Scopes 1, 2, 3 Emissions: Complete Definition, 15 Categories & How to Calculate Them (2026)

Most companies that attempt a GHG inventory run into the same problem: they measure what is easy : fuel and electricity bills : and leave out the 75 to 90 percent of emissions that sit in their supply chain, product use, and investments. The result is a partial footprint that fails regulatory audits and misses the biggest decarbonization opportunities.

This guide covers everything: precise definitions with worked examples for an industrial mid-market company, a summary comparison table, all 15 Scope 3 categories, the three recognized calculation approaches, regulatory requirements (GHG Protocol, CSRD, ISO 14064), common mistakes, and available software.

All data and standards cited here are sourced from the GHG Protocol Corporate Standard, EFRAG ESRS E1, and ISO 14064-1:2018. No figures are invented.

Table of Contents

  • [The GHG Protocol: why it defines the scopes](#ghg-protocol)
  • [Scope 1: direct emissions : subcategories and worked example](#scope-1)
  • [Scope 2: indirect energy emissions : location-based vs. market-based](#scope-2)
  • [Scope 3: all 15 categories explained](#scope-3)
  • [Summary table: Scope 1 / 2 / 3 at a glance](#table)
  • [How to calculate each scope: three recognized approaches](#calculation)
  • [Regulatory requirements: CSRD, ISO 14064, national mandates](#regulation)
  • [Common mistakes and how to avoid them](#mistakes)
  • [Tools and software for measuring all three scopes](#tools)
  • [FAQ](#faq)

The GHG Protocol: why it defines the scopes

The Greenhouse Gas Protocol (GHG Protocol) is the global accounting standard for corporate GHG inventories. Developed jointly by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it was first published in 2001 and revised in 2004. According to the GHG Protocol itself, more than 90 percent of Fortune 500 companies that disclose a carbon footprint use this standard.

The three-scope architecture solves a specific accounting problem: how do you achieve full coverage of emissions across an entire economy without double-counting them between companies in the same value chain? The answer is to assign every emission source to exactly one scope, based on who controls it and what type of activity produces it.

The GHG Protocol is the methodological foundation for:

  • ISO 14064-1:2018 : the international standard for GHG quantification and reporting at the organizational level
  • ESRS E1 (Climate Change) : the European sustainability reporting standard under the CSRD
  • National frameworks such as France's BEGES (Bilan GES Réglementaire), the UK's SECR (Streamlined Energy and Carbon Reporting), and the US EPA GHG Reporting Program

Scope 1: direct emissions

Definition

Scope 1 covers all GHG emissions produced directly from sources owned or controlled by the company. If your organization owns the equipment or facility that generates the emission, it belongs in Scope 1.

Five subcategories

  • Stationary combustion: fuel burned in fixed installations : industrial boilers, furnaces, on-site power generators, cogeneration plants.
  • Mobile combustion: fuel burned in vehicles and mobile equipment owned or controlled by the company : delivery trucks, company car fleet, forklifts.
  • Process emissions: chemical or biological reactions inherent to the production process : calcination in cement manufacturing, fermentation in food and beverage, electrolysis in metals.
  • Fugitive emissions: unintended or vented releases : refrigerant gas leaks from HVAC and refrigeration systems (HFCs, HCFOs), methane from gas distribution infrastructure.
  • Biomass combustion and land use: emissions from burning biomass and changes in land use (soils, forests).

Note: GHG emissions that occur *upstream* of combustion : the extraction and refining of the fuel itself : are not Scope 1. They belong in Scope 3, Category 3.

Worked example : mid-market French manufacturer (paint coatings, 800 employees, €120M revenue)

Scope 1 source | Annual activity | Emission factor (ADEME) | tCO2e/year

Natural gas boiler (factory) | 850,000 kWh NCV | 0.207 kgCO2e/kWh | 176

Vehicle fleet (42 diesel cars) | 580,000 km | 0.192 kgCO2e/km | 111

Solvent process emissions | 18 t solvents | 2.5 tCO2e/t | 45

Refrigerant leaks (R-410A) | 12 kg recharged | 2,088 kgCO2e/kg | 25

Total Scope 1 | 357 tCO2e

Scope 2: indirect energy emissions

Definition

Scope 2 accounts for GHG emissions produced *by the energy suppliers* that power the company's operations: purchased electricity, steam, heat, and cooling. These emissions are classified as indirect because they physically occur at the power plant or heating facility, not on the company's premises : but they are a direct consequence of the company's energy demand.

Two calculation methods recognized by the GHG Protocol

Location-based method: applies the average emission intensity of the national or regional electricity grid (e.g., France: 0.052 kgCO2e/kWh per RTE, 2024; UK: 0.207 kgCO2e/kWh per DEFRA, 2024; US average: 0.386 kgCO2e/kWh per EPA, 2023). Required for most national mandatory frameworks.

Market-based method: applies the emission factor of the specific energy contract the company holds : a Power Purchase Agreement (PPA), Renewable Energy Certificate (REC), or Guarantee of Origin (GO). Can reach near zero if the company holds certified renewable certificates. Required under CSRD/ESRS E1 as a complement to the location-based method.

Important update: The GHG Protocol is currently revising its Scope 2 Guidance (public consultation open through 2026). The expected update : anticipated for 2027 : will require hourly and geographic matching between renewable certificates and actual consumption, significantly tightening the conditions under which market-based Scope 2 can be reported as zero.

Worked example : same manufacturer

Scope 2 source | Consumption | Location factor | tCO2e/year (location) | Market factor (GO renewable) | tCO2e/year (market)

Grid electricity (factory + offices) | 1,200,000 kWh | 0.052 kgCO2e/kWh | 62 | 0.012 kgCO2e/kWh | 14

District heating (steam) | 450 MWh | 0.110 kgCO2e/kWh | 50 | 0.110 kgCO2e/kWh | 50

Total Scope 2 | 112 tCO2e | 64 tCO2e

Scope 3: all 15 categories explained

Definition

Scope 3 captures all indirect emissions not covered by Scopes 1 or 2 : every emission across the company's upstream and downstream value chain. According to the GHG Protocol, Scope 3 represents on average 75 to 90 percent of total GHG emissions for manufacturing companies.

The GHG Protocol defines 15 categories, split between upstream (Categories 1-8) and downstream (Categories 9-15).

8 Upstream categories

# | Category | What it covers | Example : paint coatings company

1 | Purchased goods and services | Extraction, processing, and transport of all materials and services bought | Resins, pigments, solvents: ~1,200 tCO2e

2 | Capital goods | Manufacturing of machines, buildings, and equipment used in operations | Mixing lines, forklifts: ~180 tCO2e

3 | Fuel- and energy-related activities | Upstream extraction and transport of fuels and energy consumed (pre-combustion) | Upstream gas + electricity: ~35 tCO2e

4 | Upstream transportation and distribution | Transport of purchased inputs from suppliers to company sites | Supplier deliveries: ~90 tCO2e

5 | Waste generated in operations | Treatment and disposal of industrial and office waste | Industrial waste, sludge: ~28 tCO2e

6 | Business travel | Flights, rail, hotels for employee business trips | Sales force travel: ~65 tCO2e

7 | Employee commuting | Daily travel between employees' homes and workplaces | 800 employees, 25 km/day avg: ~210 tCO2e

8 | Upstream leased assets | Emissions from assets leased by the reporting company (where not in Scope 1) | Leased warehouses: ~55 tCO2e

7 Downstream categories

# | Category | What it covers | Example : paint coatings company

9 | Downstream transportation and distribution | Transport of finished goods to customers and end users | Distributor deliveries: ~120 tCO2e

10 | Processing of sold products | Emissions from customers' further processing of intermediate products | Not applicable

11 | Use of sold products | Emissions during the use phase of sold products (VOCs, solvents, energy use) | Paint application by customers: ~340 tCO2e

12 | End-of-life treatment of sold products | Disposal or recycling of products at end of life | Paint containers, residues: ~85 tCO2e

13 | Downstream leased assets | Emissions from assets owned by the company and leased to third parties | Not applicable

14 | Franchises | Emissions from franchisee operations | Not applicable

15 | Investments | Emissions from equity investments and project finance | Minority stakes: ~40 tCO2e

Estimated total Scope 3 (paint manufacturer): ~2,448 tCO2e : 83% of the total footprint (2,917 tCO2e across Scopes 1+2+3).

Summary table: Scope 1 / 2 / 3 at a glance

Scope | Nature | Main sources | Typical share of corporate footprint | Key standards

Scope 1 | Direct | Combustion, industrial processes, refrigerant leaks, company fleet | 5-15% | GHG Protocol, ISO 14064

Scope 2 | Indirect (energy) | Purchased electricity, heat, steam, cooling | 2-8% | GHG Protocol Scope 2 Guidance

Scope 3 | Indirect (value chain) | Purchased goods, freight, product use, end of life, investments | 75-90% | GHG Protocol Corporate Value Chain Standard

How to calculate each scope: three recognized approaches

1. Activity-based approach

The most accurate method. Multiply a measured physical activity figure (kWh consumed, km traveled, tonnes of materials purchased) by an emission factor from a recognized database (ADEME Base Carbone, DEFRA, EPA, ecoinvent).

Formula: `Emissions (tCO2e) = Activity data × Emission factor`

Best suited for Scopes 1, 2, and Scope 3 categories where physical data is available: transportation, commuting, waste, business travel.

2. Spend-based approach

Used when physical data is unavailable. Multiply expenditure (in monetary units) by an economic emission intensity factor (tCO2e per €1,000 spent, by economic sector). More straightforward to deploy for Scope 3 Category 1 (purchased goods and services) across a broad supplier base.

Limitation: sensitive to price inflation and procurement strategy changes : a more expensive purchase does not necessarily mean higher emissions.

3. Supplier-specific approach

The most rigorous method. The supplier communicates its product-level carbon intensity (tCO2e per unit delivered), ideally certified or verified. Recommended by the GHG Protocol for Category 1 when key suppliers are engaged in SBTi commitments or have verified product carbon footprints.

Hierarchy in practice

For mandatory reporting under BEGES and CSRD, the priority order is: physical activity data first, supplier-specific data second, monetary spend data as a last resort for low-materiality categories.

Regulatory requirements: CSRD, ISO 14064, national mandates

CSRD : Corporate Sustainability Reporting Directive (EU)

The CSRD replaces the Non-Financial Reporting Directive (NFRD) and applies on a phased schedule:

  • 2025 (FY2024): large companies already under NFRD (>500 employees and listed)
  • 2026 (FY2025): all large companies meeting two of three criteria: >250 employees, >€50M revenue, or >€25M balance sheet
  • 2027 (FY2026): listed SMEs

Under ESRS E1 (Climate Change), companies must disclose Scopes 1, 2, and 3 using GHG Protocol methodology. Scopes 1 and 2 are mandatory from year one. Scope 3 may be deferred in the first reporting year if data is not yet available, provided the company documents efforts to collect it : this is not an indefinite exemption.

ISO 14064-1:2018

ISO 14064-1 specifies principles and requirements for quantifying and reporting GHG emissions at the organizational level. It aligns with the GHG Protocol but adds stricter requirements on uncertainty analysis, traceability, and third-party verification. Used for SBTi commitments, green bond reporting, and carbon certification schemes.

National mandatory frameworks

France : BEGES: Mandatory for companies with >500 employees (>250 in overseas territories), updated every 4 years, published on the ADEME BEGES platform. Scope 3 has been mandatory since the decree of 1 July 2022 (Decree n°2022-982).

UK : SECR: Mandatory for large UK companies (>250 employees or >£36M turnover or >£18M balance sheet) since April 2019. Covers Scopes 1 and 2 for all, with an encouraged Scope 3 disclosure.

US : SEC Climate Disclosure Rule: Following court challenges, the SEC's 2024 rule requires Scope 1 and 2 disclosure for large accelerated filers. Scope 3 disclosure remains voluntary at federal level (as of April 2026), though several US states have adopted stricter requirements.

Common mistakes and how to avoid them

1. Double-counting combustion between Scope 1 and Scope 3

Mistake: including in Scope 3 Category 3 the combustion emissions already counted in Scope 1. Category 3 covers only the *upstream* extraction, refining, and transportation of fuel : before it reaches your facility.

Rule: combustion belongs in Scope 1. Pre-combustion upstream belongs in Scope 3 Category 3.

2. Inconsistent organizational boundary

The GHG Protocol offers two approaches: operational control (all facilities over which the company has operational authority) or financial control (all facilities consolidated in financial statements). Mixing approaches across reporting years makes year-on-year comparisons meaningless.

Rule: choose one approach, document it, and apply it consistently.

3. Ignoring non-CO2 greenhouse gases

The GHG Protocol covers seven gases: CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3. Refrigerant leaks from HVAC and cold chain equipment can represent several hundred tCO2e even for a mid-size company. The R-410A refrigerant carries a global warming potential of 2,088 times that of CO2.

Rule: audit all refrigeration and air conditioning systems annually and record top-up quantities.

4. Underestimating Scope 3 Category 1 (purchased goods and services)

For manufacturers and distributors, this category is typically the single largest emission source. Applying only monetary factors to this entire category introduces significant uncertainty. For suppliers representing over 80 percent of purchase volume by spend, physical or supplier-specific data is strongly preferable.

5. Using outdated emission factors

Emission factor databases are updated regularly. Using factors more than three years old can produce materially incorrect results, particularly for electricity grids undergoing rapid decarbonization (France, Germany, UK).

Tools and software for measuring all three scopes

Emission factor databases

  • ADEME Base Carbone (free, French/international): the official French emission factor database, with over 10,000 sectoral factors.
  • DEFRA GHG Conversion Factors (free): updated annually by the UK government, widely used for international Scope 3 calculations.
  • ecoinvent (paid): the most comprehensive life-cycle inventory database, used for ISO 14064 and detailed supply chain assessments.

Calculation and reporting software

Spreadsheets (Excel/Google Sheets): suitable for small organizations with limited Scope 1 and 2 emissions. High error risk, no audit trail, not compliant with ISO 14064 or CSRD verification requirements.

Dedicated carbon accounting platforms like Kabaun: automate data collection via API connectors to ERP and financial systems, apply a real-time GHG Protocol calculation engine across all three scopes, decompose results by category and emission source, generate BEGES and CSRD/ESRS E1-compliant reports, and maintain an immutable audit trail for third-party verification. Kabaun's AI assistant Klem flags anomalies and suggests reduction priorities.

ERP-integrated ESG modules (SAP Sustainability, Oracle Cloud ESG): relevant for large enterprises already on these platforms, but typically limited in Scope 3 coverage and costly to configure.

Third-party verification

For ISO 14064-compliant or CSRD-ready inventories, verification by an accredited body (Bureau Veritas, SGS, EY, Deloitte Sustainability) is required. The software must provide a full audit trail allowing the verifier to trace every data point to its primary source.

FAQ : Frequently asked questions about Scopes 1, 2, and 3

What is the simplest way to understand the difference between Scopes 1, 2, and 3?

Scope 1: emissions your equipment produces. Scope 2: emissions produced to make the energy you buy. Scope 3: all other emissions in your value chain : upstream (suppliers) and downstream (customers, end of life). In practice, Scope 3 is almost always the largest and the most strategically significant.

Is Scope 3 reporting mandatory under the CSRD?

Yes. ESRS E1 requires Scope 3 disclosure for all companies subject to the CSRD. A first-year deferral is permitted if data is not yet available, provided the company documents its data collection efforts. This is not a permanent exemption : Scope 3 must be reported from the second year at the latest.

Does Scope 3 only cover the supply chain?

No. The supply chain corresponds to Categories 1-8 (upstream). Categories 9-15 cover the downstream side: distribution to customers, product use, end of life, franchises, and investments. For companies whose products are energy-intensive at the use stage (e.g., heating equipment, industrial machinery, vehicles), Category 11 (use of sold products) often exceeds the entire upstream footprint.

Can we offset Scope 1 emissions with carbon credits to report a net-zero Scope 1?

Not according to the GHG Protocol Corporate Standard. Carbon credits (offsets) are a separate action and must not reduce the gross emissions reported in the inventory. Netting offsets against Scope 1 emissions is a recognized form of greenwashing and does not meet CSRD or SBTi requirements.

What is the difference between a carbon footprint and a GHG inventory?

The terms are often used interchangeably. A GHG inventory (or GHG assessment) is the methodologically rigorous process defined by the GHG Protocol or ISO 14064. "Carbon footprint" is the broader public term. For regulatory purposes (CSRD, BEGES), the formal GHG inventory methodology applies.

What is Scope 4 and should we report it?

Scope 4 is not an official GHG Protocol category. The ADEME defines it as "avoided emissions" : reductions achieved at customers' sites as a result of using the company's products or services. For example, a software platform that enables clients to reduce 10,000 tCO2e can value those avoided emissions as Scope 4. They must be reported separately from the Scope 1-2-3 inventory : never netted against it.

How do we choose between the location-based and market-based method for Scope 2?

The GHG Protocol requires companies to report both when market-based instruments (PPAs, RECs, GOs) are used. If no market-based instruments exist, only location-based applies. Under CSRD/ESRS E1, both must be disclosed. The location-based figure typically reflects the physical reality of the grid; the market-based figure reflects contractual choices. Use both to tell a complete story.

Conclusion

Scopes 1, 2, and 3 provide a complete, standardized map of an organization's climate impact. Scope 1 covers what your equipment burns. Scope 2 covers the energy you purchase. Scope 3 : typically 75 to 90 percent of the total : covers everything your value chain emits before and after your operations. For companies subject to CSRD or equivalent national mandates, measuring and disclosing all three scopes is no longer optional.

The practical starting point: identify the five to ten emission categories that account for 80 percent of your estimated footprint. For most manufacturers, these are purchased goods (Category 1), use of sold products (Category 11), and employee commuting or business travel. Focus data collection efforts there first.

Kabaun covers Scopes 1, 2, and 3 with a GHG Protocol engine, ERP connectors, and automated CSRD and BEGES reporting. [Explore Kabaun](https://www.kabaun.com)

*Last updated: April 29, 2026. Sources: GHG Protocol Corporate Standard (2004, Scope 2 Guidance revision in progress); ADEME Base Carbone v23; EFRAG ESRS E1 Climate Change (2023); ISO 14064-1:2018; Decree n°2022-982 of 1 July 2022.*