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The journey to a reduced carbon footprint starts with understanding what can seem like some complex terminology. Luckily, we'll lay out all the terms you need to know to arm you with the knowledge to make informed choices for your reduction goals to cut costs and cut carbon. For your company to address its environmental impact in a meaningful way, it’s essential that you first measure and understand your carbon footprint. Understanding where and when greenhouse gases (GHG) are emitted is the first step to successfully reducing them. All GHG sources are allocated into 3 different categories: Scope 1, Scope 2, and Scope 3.

Scope 1

Scope 1 emissions are fairly straightforward. They refer to direct GHG emissions produced by activities or operations that are owned or controlled by the reporting company. These emissions are created directly through energy used by company-owned equipment and vehicles. The heater that keeps your business facilities warm, company vehicles, and the boiler that heats your tap water are all examples of scope 1 emissions.

Scope 1 emissions can be addressed by increasing energy efficiency, such as swapping out an HVAC system at the end of life to more energy-efficient alternatives or switching to motion detector lights that help conserve energy. These direct solutions will reduce emissions while reducing your energy bill.

Scope 2

Scope 2 emissions encompass all “upstream activities” or GHGs created by the purchase of energy. They differ from scope 1 emissions because although they are a result of the reporting company's activities, they occur at sources owned or controlled by the supplier. These are called indirect GHG emissions. Scope 2 emissions result from a business’s energy use, like electricity and heating and cooling provided by an energy company.

In order to tackle these emissions, you must understand your suppliers' policies and procedures. Scope 2 emissions can be reduced by switching to a more sustainable supplier or sourcing renewable energy sources. Because many businesses get most of their energy from public sources, a simple way to reduce scope 2 emissions is by turning off lights or replacing incandescent lightbulbs with LED bulbs. Businesses who want to reduce them further can make the change to in-house renewable energy generation. Both are a great way to reduce costs and emissions.

Scope 3

Scope 3 emissions describe emissions generated by both “downstream activities” and “upstream activities” along the life cycle of the goods and services produced by a company. Scope 3 emissions can be produced by activities occurring in a company's value chain, such as third-party shipment of goods, business travel, and customers using the company's products.

For many organizations, limiting scope 3 emissions requires accountability for the processes that occur throughout a company’s supply chain and their value chain, from the goods acquired from suppliers to the disposal of products the business sells. Engaging with your suppliers, customers, employees, and contractors to manage their own emission sources can be a great way to reduce scope 3 emissions. A large portion of these emissions are often offset by purchasing carbon credits because some activities cannot be completely emission-less, like using a business’s sold products.

The journey to reducing scope emissions requires a company to measure and understand its current carbon footprint. With BMO Radicle’s Climate Smart Training & Certification, your GHG inventory and supply chain emissions will provide important data to meet sustainability and reduction goals. Our Climate Smart advisors work with your business to develop strategies that measure and minimize emissions, prioritize feasibility, and cut operating costs.

Our team will help you implement strategies to address and reduce all types of emissions and guide you through purchasing carbon offsets for the remainder of your GHG inventory.

Understanding your climate impact through scope emissions will jumpstart any business in any industry to actions that will positively impact the environment, and positively impact bottom lines.