Almost every corporate climate claim rests on three categories of emissions. Understanding what each covers, and which one companies prefer to discuss, is the fastest way to read a sustainability report critically.
Scope 1: what you burn
Direct emissions from sources the company owns or controls. Fuel burned in boilers and furnaces, diesel in generators, petrol in the company fleet, refrigerant leaks from air conditioning.
Scope 1 is the most reliable number in any report, because the company holds the fuel invoices.
Scope 2: what you buy as electricity
Indirect emissions from purchased electricity, steam, heating and cooling. The company does not burn the coal. The power station does, on its behalf.
There are two ways to calculate it. The location-based method applies the average emission factor of the local grid. The market-based method applies the emissions of the specific electricity contracted, which is how renewable purchase agreements reduce reported Scope 2.
The gap between the two figures tells you how much of a reduction came from contracts rather than from consuming less. Both should be disclosed. Frequently only the flattering one is.
Scope 3: everything else
Fifteen categories covering the value chain: purchased goods and services, transport, business travel, employee commuting, use of sold products, end-of-life treatment, investments and more.
For most companies Scope 3 dwarfs the other two combined. For a bank it is financed emissions. For a carmaker it is the fuel burned by every vehicle sold. For a consumer goods company it is agricultural sourcing.
It is also the least reliable, because the data belongs to other people. Most Scope 3 figures are estimates built from spend-based factors rather than measurements.
How to read the report
- Check which scopes carry external assurance. Under BRSR Core, Scope 1 and 2 are assured. Scope 3 generally is not.
- Check whether Scope 2 is reported both location-based and market-based.
- Check which Scope 3 categories are included. Omitting the largest category is common and usually disclosed only in a footnote.
- Check whether intensity improved while absolute emissions rose. Both can be true, and only one is progress.
