Decoding Scope 1, 2 & 3 Emissions: What Every Business Needs to Know

An effective climate strategy involves businesses today to understand and reduce their greenhouse gas (GHG) emissions. If your business is striving to meet its sustainability targets, then it is crucial for you to decipher your Scope 1, 2, and 3 emissions. Let’s decode the three scopes of emissions and explain why a comprehensive understanding is essential to achieving real climate impact.

Scope 1: Direct Emissions

Scope 1 emissions are direct greenhouse gas emissions that arise from direct company sources. These can be emissions due to fuel combustion in the various vehicles that the company owns, the on-site manufacturing processes as well as through other company owned facilities. When it comes to B2B enterprises, especially in heavy-emission sectors such as manufacturing and logistics, scope 1 emissions are the baseline of their carbon footprint. This is why it is important to not only accurately record these emissions, but also effectively reduce them by identifying smart decarbonization opportunities.

Scope 1 is the most straightforward to measure and control, giving businesses a direct opportunity to act through operational changes, fuel switching, or technology upgrades. Fitsol’s Kyoto™ platform allows businesses to track direct emissions as well as comes up with smart decarbonization opportunities.

Scope 2: Indirect Energy Emissions

These are indirect greenhouse emissions that are generated from the consumption of purchased electricity, heating, cooling or steaming. These might originate at off-site power plants, they are attributed to your business, as that is the end user, based on your consumption. If you are in a sector that undergoes energy-intensive operations, then scope 2 emissions can form a significant contribution to your carbon footprint. Operational cost structures are important for decarbonization and value creation.

Energy efficiency upgrades, renewable energy procurement, and clean energy contracts can significantly reduce Scope 2 emissions. It is often a key focus in corporate sustainability reporting. Fitsol’s Greenfind network can be very helpful in this regard. It can connects your business to verified renewable energy partners, as well as others who can help you go green.

Scope 3: Value Chain Emissions

Scope 3 emissions contribute immensely to the total carbon footprint of a business. However, they are the most complex to measure as well as manage. These cover all other indirect emissions occurring in the value chain, both upstream and downstream. It encompasses all indirect greenhouse gas emissions that occur outside a company’s direct operations. These can include emissions from purchasing of goods and services, business travel, employee commuting, waste disposal, transportation and distribution, use of sold products, among others. It can get challenging to attain transparency as well as accurate data as it may be influenced by a wide network of suppliers, partners, and customer behaviours. However, while it can get difficult to manage as well as address Scope 3 emissions, they are integral to unlocking deep decarbonization. Fitsol, as the number one decarbonization partner, helps companies engage with suppliers, track their emissions, including scope 3, and come up with reduction strategies.

Significance of this classification for businesses

Accurate classification of Scope 1, 2, and 3 emissions are especially significant for businesses in India as the country is swiftly moving towards its climate commitments under the Net Zero 2070 target and growing ESG mandates. Systematically identifying, measuring, and managing emissions across their operations and supply chains can promote an effective synergy between regulatory expectations as well as global investor benchmarks. This classification is key to driving deep decarbonisation, promoting supply chain transparency as well as be being globally competent. With Fitsol’s AI powered emissions, business can get help to:

• Identify high-impact reduction opportunities

• Communicate transparently with investors and customers

• Align with international reporting frameworks like GHG Protocol, CDP, and SBTi

• Future-proof operations against evolving climate regulations

The importance of a B2B sustainability partner

This is where Fitsol, a number one decarbonization partner, can help you:

• Provides required tools for emissions mapping and footprint calculation across all scopes

• Makes available AI-powered tools for emissions monitoring and reporting

• Strategic guidance on decarbonization pathways

• Helps with effective supplier engagement and carbon intelligence tools

With SBTi gaining traction globally, reducing emissions isn’t just about compliance — it's about creating long-term value and resilience. Start your decarbonization journey with confidence. Ready to decode your emissions? Let Fitsol help guide the way to becoming Net-Zero.