An Introduction to Scope 1, 2, and 3 Emissions

Last updated: May 30, 2026. Scope 1, Scope 2, and Scope 3 emissions are the three categories companies use to organize greenhouse gas emissions under the GHG Protocol. The scopes help a company separate direct emissions from its own operations, indirect emissions from purchased energy, and other indirect emissions across the value chain.

Short answer: Scope 1 covers direct emissions from sources the company owns or controls. Scope 2 covers indirect emissions from purchased or acquired electricity, steam, heat, and cooling. Scope 3 covers other indirect emissions upstream and downstream in the value chain. For many companies, Scope 3 is the largest and most difficult category, but customer requests, supplier questionnaires, Microsoft supplier reporting, CSRD-linked requests, and investor reporting often require at least some Scope 3 information.

Why the scopes matter

The scopes are not just labels for a sustainability report. They determine what data the company needs, who owns the data internally, how emissions are calculated, what can be reduced directly, and what may need supplier or customer engagement.

For example, a company can usually act directly on Scope 1 emissions by reducing fuel use, switching equipment, improving maintenance, or changing vehicles. Scope 2 reductions may involve efficiency, renewable electricity procurement, or energy contracts. Scope 3 reductions often require procurement changes, supplier engagement, product redesign, logistics decisions, business-travel changes, or customer-use assumptions.

The scopes also matter when a buyer asks for emissions data. A supplier request may ask for company-level Scope 1 and Scope 2 emissions, a full Scope 1, 2, and 3 footprint, specific Scope 3 categories, service-level accounting, or a methodology note. Reading the request carefully helps avoid preparing the wrong calculation.

Scope 1 emissions: direct emissions

Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by the reporting company. Common examples include:

• fuel burned in company-owned or controlled vehicles;
• natural gas, diesel, LPG, or other fuels used in boilers, generators, furnaces, or process equipment;
• refrigerant leaks from air conditioning, refrigeration, or cooling systems;
• process emissions from manufacturing or industrial activity; and
• onsite combustion from facilities controlled by the company.

Scope 1 is often the most direct part of the inventory because the company usually controls the source. The data still needs care. Fuel records, meter readings, refrigerant top-ups, fleet logs, generator records, and facility boundaries should be organized by entity, location, reporting period, fuel type, and unit.

Scope 2 emissions: purchased energy

Scope 2 emissions are indirect emissions from purchased or acquired electricity, steam, heat, and cooling consumed by the company. The emissions happen at the energy producer, but the company reports them because it uses the purchased energy.

Under the GHG Protocol Scope 2 Guidance, companies often need to understand two approaches:

• Location-based Scope 2: emissions calculated using average grid emission factors for the location where energy is consumed.
• Market-based Scope 2: emissions calculated using qualifying contractual instruments, supplier-specific factors, or residual mix factors where applicable.

This distinction matters because a company may report different Scope 2 figures depending on the method. Buying renewable electricity certificates or entering into a green tariff does not automatically solve the accounting question. The contractual instrument needs to meet quality criteria, and the company should document the evidence behind any market-based claim.

Scope 3 emissions: value-chain emissions

Scope 3 emissions are other indirect emissions that occur in the company's value chain. They are not Scope 2 purchased energy emissions, and they are not direct emissions from company-owned or controlled sources. They can occur upstream before the company sells its product or service, or downstream after the sale.

The GHG Protocol Scope 3 Standard organizes Scope 3 into 15 categories:

1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities not included in Scope 1 or Scope 2
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
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

For service businesses, Scope 3 often includes purchased services, cloud or software usage, business travel, employee commuting, waste, and leased assets. For manufacturers, Scope 3 may be driven by purchased materials, logistics, use of sold products, and end-of-life treatment. For investors and lenders, financed emissions can make Category 15 the core challenge.

Upstream and downstream emissions

Scope 3 categories are often split into upstream and downstream categories. Upstream emissions generally relate to goods and services the company buys or activities that support operations before the company's sale to the customer. Downstream emissions generally relate to what happens after the company sells a product or service.

That split is useful, but it should not be oversimplified. Scope 1 and Scope 2 are not normally described as upstream or downstream Scope 3 categories. They sit in the company's own inventory as direct emissions and purchased-energy emissions. Scope 3 is where the upstream and downstream value-chain split is most useful.

What data do companies need?

The data depends on the business model and the reporting purpose, but common data sources include:

• utility bills and meter readings for electricity, heat, steam, or cooling;
• fuel invoices, fleet records, and generator logs;
• refrigerant service records and top-up quantities;
• procurement spend by supplier, category, and geography;
• supplier-specific emissions data where available;
• capital expenditure and fixed-asset records;
• business travel bookings, flight data, hotel nights, and mileage;
• employee commuting surveys or location assumptions;
• waste volumes, treatment methods, and waste contractor records;
• logistics distances, shipment weights, and transport modes;
• product-use assumptions and product lifetime data; and
• investment, lending, or portfolio data for financial institutions.

A useful emissions inventory should show not only the final totals but also the source documents, emission factors, units, assumptions, exclusions, and calculation methods. That evidence matters for customer review, assurance, year-on-year refreshes, and internal decision-making.

How calculations usually work

Most emissions calculations follow a simple structure:

Activity data x emission factor = greenhouse gas emissions

The activity data might be kWh of electricity, litres of fuel, kilograms of refrigerant, spend on purchased services, tonnes of material, kilometres travelled, or tonnes of waste. The emission factor converts that activity into greenhouse gas emissions. The result is usually expressed as carbon dioxide equivalent, or CO2e, so different gases can be compared on a common basis.

The calculation itself is often less difficult than the boundary and data-quality decisions. Companies need to decide what entities are included, what period is covered, which sources are material, which categories can be estimated, which factors are appropriate, and how to document uncertainty.

Why Scope 3 is usually the hardest

Scope 3 is difficult because it sits outside direct operational control. The data may be held by suppliers, customers, travel providers, logistics partners, employees, landlords, or finance teams. Sometimes supplier-specific data is available. Other times, the company needs to use spend-based, average-data, distance-based, or hybrid methods.

That does not mean companies should ignore Scope 3 until perfect data exists. A first Scope 3 screen can identify the categories most likely to matter. The company can then improve the highest-impact categories over time, request better supplier data, and build a cleaner methodology for future reporting cycles.

How scopes show up in supplier and customer requests

Many companies first encounter emissions scopes through a customer request rather than a formal sustainability report. A buyer may ask suppliers for Scope 1 and Scope 2 emissions, relevant Scope 3 categories, renewable electricity information, service-level emissions, product carbon data, or a consultant letter.

For Microsoft supplier requests, for example, public 2025 data-integrity guidance refers to total-company emissions and service-level accounting, with Scope 1, Scope 2, and Scope 3 categories 1 through 8 relevant in some response paths. That is a very different task from preparing a simple two-line carbon footprint.

If the request comes from a customer, start with the wording. Check whether the customer wants a company-level inventory, a specific service or product footprint, a supplier questionnaire response, methodology documentation, independent assurance, or a consultant-letter route. Keslio can help with this through supplier request support and Microsoft supplier GHG reporting support.

Common mistakes to avoid

• Reporting only Scope 1 and Scope 2 when the request also asks for Scope 3.
• Treating Scope 3 as one number instead of checking the 15 categories.
• Using market-based Scope 2 claims without evidence for the energy instruments.
• Mixing entities, facilities, countries, or reporting periods without documenting the boundary.
• Using spend-based Scope 3 estimates without recording the category, currency, year, and factor source.
• Double-counting the same activity across Scope 2 and Scope 3 or across multiple Scope 3 categories.
• Making service-level or product-level claims from a company-level inventory without allocation logic.
• Changing emission factors or methods year to year without documenting the change.
• Assuming that a consultant calculation is the same as independent assurance.

How Keslio can help

Keslio supports companies with practical GHG emissions calculations, Scope 1, Scope 2, and Scope 3 screening, methodology notes, evidence packs, and annual refreshes. The work can support sustainability reports, CSRD or ISSB-linked preparation, customer requests, supplier questionnaires, and internal climate planning.

If your team is starting from the standards themselves, Keslio's GHG Protocol guide explains the broader accounting framework. If the trigger is a customer request, it is usually better to interpret the request first and then calculate the emissions needed for that response.

Need help calculating Scope 1, 2, and 3 emissions?

If your team needs to calculate emissions for a report, customer request, supplier questionnaire, or Microsoft supplier response, Keslio can help turn the scopes into a clear data request, calculation workbook, methodology note, and customer-ready output.