When a company measures its carbon footprint, it sorts its emissions into three scopes. The split comes from the Greenhouse Gas Protocol, the accounting standard behind most corporate climate reporting. It tells you who controls each source of emissions, and so who can cut it.
This page is part of our carbon footprint section. For the basics of footprints and CO₂e, start with what is a carbon footprint?
The three scopes at a glance
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| Scope | What it covers | Examples | Reporting |
|---|---|---|---|
| Scope 1: direct | Emissions from sources the company owns or controls | Gas boilers, furnaces, company vehicles, chemical processes | Required |
| Scope 2: purchased electricity | Emissions from generating the electricity the company buys and uses | Electricity for offices, shops, factories, data centres | Required |
| Scope 3: value chain | All other indirect emissions caused by the company’s activities | Purchased materials, business travel, use of sold products | Optional under the Corporate Standard |
Companies must account for and report scopes 1 and 2 separately at a minimum; scope 3 is an optional reporting category under the Corporate StandardSource 1. The standard covers the seven Kyoto Protocol gases, all converted to tonnes of CO₂ equivalentSource 1.
What is scope 1?
Scope 1 is direct emissions from sources that the company owns or controls. The GHG Protocol’s examples are combustion in owned or controlled boilers, furnaces and vehicles, and emissions from chemical production in owned or controlled process equipmentSource 1.
Two things are kept out of scope 1. Direct CO₂ from burning biomass is reported separately, and so are gases not covered by the Kyoto Protocol, such as CFCsSource 1.
Examples: a bakery’s gas ovens, a delivery firm’s diesel vans, a factory’s on-site generator, refrigerant leaking from a supermarket’s fridges.
What is scope 2?
Scope 2 covers emissions from generating purchased electricity that the company consumes. These emissions physically happen at the power station, not at the company’s siteSource 1. The Scope 2 Guidance, published in 2015, changed how it is reported.
For most companies, scope 2 is now two numbersSource 2:
- Location-based: the average emissions intensity of the grids where the electricity is usedSource 2.
- Market-based: emissions from the electricity the company has chosen through contracts, such as green power programmes or supplier-specific tariffsSource 2.
Companies with operations in markets that offer such contracts must report both, and choose which one to use for targetsSource 2. A company on a renewable tariff can show low market-based emissions while its location-based figure still reflects the local grid.
Examples: electricity for an office, a shop’s lighting and tills, a cloud provider’s servers.
What is scope 3?
Scope 3 is everything else: emissions that are a consequence of the company’s activities but come from sources it doesn’t own or controlSource 1. The Scope 3 Standard, released in 2011, splits these into 15 categories, upstream and downstream of the company’s own operationsSource 3.
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| # | Category | Upstream or downstream |
|---|---|---|
| 1 | Purchased goods and services | Upstream |
| 2 | Capital goods | Upstream |
| 3 | Fuel- and energy-related activities (not in scope 1 or 2) | Upstream |
| 4 | Upstream transportation and distribution | Upstream |
| 5 | Waste generated in operations | Upstream |
| 6 | Business travel | Upstream |
| 7 | Employee commuting | Upstream |
| 8 | Upstream leased assets | Upstream |
| 9 | Downstream transportation and distribution | Downstream |
| 10 | Processing of sold products | Downstream |
| 11 | Use of sold products | Downstream |
| 12 | End-of-life treatment of sold products | Downstream |
| 13 | Downstream leased assets | Downstream |
| 14 | Franchises | Downstream |
| 15 | Investments | Downstream |
As of Oct 2026 · Source: [3] GHG Protocol Scope 3 Standard, Table 5.3
Examples: the steel a carmaker buys (category 1), employees’ flights to a conference (6), the petrol burned by the cars it sells (11), and the landfill emissions when those cars are scrapped (12).
Why scope 3 is usually the biggest
The Scope 3 Standard says scope 3 can be the largest source of a company’s emissions and its biggest opportunity to influence reductionsSource 3. In a 2024 report with BCG, CDP found that companies’ scope 3 supply chain emissions were on average 26 times their emissions from direct operationsSource 4. Only 15% of the companies disclosing to CDP had set a scope 3 targetSource 4.
Scope 3 is also the hardest to measure. The Scope 3 Standard suggests starting with rough screening estimates, for example from industry-average data, and ranking every scope 3 activity from largest to smallest to see where to focusSource 3.
One company’s scope 3 is another’s scope 1
The Scope 3 Standard’s own example: a power generator’s scope 1 emissions are the scope 2 emissions of someone using an electrical appliance, and the scope 3 emissions of both the appliance maker and the retailerSource 3. The scopes stop two companies counting the same emission in scope 1 or 2, but overlap within scope 3 is part of the design: each company can act on the same emissionsSource 3.
How the scopes shape targets
The SBTi’s Corporate Net-Zero Standard builds on the three scopes. Near-term targets must cover at least 95% of company-wide scope 1 and 2 emissionsSource 5. When scope 3 makes up 40% or more of total emissions, companies must also set scope 3 targets covering at least 67% of itSource 5.
Carbon credits sit outside this inventory. The SBTi says credits must be reported separately and do not count as reductions towards near-term or long-term targets. They may only be used to neutralise residual emissions or to fund mitigation beyond a company’s targetsSource 5.
Step 1: Measure scopes 1 and 2
Start with fuel and electricity bills. These are the required scopes and the easiest data to collect.
Step 2: Screen scope 3
Estimate all 15 categories roughly to find the few that make up most of the total.
Step 3: Set targets and cut
Reduce the biggest sources first, working with suppliers on scope 3.
Step 4: Use credits for what is left
Report credits separately and describe them as a contribution, never as a reduction in any scope.
For what to do after measuring, see reduce vs offset. Companies buying credits can read our guide for companies or the guide for small businesses.