissions reporting. Master Scope 1 and 2 for SECR compliance, then build Scope 3 capability for TCFD, UK SRS, customer requirements, and credible net zero strategy.
Transparent methodology matters more than false precision—document boundaries, factors, and improvement plans.
Next steps:
- SECR reporting guide — energy-associated emissions on the applicable boundary
- Sustainability KPIs — track emissions metrics
- What is carbon footprint — organisational footprint context
- Net zero guide — reduction planning
Limits and sources
This page does not assess a specific contract or certificate against the Scope 2 Quality Criteria.
- GHG Protocol — Corporate Standard, including the full revised edition (Chapter 5), and Scope 3 Standard
- GHG Protocol — Scope 2 Guidance, 2015, Chapters 6 and 7, Tables 6.3 and 7.1
- DESNZ — Greenhouse gas reporting: conversion factors 2026, full set, Version 1
- UK Government — GHG conversion factors for company reporting
- UK Government — Environmental reporting guidelines including SECR
- IFRS Foundation — IFRS S2 Climate-related Disclosures
This article is for general information only.