Business carbon accounting runs on a framework called the GHG Protocol, which splits a company’s emissions into three categories, or “scopes.” Understanding what falls into each one is the first step to calculating a company-wide footprint correctly — and to knowing which emissions are actually within your control.
Scope 1: Direct Emissions
Scope 1 covers emissions a company generates directly, from sources it owns or controls: fuel burned in company vehicles, natural gas burned on-site for heating, or emissions from on-site manufacturing processes. These are usually the easiest emissions to measure, since the company has direct data — fuel receipts, meter readings — and the most direct emissions to reduce, since the company controls the source.
Scope 2: Purchased Energy
Scope 2 covers indirect emissions from purchased electricity, steam, heating, or cooling. The company doesn’t burn the fuel itself, but it’s responsible for the emissions generated to produce the energy it consumes. Scope 2 is typically calculated using a location-based method (the average emissions factor for the local electricity grid) or a market-based method (the specific emissions factor of the electricity supplier or renewable energy contract the company holds).
Scope 3: Everything Else in the Value Chain
Scope 3 is the largest and hardest category: every other indirect emission connected to the business, upstream or downstream. This includes purchased goods and services, business travel, employee commuting, waste disposal, and — for many companies — the use of sold products after they leave the company. Scope 3 frequently accounts for the majority of a company’s total footprint, and it’s also the hardest to measure accurately, since it depends on data from suppliers, customers, and third parties outside direct company control.
Why the Breakdown Matters
Reporting emissions by scope isn’t just an accounting exercise — it shows where a company actually has leverage. A company can usually cut Scope 1 emissions directly (switching fleet vehicles, upgrading on-site equipment). Scope 2 can often be addressed through renewable energy contracts. Scope 3 typically requires working with suppliers and customers, which is slower but frequently where the largest reduction opportunity sits.
Calculating a Business Footprint
In practice, most businesses start with Scope 1 and 2, since the data is more directly available, and build toward full Scope 3 accounting as data collection matures. Each scope is converted into CO₂e using emission factors from sources like DEFRA and the IEA, so the three scopes can be summed into one total footprint figure.
Coffset for Business structures its calculator around this same three-scope framework, using DEFRA 2024 emission factors, so a company can calculate a footprint across Scope 1, 2, and 3 and move directly to offsetting whatever it hasn’t yet reduced through Coffset’s business carbon credit purchasing.
