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Scopes 1, 2 and 3: Understanding their Importance for a Sustainable Business
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Carbon emissions are increasingly in the international spotlight, particularly those concerning companies - the biggest contributors to their production - which are being pushed by legislation and society to become carbon neutral in the coming years.
In fact, companies like Apple have already committed to making their supply chain and products 100% carbon neutral by 2030 (having already achieved this goal in terms of corporate emissions worldwide), meaning that the company plans to eliminate its entire carbon footprint 20 years earlier than the targets set by the Intergovernmental Panel on Climate Change (IPCC) - the United Nations body dedicated to assessing issues related to climate change.
And why 20 years earlier? In fact, in a 2018 report, the IPCC proposed a 2050 target. In this document, based on exhaustive scientific consultations, it states that cutting emissions by around 45% between 2010 and 2030 and then 100% by 2050 would limit the rise in the planet's temperature to 1.5º Celsius. This increase, while not ideal, would still minimize the damage that global warming will cause in the coming decades.
That's why carbon emissions are the order of the day. And when we talk about emissions, we necessarily talk about Scopes.
In the business world, talking about Scopes has become an increasingly common practice, especially for companies committed to sustainability. However, understanding what Scopes represent and how they can influence business strategies is essential.
Scopes refer to the different categories of Greenhouse Gas (GHG) emissions associated with an organization's activities. It is a fundamental tool for quantifying and understanding a company's environmental impact.
Let's analyze each of them:
This first Scope encompasses direct GHG emissions from activities controlled by the organization itself. It includes, for example, emissions resulting from the burning of fossil fuels on company premises, such as the use of natural gas in industrial processes, emissions from fleet vehicles and emissions resulting from the operation of the company's own facilities.
Scope 2 refers to indirect GHG emissions associated with electricity, steam, heating or cooling purchased by the company. Although the company does not directly produce these energy sources, it is responsible for the emissions resulting from their consumption. For example, if a company purchases electricity produced from coal, it is responsible for the GHG emissions associated with burning this fuel.
Scope 3 covers a wider range of indirect emissions that occur along the company's value chain, but which are outside its direct control. This ranges from emissions from raw materials and product transportation to product treatment and end-of-life. Examples include GHG emissions associated with the production of raw materials, such as the cultivation of cotton for the manufacture of textiles, or emissions resulting from the transportation of products to end customers.
Now that we understand what Scopes are, let's explore why they are so important for companies:
By analyzing emissions in each Scope, companies can identify areas where they can reduce their environmental impact. For example, a company may discover that most of its Scope 1 emissions come from its own fleet vehicles and decide to invest in electric vehicles or route optimization programs to reduce fuel consumption.
Understanding emissions throughout the value chain helps companies manage the risks associated with climate change and environmental regulations. For example, a company that relies heavily on raw materials from regions susceptible to extreme weather events may face interruptions in the supply chain due to phenomena such as droughts or floods.
Companies that adopt sustainable practices often enjoy a better reputation with consumers and investors. Communicating transparently about their environmental performance, including emissions in each Scope, can differentiate a company in the market and attract eco-conscious customers and investors.
In short, Scopes 1, 2 and 3 are a way of categorizing the different types of carbon emissions that a company creates in its own operations and in its wider value chain. By analyzing and acting on the emissions in each Scope, companies not only reduce their environmental impact, but also gain benefits in terms of operational efficiency, risk management and reputation. It is therefore essential for any company committed to sustainability to understand and integrate the Scopes into its business strategy.
Identifying and reducing Scope 1 and 2 emissions is usually simpler, as they are under the company's control.
The real challenge lies precisely in Scope 3 emissions, which involve the entire value chain, with upstream and downstream activities. As well as being more complex to control and measure, for many businesses it also represents the Scope with the greatest impact on their total carbon footprint (estimated at around 70% of total emissions). For example, in the specific case of a factory, the most significant carbon emissions come from the extraction, manufacture and transformation of the raw materials it uses for its operation.
First of all, you have to accept that measuring Scope 3 emissions may not be an exact science and that the results will have to be refined over time. At first, you may have to resort to some industry estimates, public statistical data from reference entities, among others, to arrive at an approximate figure. It's better to make a reasonable estimate based on credible data than no estimate at all and never make a decision.
Next, the solution will certainly involve strategic business decisions and, in reality, there are only two alternatives:
In short, the purchasing and production decisions of the suppliers themselves influence the extent to which emissions are reduced or not. And the choice of suppliers is up to you! Companies seeking to adopt best practices put the fight against Scope 3 emissions in their planning, despite its greater difficulty. Mapping your footprint and the degree of control you have over the source is a good way to start managing your company's emissions.
Ready to boost the sustainability of your business? Start measuring, analyzing and reducing Scope 1, 2 and 3 emissions right now. With Nextbitt technology, measuring your emissions becomes easier, in real time and is also auditable. Ask for a demonstration of Nextbitt's unique tool to help your company measure and reduce its emissions.
