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About Carbmee & Decarbonization

Frequently asked questions and their answers about EIS carbon management solution of carbmee.

Our product can be used by customers interested in measuring and reporting their carbon emissions. However, it goes beyond that. It was designed for reduction – helping customers to make data-driven decisions based on factual information about their value chain emissions and achieve net-zero targets in a cost-efficient way.

Most of our competitors’ platforms use spend-based calculation alone, which isn’t precise enough to include primary, operations data or provide results that can help companies identify actionable hotspots. Our approach is to use both spend-based and activity-based calculations for the most thorough and precise results possible. 

We provide spend-based calculation to set a baseline for Scope 1 and 2 as well as to identify hotspots if needed. At the same time, we guide our users towards collecting and growing their emissions data within the organization and increasing activity-based data coverage. 

We provide activity-based calculation to tackle emissions that can be the most difficult to measure throughout the value chain, i.e. Scope 3. While many competitors avoid using activity-based calculations due to their complexity, carbmee has streamlined the process, to deliver on results that are 30% more accurate and actionable insights for carbon reduction strategies. 

What makes carbmee different from its competitors?

We have developed our own categorization for how we break down all of your company’s emissions, which are:

      Company Carbon Footprint...

calculates CO2e emissions across your entire company, i.e. all suppliers, internal processes and products;

covers all phases of the company, i.e. Scope 1, 2, and 3;

fulfills regulatory and sustainability reporting requirements;

enables identification of strategic reduction opportunities.

Product Carbon Footprint...


enables carbon reduction along the product development process;

commonly required to win tenders, report on progress, and comply with regulations.

Supplier Carbon Footprint...


calculates climate impact across all suppliers;

covers all phases of the supply chain, i.e. Scope;

identifies cross-supplier/category reduction opportunities;

enables collaboration with suppliers for joint carbon reduction.

What kind of carbon footprints do you calculate?

Yes, our solution is system-agnostic and can integrate with any ERP system.

Can we integrate our ERP system data directly into carbmee’s EIS™ platform?

Yes, our solution provides precise information for compliance with major sustainability reporting standards like CDP and GHG Protocol.

Can I use international reporting frameworks?

While Excel is the classic solution for formatting, organizing and calculating data, it is also entirely manual – not at all optimized for the complexity of corporate carbon management. 

Carbmee’s EIS™ Carbon Management Solution automates carbon management, not only making carbon management easier but also delivering on: 

calculations 80-90% faster than with Excel;

the opportunity to collaborate on data collection – streamlining data from multiple sources (e.g. suppliers, various internal teams, etc.);

a variety of features built for reduction like analytics for easy hotspot identification, an initiative planner for planning reduction path and high ROI initiatives, as well as automated reporting.

Why is carbmee better than my company’s internal excel solutions?

We use a variety of databases, including comprehensive activity-based databases such as ecoinvent, as well as industry specific ones such as carbon minds and Exiobase for clients in need of spend-based carbon calculations.

Which database do you use for emission calculations?

Yes, all of our 3rd party database partners provide transparent and auditable data on request.

We have different packages that can be set-up based on customer’s needs and value chain complexity. Talk to one of our decarbonization experts to get a quote for your company.

FAQ about our product and solution

A list of all frequently asked questions about carbmee's carbon management solution with the answers.

All questions about carbmee's carbon management solution

All answers about carbeem's carbon managemnt software and how we help organisations decarbonize.

Carbmee sits at the nexus of technology, digitization, and sustainability, with the vision of driving the sustainable transformation of businesses with environmental intelligence in order to achieve net-zero by 2050. Carbmee’s Environmental Intelligence System ™ (EIS) is an enterprise software solution for value chain carbon management, specializing in Scope 3 emissions analysis and reduction potential.

Carbmee’s EIS™ Carbon Management Solution is not just a reporting tool or an offsetting platform – our Solution is about integrating operational ERP data to identify where to abate emissions at their source and managing carbon reduction initiatives as effectively as possible. By linking emissions from materials, transactions, logistics, and supplier data to globally recognized standards and methodologies, our Solution calculates carbon footprints down to a supplier-specific level. 

What is carbmee’s EIS™ Carbon Management solution?

We’re trying to make the biggest impact we can and that means working with some of the world’s largest companies, which also have complex supply chains (i.e. companies with significant Scope 3 emissions). We also work directly with suppliers to analyze and verify their carbon footprint.

What kind of companies does carbmee work with?

The climate crisis is intensifying and with it so is the need for companies to comply with regulations, but also to develop more resilient supply chains, lower their climate risk, and continually make their operations more sustainable overall. Our Solution gives companies the chance to not only fulfill their emissions reductions pledges, but to truly operate carbon-aware now and far into the future.

Why should my company decarbonize its value chain?

Scope 1 emissions are direct emissions from owned or controlled sources.
Scope 2 emissions are indirect emissions from the generation of purchased energy. 
Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.

About carbmee & decarbonization

Details about how carbmee can help you in your decarbonization journey and how our EIS carbon management software can help reduce your carbon footprint.

Our team is composed of industry experts specialized in procurement, business consulting, technology, and more. This means we have the domain knowledge to understand our customers’ challenges and needs – and the know-how to solve them.

To ensure our customers are able to have the greatest impact on their net-zero journey, we also provide:

one-on-one guidance and recommendations on how customers can start and level-up their decarbonization;

online courses that explain what net-zero is and how to use our product from end-to-end of your enterprise;

webinars and events with industry experts, focused on net-zero for both the planet and your company’s sustainable business performance.

How does carbmee support teams from end-to-end of your enterprise?

Yes, our Consultancy Partners are key in supporting our joint customers to eliminate implementation barriers, maximize low-carbon capacity, and achieve breakthroughs in sustainable business performance. 

We are a consultancy firm interested in EIS™ Carbon Management for our clients’ projects. Can we partner with carbmee?

Yes, carbmee provides both personal support from our Customer Success Managers but also through our interactive learning platform, carbmee Academy. Customer Success Managers ensure that every customer is guided through:

their decarbonization journey, i.e align use of Carbmee with business goals and strategy;

how to leverage EIS Carbon Management to achieve meaningful carbon reduction goals;

mapping challenges to match for solutions, i.e. product discovery and co-development.

Is there support available when using EIS™ Carbon Management?

How carbmee can support you in meeting Net-Zero goals

In the evolving landscape of global business, managing the carbon footprint across the supply chain has become a critical challenge. Scope 3 emissions, which encompass all indirect emissions occurring in a company’s value chain, often constitute the bulk of a company’s total carbon footprint. Tackling these emissions requires comprehensive strategies, robust data management, and innovative solutions. This blog post provides a comprehensive guidance on how to manage emissions in the supply chain efficiently and drive effective decarbonization  initiatives.

Studies indicate that for many industries, up to 80% of their total emissions originate from the supply chain. This underscores the importance of addressing Scope 3 emissions to make a meaningful impact on overall carbon reduction efforts. Focusing solely on direct emissions (Scope 1 and 2) will not suffice if the larger portion of emissions remains unchecked.

Achieving sustainability targets and transitioning to a low-carbon economy hinges on effectively managing Scope 3 emissions. Companies are increasingly setting ambitious reduction targets, and delivering on these promises is crucial for long-term environmental and economic sustainability.

Regulatory landscapes are evolving, with enhanced Environmental, Social, and Governance (ESG) regulations requiring accurate and comprehensive reporting of Scope 3 emissions. Compliance with these regulations not only helps avoid penalties but also positions companies favorably with investors and consumers who are increasingly valuing transparency and sustainability.

With the advent of carbon pricing, managing Scope 3 emissions becomes essential for maintaining profitability. Companies that proactively reduce their carbon footprint can mitigate the financial impact of carbon taxes and leverage sustainability as a competitive advantage.

The Importance of Scope 3 Emission Reduction

The Importance of Scope 3 Emission ReductionWhat is the CSRD?

Challenges of Managing Scope 3 Emissions in Complex Supply Chains

Managing Scope 3 emissions is inherently challenging due to the complexity of modern supply chains. Companies often deal with multiple tiers of suppliers across different countries, each with varying environmental regulations and technological capabilities. Gathering accurate and comprehensive data requires cross-departmental collaboration within the company and across the supply chain.

Spend-based carbon accounting estimates emissions by multiplying the financial value of goods or services by emission factors. It provides a quick overview but lacks accuracy and granularity.

Activity-based accounting focuses on specific activities and processes, using detailed data on physical flows such as energy use, material consumption, and transport distances. It provides more accurate and granular data that enables companies to gain a comprehensive understanding of their Scope 3 emissions and identify hotspots.

The most actionable and accurate method, supplier-specific data, gathers precise information from the supplier's operations and production processes. This data is the most actionable carbon data that empowers companies to drive high ROI reduction strategies, collaborate with existing suppliers or source new low-emission suppliers, and innovate new production processes or materials.

Integrating carbon data into existing corporate data systems is crucial for informed decision-making. Within procurement and supply chain management (SCM), the primary challenge lies in gathering precise and granular data across the entire value chain. This involves connecting data from various Enterprise Resource Planning (ERP) systems and ensuring it is specific enough to influence meaningful decisions.

Understanding Carbon Data Management for Complex Supply Chains

- Awareness and Stakeholder Onboarding: Educate stakeholders about the importance of managing Scope 3 emissions and the associated risks. Establish company-wide reduction targets and communicate these targets clearly to managers, defining their responsibilities and specific objectives.

- Developing an RFP: Create a Request for Proposal (RFP) tailored to your Scope 3 emission use cases and select a suitable software solution provider like carbmee.

- Supplier Carbon Footprint Modelling: Develop models to quantify the carbon footprints of your suppliers using certified calculation methods to ensure data transparency across the supply chain.

- Achieving Data Transparency: Ensure data transparency and set a baseline for your Scope 3 emissions.

- Transition to Activity-Based Calculations: Move from spend-based to activity-based calculations and increase the collection of supplier-specific data.

- Identifying Emission Hotspots: Utilize transparent and accurate data to pinpoint emission hotspots within your supply chain.

- Strategic Use of Carbon Data: Integrate carbon data into operations and strategic planning to support the path to net zero with clear roles and responsibilities.

- Fostering Supplier Collaboration: Encourage collaboration with suppliers to share sustainability goals, implement data-informed reduction initiatives and reduce the Supplier carbon footprint.

- Achieving High ROI in Reduction Initiatives: Focus on sourcing low-emission goods and identifying low-emission alternatives to enhance procurement decisions and achieve sustainable procurement. 

- Opting for Low-Carbon Transportation and Waste Management: Reduce emissions further by choosing more sustainable transportation and waste management options.

- Innovating Eco-Friendly Products: Use granular carbon data to innovate and track the success of eco-friendly products.

- Data-Driven Optimization: Leverage data for supplier emissions tracking and to continuously monitor and optimize your carbon footprint reduction strategies 

- Staying Compliant: Ensure compliance with evolving ESG regulations by providing validated, high-quality carbon data.

- Regular Reporting: Report achievements and milestones to stakeholders regularly to maintain transparency and accountability.

- Considering Premium Pricing: Explore premium pricing for low-emission products to reflect their added value and sustain profitability.

Act Now: 4 Steps to Supply chain sustainability

carbmee’s Envirnomental Intelligence System (EIS™) offers a comprehensive solution for managing carbon across complex supply chains. The Supplier Carbon Footprint (SCF) module within carbmee EIS™ enables companies to achieve data transparency and accuracy swiftly. By transitioning from spend-based to activity-based calculations and incorporating supplier-specific data, companies can gain detailed insights at the SKU level. This facilitates the identification of high return-on-investment (ROI) hotspots and empowers companies to develop and implement effective reduction initiatives.

Key Benefits of Using the SCF Module in carbmee EIS™

1.Achieving Data Transparency and Accuracy: carbmee EIS™ allows for complete data transparency and the highest level of data accuracy. By incorporating supplier-specific data, companies can achieve detailed granularity, making the data both actionable and reliable.

2.Driving High ROI Carbon Reduction: With superior data quality, companies can easily identify emission hotspots and develop targeted reduction initiatives. This enables effective collaboration with suppliers and strategic sourcing of low-emission suppliers.

3.Simplifying Compliance: Using certified calculation models, carbmee EIS™ ensures that carbon data is validated and emission reports adhere to international standards, easing the reporting process and avoiding penalties.

4.Streamlining Supplier Collaboration: The platform streamlines supplier communication across the value chain, enabling efficient onboarding, training, and collaboration on reduction initiatives. Suppliers can submit their primary data in a standardized and compliant format, ensuring data quality and consistency.

Carbon Management for Supply chain transformation with carbmee EIS™

Managing carbon in the supply chain is no longer optional but a strategic necessity. With the increasing regulatory requirements and the financial implications of carbon pricing, companies must take proactive steps to measure, report, and reduce their Scope 3 emissions. carbmee’s carbon management software offers a comprehensive solution to achieve data transparency, drive high ROI carbon reduction, simplify compliance, and streamline supplier collaboration. By leveraging accurate and actionable carbon data, companies can future-proof their supply chains, achieve sustainability goals, and maintain competitiveness in an increasingly carbon-conscious market.

Want to have data confidence in your decision-making? Talk to one of our Experts to learn more about carbmee's solutions.

Corporate Sustainability Reporting Directive (CSRD):Quick Guide

What is the Corporate Sustainability Reporting Directive? What will it mean for your industry? How can your enterprise prepare for compliant reporting? Check out our quick guide to find out.

Transforming to a Sustainable Supply Chain: Managing Carbon and Achieving Scope 3 Emissions Reduction

Future-proofing Supply Chains with Carbon Data Management

In an era where environmental responsibility is crucial, most companies commit to reduction targets, yet do not know how to actually tackle their Scope 3 emissions. Measuring, reporting, and reducing Scope 3 emissions is both a completely new and highly complex challenge. Supply chain decarbonization is still in its early stages and there is an escalating demand for solutions. 89% of companies are using or currently searching for a Scope 3 digital solution, meaning they want to manage their emissions with software, not with service providers.

carbmee is a recognized vendor of carbon management software with a strong commitment to developing and providing a software solution that will empower companies to get their carbon under management. It is carbmee's vision to drive the sustainable transformation of businesses with environmental intelligence to achieve net-zero by 2050. Therefore, it comes as no surprise that carbmee is incorporating all technological advancements to stay at the forefront of carbon management innovation. Whatever technological possibilities exist, carbmee will incorporate the latest innovations into the software, constantly improving the product and using every tool available to empower companies to achieve net zero. While specifically focusing on improving sustainability, carbmee is among other technological start-ups that aim to revolutionize supply chain management with AI.

carbmee´s cutting-edge software enables businesses to measure, reduce, and report emissions in their supply chain with unparalleled accuracy and efficiency. Through advanced data matching techniques with generative AI, carbmee is able to provide granular emission data for massive amounts of data at speed, ensuring precise tracking and management of carbon footprints.

Tackling Scope 3 emissions with intelligent software solutions

carbmee has integrated Gen AI into its carbon accounting software to revolutionize how businesses manage their emissions. Here’s how carbmee stands out:

Gen AI enables carbmee to match customer data with emission data from comprehensive databases such as Ecoinvent. This process ensures that emission data is highly accurate and specific to each item, providing businesses with detailed insights into their carbon footprint.

A key aspect of carbmee’s approach is to focus on excelling at data matching and modeling processes while relying on strong partners like ecoinvent to provide the best emission data. With this clear objective, carbmee´s software solution outperforms in data matching, delivering highly accurate footprint calculations. Gen AI-driven data matching enables companies to measure, report, and reduce their emissions as efficiently and effectively as possible.

Generative AI can handle vast amounts of data efficiently, making it suitable for big data applications. By using generative AI, big bulks of data can be processed efficiently in carbmee EIS™,  enabling the system to provide granular emission data for all items in the supply chain. It is only with this level of detail and granularity that businesses can meet stringent sustainability targets and regulatory requirements.

GenAI models understand the context around data points, leading to more accurate matches. The precision of generative AI in data matching leads to highly accurate emission reports. This accuracy helps companies make informed decisions about their supply chain operations, ultimately contributing to more effective carbon reduction strategies.

Tracking Scope 3 emissions presents several challenges, including inconsistent data sources, varying emission factors, and a lack of standardized methodologies. carbmee’s generative AI addresses these issues by providing:

Consistent Data Integration: carbmee´s incorporated AI ensures seamless integration of data from multiple sources, maintaining consistency and accuracy.

Standardized Emission Factors: Using comprehensive databases like EcoInvent, carbmee standardizes emission factors across the supply chain.

Real-Time Data Insights: The speed of Gen AI data processing and its processing power to handle massive amounts of data, leads to real-time data insights in carbmee EIS™. It enables companies to make timely decision-making.

Overcoming Challenges in Scope 3 Emissions Tracking

carbmee’s innovative use of generative AI in its carbon management software marks a significant advancement in the fight against climate change. By ensuring accurate, granular emission data, carbmee empowers businesses to take effective action towards reducing their carbon footprints. As the world moves towards stricter environmental regulations and greater sustainability demands, technologies like generative AI will be crucial in achieving these goals. The integration of generative AI into carbon accounting is just the beginning. As AI technology evolves, its applications in sustainability will expand, offering new ways to optimize supply chains and reduce emissions. Exciting AI-powered developments in carbmee EIS™ for analysis, forecasts, and scenario modeling are in the making already - stay tuned.

Leading the sustainability transformation with AI-powered climate tech

The complexity of tracking Scope 3 emissions requires powerful solutions. Gen AI significantly contributes to achieving emission data precision and reliability. Learn how Gen AI fuels data matching in carbmee EIS™.

Gen AI Enhances Scope 3 Emissions Tracking with carbmee EIS™

Discover how carbmee uses Generative AI for precise Scope 3 emissions tracking. Learn about enhanced data matching and accuracy for supply chain decarbonization.

Leveraging Generative AI for Supply Chain Decarbonization with carbmee EIS™

The CSRD is an EU regulation that expands the Non-Financial Reporting Directive (NFRD). It mandates a more detailed reporting of sustainability-related information, aiming to enhance the comparability and reliability of sustainability data reported by companies operating within the EU. The implementation of CSRD is phased, learn more about which companies are subject to it here.

With the introduction of CSRD and therefore standardized sustainability reporting, investors, consumers, and other stakeholders can assess and compare the ESG performance of companies.

A foundational concept of CSRD is double materiality, extending the concept of materiality to include both financial information and the company's impacts on society and the environment.

"Double materiality highlights the interconnectedness of financial performance and sustainability. It pushes companies to be even more accountable for their impact on the world." Alexandra Morton, Founder & MD, circularity.

Under the CSRD compliance, companies are required to conduct  double materiality analysis. This analysis compels companies to identify and assess their positive and negative impacts on the environment and society by considering both potential and actual effects. External influences that could affect financial performance must also be included.

CSRD Explained: Incorporating Double Materiality in EU Corporate Sustainability Assessments

To ensure that all relevant ESG information is reported in a consistent, structured manner across all industries within the EU, the European Sustainability Reporting Standards (ESRS) were developed. While CSRD dictates the 'what' of sustainability reporting, ESRS provides the 'how.'

The ESRS provides an overarching framework for all affected company types and sizes. It consists of two cross-cutting standards (ESRS 1 and ESRS 2) and 10 topic-specific standards that cover the so-called Environmental, Social, and Governance issues (ESG). 

ESRS 1 (General Requirements) sets general rules for reporting 

ESRS 2 (General Disclosures) describes basic information that must be published 

Topical Standards, depend on the result of the double materiality analysis, considering

Inside-Out perspective (Impact Materiality

Outside-In perspective (Financial Materiality) 

These two perspectives are fundamental for identifying strategically relevant sustainability topics and the associated reporting obligations. While each company has to assess which topics are material, almost with certainty ESRS E1 (climate change reporting) and ESRS S1 (own workforce reporting) are material.

The data points for ESRS S1 are not too complex, usually handled in HR systems and fairly easy to report. In contrast, compliant reporting and understanding ESRS E1 pose a significant challenge for companies, due to the complexity of relevant data and a lack of existing systems and processes.

ESRS: Structuring ESG Reporting for Consistency and Clarity in EU Industries

With its focus on climate change-related disclosures, for ESRS E 1 companies must report their emissions and how their business strategies align with global targets defined in the Paris Agreement. 

Data Collection: ESRS E1 consists of 220 specific data points. The required data points range from direct emissions to indirect impacts through the value chain, covering Scope 1, 2, and 3. To handle the vast amount of data efficiently and to ensure data accuracy it is almost mandatory to implement carbon data management systems. 

“ When it comes to data, do you want to achieve improvements, or do you want to report the same performance which you reported last year? It comes down to the ability to drill down opportunities. With an emission breakdown, you can access different data points and really make root cause-based decisions on a granular level." Christian Heinrich, Founder & MD, carbmee.

1. Data Analysis: Analyze this data to not only report but also to understand where significant environmental impacts occur and where improvements can be made.

2. Integration of Sustainable Practices: Incorporate sustainable practices into the business strategy to mitigate identified risks and capitalize on new opportunities within a low-carbon economy.

3. Regular Review and Update: Regularly review reporting processes and outcomes to ensure continuous improvement and compliance with evolving standards.

ESRS E1 - addressing Climate Change Disclosures and Strategic Alignment

Navigating the complexities of CSRD and ESRS E1 requires a robust strategy backed by powerful tools. With its comprehensive features designed to address the nuances of these new regulations, Carbmee’s EIS platform stands out as an essential ally for companies aiming to meet their sustainability reporting obligations while fostering a sustainable business model.

As regulations evolve and the importance of ESG considerations grows, ensuring compliance with CSRD will not only meet regulatory requirements but also enhance corporate reputation and stakeholder trust.

Simplifiy CSRD reporting and build a lasting legacy with carbmee EIS™

The role of carbon management software for CSDR and ESRS E1

The Corporate Sustainability Reporting Directive (CSRD) and the ESRS represent a significant development towards greater transparency and accountability in the European corporate sector. This blog aims to provide an overview on CSRD and ESRS, and understand how to minimize the administrative burden, and seize the opportunities that come with transparency of sustainability data.

GHG Protocol: What Are Scope 1, 2, & 3 Emissions?

The GHG Protocol is the most widely recognized standard for measuring and managing greenhouse gas emissions from private and public sector operations.

Measured Impact: The Role of ESRS for CSRD in Shaping Sustainability

carbmee introduces enhanced CBAM capabilities within carbmee EIS™

Today's companies are increasingly hearing and heeding the warning calls of climate change experts. Everyone strives to understand what factors like the greenhouse gas protocol and Scope 1, 2, & 3 emissions mean for their business and how to ensure compliance.

Multinational companies like BP, Coca-Cola, and Walmart account for nearly a fifth of global CO₂ emissions – with the majority of those emissions to be found in their supply chain. As companies become more aware of their environmental impact, it’s clear that organizations' supply chains often account for more than 90% of their greenhouse gas (GHG) emissions. But what does that even mean?

Nearly everything a company does can be understood through the lens of carbon – that is to say, its activities, products, and purchases all have an amount of greenhouse gas emissions allocated to them. So how do companies know what is essential to measure, or how even to quantify the emissions of everything they do? This is where the Greenhouse Gas Protocol comes into play.

We have developed this guide to help organizations understand the GHG Protocol and accompanying emissions to help do their part in compliance and stewardship. 

The GHG Protocol is a comprehensive standardized framework for measuring and managing emissions from private and public sector operations, value chains, products, cities, and policies. Originally established in 1988 as a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the purpose of the GHG Protocol is to help businesses everywhere account for the subtle and potentially drastic changes in our future related to greenhouse gas emissions. It has become the most widely recognized and used standard for measuring all three emissions scopes.

What Is the Greenhouse Gas (GHG) Protocol?

In the GHG Protocol, the Corporate Standard categorizes the primary GHG emissions into three distinct Scopes: Scope 1 emissions, Scope 2 emissions, and Scope 3 emissions. 

Scope 1 emissions are direct emissions created by owned or controlled sources. Scope 2, or indirect emissions, stem from the generation of purchased energy, and Scope 3 emissions are all indirect emissions. These take place in the value chain for each reporting company and include upstream and downstream emissions. 

How Is the GHG Protocol Related to Scope Emissions?

Not all GHG emissions are the same. There are various categories that businesses, government bodies, and organizations must consider to ensure complete awareness and ultimate reduction. Gaining a better understanding and more insights into each scope helps businesses succeed in reducing emissions. 

GHG Scopes 1, 2, & 3 are emissions categories defined by the GHG Protocol. Each scope is used by organizations, government bodies, and regulators to set goals and targets to reduce carbon emissions and other chemical greenhouse gases damaging the environment. Each scope is distinguished by the degree of control a business or organization has over the emission source rather than by emission type.

Scope 1 Emissions: Direct Emissions

Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by an organization (i.e., direct emissions from company facilities and vehicles). They include boiler and furnace emissions, transportation emissions, and chemical production emissions from owned or controlled processes. All this means that emissions are released into the atmosphere directly from the company's daily activities.

Scope 1 emissions reporting is mandatory. 

Scope 2 Emissions: Indirect Emissions (Owned & Not-Owned)

Scope 2 emissions come from electricity, steam, heat, and cooling consumption (i.e., indirect emissions from purchased energy to turn on the lights in your office). The energy consumption counted for Scope 2 emissions are related to the end-user, indirectly owned by corporations. 

Scope 2 emissions are also mandatory to report.

Scope 3 Emissions: Indirect Emissions (Not-Owned)

Scope 3 emissions are naturally complex since they are linked not only to a company’s value chain but also to its entire product life. Scope 3 emissions are companies' most common and significant source of emissions. It refers to GHG emissions that result from the company's activities. However, the company has no direct control over the resulting emissions. 

Also known as "value chain" emissions, Scope 3 GHG emissions are part of the cost of doing business. Here are some examples of Scope 3 emissions: 

Emissions from waste disposal or incineration 

Emissions from business travel, whether via air, train, boat, or automobile

Emissions from the extraction of raw materials used in manufacturing

Emissions from the manufacturing of products used by the company

Emissions from the downstream usage of products or services

While organizations must report Scope 1 and Scope 2 emissions, Scope 3 reporting is optional. However, it is highly encouraged to account for and report these emissions since they account for 70% of the total GHG footprint. Of course, these emissions are more challenging to detect, record and report, but they are a vital component toward reaching net-zero targets in the future. 

Scope 3 emissions are referred to as upstream or downstream depending on where they initiate in the value chain. 

Let's start with a closer look at Scope 3 emissions with upstream emissions. These types of emissions come from goods and services that a business buys or otherwise acquires: 

Purchased goods and services have a cradle-to-gate carbon impact, meaning they have an emissions impact from the moment of production until the moment it arrives at a store or other sales space. The reporting company must also account for the extraction, production, and transportation of services or goods purchased, leased, or otherwise acquired. 


Capital goods, sometimes called capital assets, also have a cradle-to-gate impact. The upstream impact of capital goods comes from their extraction, production, and transportation upon purchase or acquisition by the reporting company. 


Fuel and energy-related activities that do not fall under the same activities listed in Scope 1 or Scope 2. These activities derive from the extraction, production, and transportation of energy and fuels acquired or purchased by the reporting company. Here is a breakdown of the different categories of this particular Scope 3 upstream activity: 
- Upstream emissions of purchased fuels consumed by the reporting company. 
- Upstream emissions of purchased electricity with the extraction, production, and transportation of fuels used when generating electricity, steam, and heating and cooling used by the reporting company. 
- Transmission and distribution (T&D) losses result from generating electricity, steam, heating, and cooling and are reported by the end user. 
- Generation of purchased electricity, steam, and heating and cooling is later sold to end users and reported by a utility company or energy retailer. 


Upstream transportation and distribution or emissions from transportation via air, road, rail, sea, and third-party transportation or related to storage. These upstream activities might include: 
- Transportation and distribution of products purchased by the reporting company for its operations or between tier 1 suppliers in vehicles and facilities owned by someone other than the reporting company. 
- Transportation and distribution services by the reporting company, focusing on inbound and outbound logistics and transportation and distribution between businesses' different facilities.


Waste disposal and treatment in a reporting company's operations in facilities not owned or controlled by the reporting company. Waste matters might include wastewater, landfill, or composting.


Business travel by air, bus, rail, or rental car specifically for business-related activities during a reporting year in vehicles not owned or operated by the reporting company.


Employees commute activities between their homes and worksites by car, rail, bus, air, subway, or teleworking.
 

Upstream leased assets or operation of assets, such as assets from energy use, are those leased by the reporting company, known as the lessee, distinguishing them from assets included in Scope 1 and Scope 2 emissions.

Scope 3 downstream activities are more challenging to assess and report because they involve product consumption and focus on the consumer. 

Let's look at some examples of downstream activities for Scope 3 emissions. 

Downstream transportation and product distribution activities occur when the manufactured items are no longer in the reporting company's possession. While they are still responsible for producing and distributing those products, the consumer now creates more emissions from the product. The downstream activities occur via air, road, rail, sea, and third-party shipping and storage products. 


The processing and use of sold products, such as a car motor, and what the end user does with them daily. 


End-of-life treatment of sold products is when a consumer has finished using the product, whether the product wore out its usefulness or they bought something new. What is the waste-disposal emissions factor? Was the product incinerated, recycled, or is it in a waste heap?


Downstream leased assets - While some leased assets fall under Scope 1 or Scope 2, most fall under Scope 3 as downstream concerns. This area is challenging because it is difficult to account for leased items because of varying possession. However, it is still a downstream activity and more challenging to monitor and report.


Franchises - This category applies to franchisors who must account for emissions from the operation of franchises not included in Scope 1 or 2.


Investments and financial institutions may involve Scope 1 and 2 emissions classifications related to organizational boundaries related to equity-share investments. Scope 3 becomes a factor when considering the emissions of Scope 1 and 2 investees.

Downstream activities are challenging to measure, but they represent a holistic and realistic overview of a product's complete life cycle and carbon impact, from production to retirement and disposal.

Interested to know more about CSRD guidelines? Download our CSRD guide

Since Scope 1 and 2 emissions are mandatory to report, companies have focused on GHG emissions from their operations. But what about the emissions happening outside their walls?

If companies ignore Scope 3 emissions — those linked to the company’s operations but not owned by them — they miss out on a crucial step towards successful decarbonization.

Why? Scope 3 emissions often represent the most significant production of greenhouse gases. And they are also the hardest to measure since they are outside the company’s operations and direct control. In fact, the CDP has found that supply chain emissions (read: Scope 3) are, on average, 11.4 times higher than operational emissions. 

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