Takeaways
- GHG Protocol corporate standard categorises a company’s greenhouse gas emissions into three categories – Scope 1, Scope 2 and Scope 3.
- Companies are suggested to cut greenhouse gas emissions across the scope to achieve the carbon neutrality target.
- Adopting renewable energy and energy-efficient technologies will help the company reduce emissions effectively.
You might be familiar with Greenhouse Gases emissions. Yet, with the tighter legal and regulations requirements worldwide recently, we have received many questions about what Scope 1, 2 and 3 emissions are. In this article, we will explore these different emissions categories and provide case studies on how IKEA, the well-known Swedish multinational firm that specialises in designing and selling ready-to-assemble furniture and home furnishings, has been actively working on reducing the scope of emissions.
Understanding the various types of emissions is critical for developing successful emission reduction methods. The emissions categories Scope 1, Scope 2, and Scope 3 assist businesses in identifying and managing their carbon footprints. Let’s look at each perspective to understand its relevance and consequences for environmental sustainability.
Scope 1 Emissions
Scope 1 emissions include “direct” greenhouse gas emissions from sources owned or managed by a business. These are the most visible and immediate emissions inside the company’s operational boundaries. Some examples of Scope 1 emissions are:
- Combustion of Fossil Fuels: Emissions from using fossil fuels in company-owned cars or machinery, such as petrol or diesel.
- Onsite Industrial Processes: Emissions from chemical reactions or industrial processes occur within the company’s premises.
- Fugitive Emission: Emissions from the manufacture, processing, storage, and transportation of different compounds, such as refrigerants.
IKEA Reduces Scope 1 Emissions Through Electrifying Production
IKEA has made significant strides in reducing its greenhouse gas emissions by electrifying production processes, heating, and internal transportation. According to the company’s Climate Report for FY22, the use of coal- and fossil oil-based fuels in production has been reduced by 5% since FY16 to reach zero by FY25. IKEA’s amount of coal- and fossil-oil-based fuels used on-site decreased from 7% in FY21 to 5% in FY22 with the efforts in continually improving energy efficiency and transitioning towards 100% renewable energy. Besides, the company is promoting on-site renewable energy generation and new installations to increase the availability of renewable energy. Additionally, IKEA enables the purchase of renewable electricity for those areas where it cannot be generated on-site.
To phase out coal- and fossil-oil-based fuels used on-site, IKEA is electrifying production processes, heating, and internal transportation. This shift towards electrification will help reduce the company’s dependence on non-renewable energy sources and contribute to achieving its ambitious climate goals.
Source: https://www.ikea.com/global/en/images/ikea_climate_report_fy22_3d612b1854.pdf
Scope 2 Emissions
Scope 2 emissions are indirect greenhouse gas emissions caused by the company’s usage of bought power, heat, or steam. While the firm does not directly create these pollutants, they are related to the company’s energy use. Scope 2 emissions include the following:
- Purchased Electricity: Emissions from the power facilities that supply electricity to the business.
- Purchased Heat and Steam: Emissions caused by the use of heat and steam received from external sources.
IKEA Acquires Renewable Energy to Reduce Scope 2 Emissions
IKEA has aggressively acquired renewable energy to power its activities and minimise Scope 2 emissions to address Scope 2 emissions. The corporation has made significant investments in wind and solar energy projects by establishing its own renewable energy infrastructure and acquiring renewable energy from third-party sources. IKEA may lower the carbon intensity of their power and thereby Scope 2 emissions by increasing their dependence on renewable energy sources.
Source: https://www.independent.ie/business/world/ikea-reveals-it-packs-in-more-wind-turbines-than-stores/36218486.html
Scope 3 Emissions
Scope 3 emissions include all indirect greenhouse gas emissions across a company’s value chain that Scopes 1 and 2 do not include. According to Deloitte, Scope 3 is nearly the most complex one among the scopes of emissions since they entail various activities that occur upstream and downstream of the company’s operations. Scope 3 emissions include the following:
- Upstream Activities: This includes emissions from manufacturing and transporting raw materials and components utilised in the company’s goods or services. For example, mining minerals for electronic components or manufacturing materials for product packaging would be considered upstream Scope 3 emissions if a firm makes electronic gadgets.
- Downstream Activities: Downstream activities refer to the latter steps of a manufacturing or industrial process. These activities take place after manufacturing goods or services and include processes required for distributing, selling, and delivering the finished products to end-users or customers.
- Business Travel: Emissions from workers’ travel for work reasons, both by air and road.
- Waste Generation and Disposal: Emissions from waste disposal operations such as landfilling and incineration.
IKEA Acquires Renewable Energy to Reduce Scope 3 Emissions
To combat Scope 3 emissions, IKEA has prioritised sustainable material procurement and the application of circular economy concepts. They seek to get materials from ethically managed forests and to decrease the carbon footprint associated with raw material extraction and transportation. In addition, to lengthen the life cycle of its goods and decrease waste, IKEA supports product lifetime, repairability, and recycling. IKEA wants to reduce emissions connected with product disposal by encouraging consumers to return old furniture for recycling or resale.
Source: Corporate Value Chain Accounting Reporting Standard
Why measure all 3 scopes?
Most of the time, emissions along the value chain have the most significant GHG impact. For decades, businesses have passed up tremendous potential for growth. For example, Kraft Foods claimed that its value chain accounted for approximately 95% of its overall emissions. Companies must complete an entire GHG emission inventory, including scopes 1, 2, and 3 – to focus on lowering carbon emissions, minimising carbon footprint, and becoming carbon-neutral.
In short, knowing Scope 1, Scope 2, and Scope 3 emissions is critical for businesses and organisations dedicated to strategic ESG, sustainability and climate action. Companies may design focused plans to decrease their environmental effect, contribute to global emission reduction targets, and pave the road for ESG and sustainability by identifying and monitoring these emissions.
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