Overview
When a company announces a net zero commitment, its press release almost never specifies which emissions are actually covered. That omission is often the story. The three-scope framework is the tool that makes the gap visible.
Developed by the GHG Protocol, the framework divides a company’s total climate footprint into concentric rings of responsibility. The inner ring is what a company does itself. The middle ring is what it pays others to do for it. The outer ring is the full upstream and downstream chain it depends on and enables. Together, the three scopes are designed to ensure that no significant source of emissions disappears into accounting ambiguity.
Scope 1 covers direct emissions from sources the company owns or controls: a factory burning natural gas, a fleet of diesel vehicles, a cement kiln. These are the most straightforward to measure and the most directly under management control. They are also, for most companies, the smallest share of total emissions.
Scope 2 covers indirect emissions from purchased energy, primarily electricity and heat. When a company buys electricity from the grid, it is responsible for the emissions produced to generate it, even though those emissions happen at the power station rather than on-site. Scope 2 accounting has created a major market for corporate purchases of renewable electricity, through instruments like Power Purchase Agreements and renewable energy certificates.
Scope 3 covers everything else: all indirect emissions across the full value chain, upstream and downstream. This includes the emissions from producing raw materials, business travel, the use of products by customers, and end-of-life disposal. For most companies, Scope 3 is the largest category by far, often representing 70 to 90 percent of total emissions footprint. It is also the category most likely to be absent from corporate climate claims.
Why Scope 3 Is the Hardest and Most Important
Scope 3 is hard to measure because it requires collecting data from hundreds or thousands of suppliers and customers, many of whom operate in jurisdictions with no mandatory disclosure. The estimates are approximate, and methodologies vary, making comparison between companies unreliable. Companies often use this complexity as a reason to exclude Scope 3 from their targets. Regulators and investors are increasingly treating that exclusion as a red flag rather than an excuse.
For a financial institution, Scope 3 includes financed emissions: the emissions attributable to the loans and investments it makes. A bank’s own offices and servers are climate-trivial compared to the carbon embedded in the companies it finances. This is why frameworks like TCFD and IFRS S1 and S2 increasingly require financial institutions to report Scope 3, and why coalitions like GFANZ have made financed emissions a central accountability metric. A bank that claims to be net zero while continuing to finance oil and gas expansion is making a Scope 1 and 2 claim while ignoring the overwhelming majority of its actual climate impact.
For a fossil fuel company, Scope 3 includes the emissions generated when customers burn its products. That is almost always the largest portion of the company’s total climate impact by a significant margin. It is also what makes proven fossil fuel reserves potential stranded assets: the Scope 3 liability attached to them is enormous under any credible net zero scenario.
Scopes and Net Zero
A credible net zero commitment must address all three scopes, not just Scope 1 and 2. The Science Based Targets Initiative requires companies setting net zero targets to cover Scope 3 emissions wherever they are material, which for most large companies is almost always.
A net zero claim that silently omits Scope 3 is one of the most common forms of greenwashing by omission, and a growing source of litigation and regulatory risk. For a communications professional, the practical check is simple: when reviewing or drafting any corporate climate claim, ask which scopes the commitment actually covers. If the answer is not explicit, the claim is incomplete.
The GHG Protocol is the dominant standard for how scopes are measured and reported, forming the foundation on which all other corporate climate accounting sits.