Understanding your organisation’s greenhouse gas emissions is becoming increasingly important. Whether your business is responding to customer expectations, investor requirements, procurement demands or sustainability regulations, measuring emissions is often the first step towards reducing them.

One of the most widely used frameworks for measuring corporate emissions is the Greenhouse Gas Protocol, which categorises emissions into three groups:

• Scope 1 Emissions
• Scope 2 Emissions
• Scope 3 Emissions

Together, these three categories provide a complete picture of an organisation’s carbon footprint.

In this guide, we explain each scope, provide practical examples, and discuss why Scope 3 is rapidly becoming the biggest challenge (and opportunity) for businesses worldwide.

What Are Greenhouse Gas Emissions?

Greenhouse gas (GHG) emissions are gases released into the atmosphere that contribute to climate change.

The most common greenhouse gases include:

• Carbon dioxide (CO₂)
• Methane (CH₄)
• Nitrous oxide (N₂O)
• Hydrofluorocarbons (HFCs)

Businesses produce these emissions through activities such as:

• Using electricity
• Manufacturing products
• Operating vehicles
• Heating buildings
• Transporting goods
• Purchasing materials
• Business travel
• Waste disposal

To make reporting consistent across organisations, the Greenhouse Gas Protocol groups emissions into three scopes.

What Are Scope 1 Emissions?

Scope 1 emissions are direct emissions generated from sources that your organisation owns or controls.

These emissions come directly from your operations.

Examples include:

• Company vehicles
• Factory boilers
• Diesel generators
• Manufacturing equipment
• Company-owned machinery
• Refrigerant leaks from air conditioning systems

Example

If a logistics company owns a fleet of delivery vehicles, the fuel burned by those vehicles creates Scope 1 emissions.

Similarly, a manufacturing plant burning natural gas to produce heat generates Scope 1 emissions.

Because businesses have direct control over these sources, Scope 1 emissions are often the easiest to reduce through:

• Electrification
• Energy efficiency
• Renewable fuels
• Equipment upgrades
• Improved maintenance

What Are Scope 2 Emissions?

Scope 2 emissions are indirect emissions resulting from the generation of purchased energy consumed by your organisation.

Although your business does not generate these emissions directly, they occur because you purchase electricity, steam, heating or cooling from another provider.

Examples include:

• Purchased electricity
• Purchased steam
• District heating
• District cooling

Example

An office building may have no direct emissions from heating, but every computer, printer, light and air conditioning unit uses electricity generated elsewhere.

Those emissions fall into Scope 2.

Businesses can reduce Scope 2 emissions by:

• Purchasing renewable electricity
• Installing solar panels
• Improving energy efficiency
• Upgrading lighting
• Using smart energy management systems

What Are Scope 3 Emissions?

Scope 3 emissions are all other indirect emissions that occur throughout an organisation’s value chain.

They include emissions generated both:

• Upstream (before products reach your business)
• Downstream (after products leave your business)

For most organisations, Scope 3 represents the largest proportion of total emissions.

In many industries, Scope 3 accounts for between 70% and 95% of an organisation’s total carbon footprint.

Examples of Scope 3 Emissions

Scope 3 covers a wide range of business activities, including:

Upstream emissions

• Purchased goods and services
• Raw materials
• Capital equipment
• Fuel production
• Transportation and distribution
• Employee commuting
• Business travel
• Waste generated in operations

Downstream emissions

• Product transportation
• Product use
• End-of-life disposal
• Franchises
• Investments
• Leased assets
• Distribution partners

Example: A Coffee Company

Imagine a company that sells coffee.

Scope 1

Fuel used in company delivery vans.

Scope 2

Electricity used in offices and roasting facilities.

Scope 3

• Growing coffee beans
• Manufacturing packaging
• Shipping coffee internationally
• Employee travel
• Customer use of coffee machines
• Disposal of coffee packaging

Although the company may directly control only a small portion of these activities, the majority of its environmental impact occurs across the wider supply chain.

Why Is Scope 3 So Important?

Historically, organisations focused primarily on Scope 1 and Scope 2 emissions because they were easier to measure.

Today, regulators, investors and customers increasingly expect businesses to understand and manage their entire value chain.

This is why Scope 3 has become one of the fastest-growing areas of sustainability reporting.

Reducing Scope 3 emissions can lead to:

• Lower supply chain risk
• Increased operational efficiency
• Better supplier engagement
• Improved ESG performance
• Greater investor confidence
• Enhanced brand reputation
• Progress towards Net Zero targets

Why Is Scope 3 Difficult to Measure?

Unlike Scope 1 and Scope 2, Scope 3 often depends on information from suppliers, customers and logistics providers.

Many organisations struggle because they have limited visibility beyond their own operations.

Common challenges include:

• Missing supplier data
• Inconsistent reporting methods
• Different international standards
• Limited digital monitoring
• Complex global supply chains

As supply chains become increasingly interconnected, accurate data collection and verification become essential.

The Future of Carbon Reporting

Businesses are moving beyond annual carbon reporting towards continuous environmental monitoring.

Advances in digital Measurement, Reporting and Verification (D-MRV), satellite monitoring, Internet of Things (IoT) sensors, blockchain verification and AI-driven analytics are transforming how organisations measure and verify environmental performance.

These technologies improve transparency, strengthen confidence in reported data and support more informed sustainability decisions.

How Kyoto Network Supports Businesses

At Kyoto Network, we help organisations understand, measure and reduce greenhouse gas emissions across their operations and supply chains.

Our services include:

• Carbon footprint assessments
• Scope 1, Scope 2 and Scope 3 reporting
• Supply chain emissions analysis
• ESG strategy development
• Carbon project development
• Digital MRV systems
• Carbon market advisory
• Climate risk assessment
• Sustainability programme design

Through our proprietary Supply Chain Emission Reduction Method (SCERM) framework, we are also helping businesses recognise measurable emissions reductions achieved throughout their value chains, creating greater transparency and encouraging investment in real-world climate action.

Whether your organisation is beginning its sustainability journey or seeking to enhance an established ESG programme, Kyoto Network provides practical expertise to support measurable progress.

Frequently Asked Questions

Which emissions are usually the largest?

For most organisations, Scope 3 emissions represent the largest share of their total greenhouse gas emissions.

Are businesses legally required to report Scope 3 emissions?

Reporting requirements vary between countries and regulations. However, many large organisations, listed companies and supply chain partners increasingly expect Scope 3 reporting as part of broader ESG and sustainability disclosures.

Can small businesses measure Scope 3 emissions?

Yes. While data availability may be more limited, businesses of all sizes can begin by identifying their most significant sources of indirect emissions and improving reporting over time.

What is the Greenhouse Gas Protocol?

The Greenhouse Gas Protocol is the world’s most widely used framework for measuring and reporting greenhouse gas emissions. It provides the internationally recognised definitions for Scope 1, Scope 2 and Scope 3 emissions.

Final Thoughts

Understanding Scope 1, Scope 2 and Scope 3 emissions is fundamental to managing an organisation’s environmental impact.

While Scope 1 and Scope 2 focus on emissions from an organisation’s own operations and purchased energy, Scope 3 captures the wider emissions generated throughout its value chain. For many businesses, this represents both the greatest measurement challenge and the largest opportunity for meaningful emissions reductions.

As sustainability reporting continues to evolve, organisations that invest in accurate measurement, robust data and proactive emissions management will be better positioned to meet regulatory expectations, strengthen stakeholder confidence and support the transition towards a lower-carbon economy.

Businesses and organisations can use Kyoto Network’s free carbon calculator to begin measuring their carbon footprint, identify key sources of emissions and explore practical opportunities for reduction.

Use the Kyoto Network’s KyoGreen Carbon Calculator: https://kyogreen.com/login

To learn more about how emissions reductions can be identified, measured and recognised throughout supply chains, download Kyoto Network’s Supply Chain Emission Reduction Method (SCERM) White Paper.

Download the SCERM White Paper: https://scerm.org/

Whether your organisation is beginning its sustainability journey or looking to strengthen an existing carbon reduction strategy, Kyoto Network can provide the tools, technology and expertise needed to support measurable progress.