RESOURCES
What are Scope 1, Scope 2, and Scope 3 emissions?
When businesses start measuring their carbon footprint, one of the first concepts they encounter is Scopes. These categories, defined by the Greenhouse Gas (GHG) Protocol, are the standard way of classifying greenhouse gas emissions across organizations worldwide.
For small and midsized businesses, understanding Scopes 1, 2, and 3 is essential. They show you where your emissions come from, how to prioritize reductions, and what data clients or regulators may ask for.
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Emissions from sources you own or control.
Examples for SMBs:
Fuel burned in company-owned vehicles
Natural gas in on-site boilers or furnaces
Refrigerants from air conditioning or refrigeration
Why it matters: Scope 1 is often the most visible because it comes directly from your operations. For businesses with vehicles or physical facilities, it can represent a large share of emissions.
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Emissions from the energy you purchase.
Examples for SMBs:
Electricity for offices, warehouses, or production facilities
Purchased steam, heating, or cooling
Why it matters: Even though you’re not burning the fuel yourself, your utility provider is. Scope 2 is often the easiest place to see quick wins — switching to renewable energy or improving efficiency cuts costs and emissions at the same time.
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All other emissions across your value chain.
Examples for SMBs:
Employee commuting and remote work energy use
Business travel
Purchased goods and services
Waste from operations
Shipping of supplies or products
End-of-life treatment of what you sell
Why it matters: Scope 3 is usually the biggest category — often 75–90% of a company’s footprint. It’s also where clients most often ask for data, since your Scope 1 and 2 become their Scope 3.
Why scopes matter for SMBs
Clarity: They show you where emissions come from so you can focus on what matters most.
Client expectations: Large corporations ask for Scope 3 data because they can’t hit their targets without it.
Compliance: New rules in the EU and California require Scope 1, 2, and 3 reporting. Even if you’re not directly regulated, your clients may be.
Opportunity: Spotting Scope 2 and 3 hotspots can reveal cost savings and advantages — like lower utility bills or greener supply chain partnerships.
A small business example
Imagine a food distribution company:
Scope 1: Fuel from delivery vans and refrigerant leaks in cooling systems
Scope 2: Electricity powering its warehouse
Scope 3: Packaging it purchases, shipping to customers, and employee commuting
By looking at Scopes, the company sees that while vans matter, most emissions come from packaging and transport. That insight makes it easier to target meaningful improvements.
What this means for your business
Scopes 1, 2, and 3 are the backbone of modern carbon accounting. They give structure to your efforts and make your reporting credible to clients, regulators, and investors.
For SMBs, the key is not to get overwhelmed. Start with Scopes 1 and 2 to get a baseline, then expand into Scope 3. Even small steps toward measurement show clients you’re serious — and prepare your business for the future.
Next step: Scopes show you where your emissions come from and what to do first. The SMB Sustainability Guide gives small businesses a clear way to start.
