If yes, please select the emissions in scope of the target:

  • Radia Guira

If yes, please select the emissions in scope of the target:

Understanding ESG Emissions Scopes

When businesses aim to calculate and improve their Environmental, Social, and Governance (ESG) scores, understanding emissions scopes becomes crucial. Emissions are categorized into three scopes by the Greenhouse Gas Protocol, a widely-used international accounting tool. Scope 1 covers direct emissions from owned or controlled sources, Scope 2 covers indirect emissions from the generation of purchased energy, and Scope 3 includes all other indirect emissions that occur in a company’s value chain.

Scope 1: Direct Emissions

Scope 1 emissions are the direct greenhouse gas (GHG) emissions that occur from sources that are owned or controlled by the company, such as emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc. Companies targeting Scope 1 emissions in their ESG strategy should take a comprehensive inventory of all direct emission sources. This can include company vehicles, on-site production processes, and any other direct sources.

To accurately report Scope 1 emissions and set realistic reduction targets, detailed data collection is necessary. Companies may need to invest in monitoring equipment or adopt emission tracking software to ensure precise data. This step is essential to support claims of reducing GHG emissions and to enhance ESG scores. An example of a company that has outlined a comprehensive approach to Scope 1 emissions can be found in Legrand’s Sustainability Framework, which can be accessed here.

Scope 2: Indirect Emissions from Purchased Energy

Scope 2 emissions come from indirect GHG emissions associated with the purchase of electricity, steam, heating, and cooling. Though these are indirect emissions, companies can still influence them through energy efficiency measures and sourcing energy from renewable sources.

For instance, transitioning to renewable energy providers or investing in renewable energy projects can significantly reduce Scope 2 emissions. Companies should carefully document their energy sourcing decisions and the related emissions impacts. The detailed second party opinion on Atos’s ESG performance, available here, showcases how a company can approach Scope 2 emissions and incorporate them into their overall sustainability strategy.

Scope 3: Indirect Emissions in the Value Chain

Scope 3 emissions can often be the most significant source of a company’s GHG emissions and represent indirect emissions that occur in the company’s value chain. This includes both upstream and downstream emissions, encompassing everything from the extraction and production of purchased materials to the end use of sold products.

Given the complexity and breadth of Scope 3 emissions, accurately tracking and targeting them in ESG goals can be particularly challenging. Collaboration with suppliers and customers is critical. Establishing clear communication and reporting standards with partners in the value chain enables companies to gather the necessary data to measure Scope 3 emissions effectively. Companies looking for guidance on setting ambitious yet achievable targets for Scope 3 emissions should consider the International Energy Agency’s (IEA) roadmap, which is an invaluable resource available here.

When completing an ESG questionnaire and calculating an ESG score, it is necessary for companies to not only acknowledge which emissions scopes are included in their targets but also to provide detailed information on how they plan to measure, reduce, and report these emissions. The more precise and comprehensive the data, the more accurate and potentially favorable the ESG score will be.

An organization’s commitment to reducing emissions across all scopes demonstrates a strong ESG strategy aligned with global sustainability efforts. Businesses that are transparent about their emissions data and reduction strategies will not only improve their ESG scores but will also build trust with stakeholders, customers, and investors who are increasingly prioritizing sustainability in their decision-making processes.

In conclusion, selecting the emissions in scope for your ESG target is a significant step towards sustainability. It requires a thorough understanding of the emission sources, a robust data collection and management system, and a clear action plan for reduction. By focusing on precise measurement and impactful actions, businesses can make meaningful progress in their ESG performance and contribute positively to the larger goal of environmental sustainability.