Scope 1, 2 and 3 Emissions Explained (with Examples)

Scope 1, 2 and 3 emissions are the three groups the GHG Protocol Corporate Standard uses to sort a company's greenhouse gas emissions by where they physically happen and who controls the source. Scope 1 is what you burn directly, Scope 2 is the energy you buy, and Scope 3 is everything else across your value chain. This guide explains Scope 1, 2 and 3 emissions in plain English, with real examples for a typical UK business, and shows which ones you are actually required to report in 2026.

Key takeaways

• Scope 1 is direct emissions from sources you own or control; Scope 2 is the indirect emissions from the energy you purchase; Scope 3 is every other indirect emission in your value chain, sorted into 15 defined categories.
• Under UK law (SECR), large and quoted companies must report Scope 1 and 2; Scope 3 is still largely voluntary here, even though for most businesses it is by far the biggest slice.
• In the UK you should report Scope 2 two ways, location-based and market-based, which the GHG Protocol calls dual reporting.
• The 2026 UK electricity emission factor fell 26%, so many footprints will drop this year for reasons that have nothing to do with the business. Explain the change so it is not read as a real reduction.
• The GHG Protocol is being revised (draft proposals published March 2026, final standards expected around 2027), but today's definitions still apply.

These three scopes are the backbone of any business carbon footprint, and the split exists for a simple reason: to stop the same tonne of CO2e being counted twice when companies add up their emissions. Your Scope 2 is your electricity supplier's Scope 1, so the framework draws a clean line around what you directly cause, what your energy purchases cause, and what the rest of your value chain causes.

Scope 1: direct emissions you own or control

Scope 1 covers direct greenhouse gas emissions from sources that are owned or controlled by your company. In practice that means anything you physically burn or release on site or in your own vehicles.

Typical Scope 1 sources for a UK business:

• Natural gas burned in your own boilers and furnaces to heat premises or for process heat.
• Fuel burned in company-owned or controlled vehicles, such as vans, cars or a forklift running on diesel or LPG.
• Refrigerant gases that leak from air conditioning, chillers or refrigeration (these are potent greenhouse gases even in small quantities).
• Emissions from chemical or industrial processes in equipment you operate.

One quirk worth knowing: direct CO2 from burning biomass, such as wood pellets, is reported separately rather than inside Scope 1, so it does not get lost in your headline figure.

Scope 2: emissions from the energy you buy

Scope 2 covers the indirect emissions from generating the electricity you purchase and consume. The emissions physically happen at the power station, not at your office, but they are a direct consequence of your demand, so they sit with you. The GHG Protocol's 2015 Scope 2 Guidance extends this to purchased steam, heat and cooling too.

For most office-based businesses, Scope 2 is simply the grid electricity that lights the building, runs the servers and charges the laptops. A manufacturer might also buy steam or district heat.

Location-based and market-based Scope 2

There are two ways to calculate Scope 2, and in the UK you should report both. The GHG Protocol Scope 2 Guidance sets out:

• Location-based, which uses the average emissions intensity of the grid where you consume the electricity, based on grid-average factors.
• Market-based, which reflects the electricity you have contractually chosen, using energy attribute certificates (in the UK, REGOs), power purchase agreements, or supplier-specific rates, and the residual grid mix where you have made no active choice.

Because the UK is a market where these contractual instruments exist, companies following the GHG Protocol are required to report Scope 2 both ways, labelled by method. This is called dual reporting. A green tariff can pull your market-based figure to near zero while your location-based figure still reflects the real grid, which is why both numbers matter.

Scope 3: everything else in your value chain

Scope 3 covers all other indirect emissions that are a consequence of your activities but occur at sources you do not own or control, from your suppliers to your customers. Under the original Corporate Standard, Scope 3 is an optional category, and companies must report Scopes 1 and 2 as a minimum. In reality, for most businesses Scope 3 dwarfs the other two combined.

The Corporate Value Chain (Scope 3) Standard defines exactly 15 categories, designed to be mutually exclusive so nothing is double-counted:

#	Upstream categories (1–8)	#	Downstream categories (9–15)
1	Purchased goods and services	9	Downstream transportation and distribution
2	Capital goods	10	Processing of sold products
3	Fuel- and energy-related activities	11	Use of sold products
4	Upstream transportation and distribution	12	End-of-life treatment of sold products
5	Waste generated in operations	13	Downstream leased assets
6	Business travel	14	Franchises
7	Employee commuting	15	Investments
8	Upstream leased assets

Not every category applies to every business. A software firm's footprint is dominated by purchased services, business travel and commuting; a manufacturer's by purchased goods and the use of its sold products. Scope 3 is also the hardest part to measure, because the data sits with third parties. Most companies begin with rough estimates to find their hotspots, then improve the biggest categories over time. Our guide to where to begin with Scope 3 emissions walks through that starting point in detail.

Where does the boundary sit? Operational vs financial control

Before you count anything, you have to decide which operations count as yours. The Corporate Standard offers two consolidation approaches. Under the equity share approach you account for emissions in proportion to your ownership stake. Under the control approach you account for 100% of emissions from operations you control, choosing either financial control (the ability to direct financial and operating policies for economic benefit) or operational control (full authority to introduce and implement operating policies).

Most UK SMEs use operational control, because it usually matches how they actually run their sites. Whichever you choose, apply it consistently across every scope. One thing to watch: the draft GHG Protocol revision proposes removing the equity share approach altogether, which would leave financial and operational control as the two options.

Which scopes does UK law make you report?

For a UK company, the legal floor is set by SECR, the Streamlined Energy and Carbon Reporting rules in the Companies (Directors' Report) and LLPs (Energy and Carbon Report) Regulations 2018. SECR applies to all quoted companies and to large unquoted companies and LLPs. "Large" means exceeding at least two of: turnover over £36 million; balance sheet total over £18 million; more than 250 employees. Qualifying organisations must disclose their UK energy use and the associated Scope 1 and 2 emissions, with at least one intensity ratio, in their annual report. A low energy user that consumed 40,000 kWh or less in the year is exempt from the detailed disclosures, but must say so.

Two points catch people out in 2026. First, Scope 3 is not required by SECR; it stays voluntary here, even though it is usually the largest part of the footprint. Second, the Companies Act size thresholds rose by around 50% for financial years starting on or after 6 April 2025, but SECR was not swept up in that change, because its regulations state the £36m/£18m/250 figures directly. Plenty of firms that are now "medium" for their accounts still qualify for SECR.

Looking ahead, the final UK Sustainability Reporting Standards (UK SRS S1 and S2) were published in February 2026 and are available for voluntary use; S2 asks for Scope 1, 2 and 3. The FCA has consulted on making UK SRS-based disclosure mandatory for listed companies from 2027, with final rules expected later in 2026.

A word on what we do and don't do here. Frameworks like SECR and UK SRS are filing and disclosure obligations; we don't write your directors' report or file your accounts. What every one of them rests on is a GHG-Protocol-aligned footprint, and that is exactly what our carbon reporting service builds: your Scope 1, 2 and 3 emissions, measured properly and ready to report. If you are weighing up commissioning one, our guide to what a carbon footprint assessment costs in the UK sets out the ranges we see in the market.

Why did the emission factors change in 2026?

If your Scope 2 number fell sharply this year without you changing anything, the reason is almost certainly the emission factors, not your business. The 2026 UK Government (DESNZ) conversion factors, published on 11 June 2026, cut the electricity (generation) factor by 26% to 0.13096 kgCO2e/kWh, down from 0.17700 the year before.

Part of that is genuine grid decarbonisation. Part is a methodology change: DESNZ reduced the data lag from two years to one, so the 2026 set absorbs two years of grid change in a single update, a one-off effect. Transmission and distribution losses fell around 30% and the homeworking factor around 31%. A few factors went the other way, with international rail (Eurostar) up over 150%. The practical takeaway is simple: always use the factor set that matches your reporting year, and explain the factor change in your report so a paper reduction is not mistaken for a real one.

What is changing in the GHG Protocol?

The GHG Protocol is being revised across its whole corporate suite, now in partnership with ISO. The Scope 3 Standard Revisions Phase 1 Progress Update, published in March 2026, floats several notable proposals: a prescriptive 95% minimum Scope 3 coverage rule (with justified exclusions capped at 5%), a new Category 16 for "other value chain activities", Category 15 narrowed to financed emissions, and mandatory disclosure of how your data was calculated and its verification status.

These are working drafts, not rules. A public consultation draft is still to come, final standards are expected around 2027, and no transition timetable has been set. So the definitions in this guide are the ones that apply to your current reporting. The direction of travel is clear, though: more Scope 3, more coverage, and more transparency about data quality.

Bringing it together

Scope 1, 2 and 3 are simply a way of organising every tonne of CO2e your business is responsible for, without double-counting: direct emissions, purchased energy, and the value chain. Get the boundary and the scopes right and you have the foundation everything else, from SECR to a net zero target, is built on. To see how the three come together into one number, start with how to calculate your business carbon footprint.