Business Carbon Footprint: A Guide to Scope 1, 2 & 3 Emissions Measurement
Measuring and managing your organisation's greenhouse gas (GHG) emissions is no longer voluntary for most businesses. Mandatory climate disclosure regulations are rolling out in Australia, the EU, the US (SEC), and India. Supply chain requirements from large corporations increasingly require Scope 3 data from their suppliers. And investors, guided by TCFD and ISSB frameworks, expect credible climate data. Understanding your carbon footprint is the first step toward reducing it.
The GHG Protocol Corporate Standard
The GHG Protocol Corporate Accounting and Reporting Standard is the foundation of corporate climate measurement. It defines three "scopes" to capture the full range of GHG emissions associated with a business's operations. Scope 1 direct emissions include combustion of fossil fuels (natural gas, diesel, petrol, LPG, coal) in company-owned boilers, furnaces, vehicles, and manufacturing processes. Fugitive emissions from refrigerant leaks — particularly HFCs with very high global warming potential — are also Scope 1. Scope 2 indirect emissions from purchased electricity are typically a major source for office-based businesses. The location-based method uses the average grid emission factor for your country or region; the market-based method uses the actual emission factor of your electricity contract (renewable energy certificates reduce this to near-zero). Both must be reported.
Scope 3: The Largest and Most Complex Category
Scope 3 encompasses 15 upstream and downstream categories defined in the GHG Protocol Scope 3 Standard. Upstream categories include: purchased goods and services (often the largest, measured by spend or supplier data), capital goods, fuel and energy-related activities, upstream transport, waste generated in operations, business travel, employee commuting, and upstream leased assets. Downstream categories include: downstream transport, processing of sold products, use of sold products (e.g. energy consumed by software running in data centres), end-of-life treatment, downstream leased assets, and investments (for financial institutions). Not all 15 categories are material for every organisation — the standard requires calculating and reporting all "relevant" categories defined by significance thresholds.
Mandatory Reporting Requirements: India and Australia
In India, SEBI's Business Responsibility and Sustainability Report (BRSR) is mandatory for the NSE/BSE top 1,000 listed companies by market cap since FY2023. BRSR Core — a subset of 49 key performance indicators requiring limited third-party assurance — is being phased in progressively. Scope 1 and 2 emissions are core disclosures; Scope 3 is increasingly expected. India's Carbon Credit Trading Scheme (CCTS) 2023, administered by the Bureau of Energy Efficiency, will create a compliance carbon market for energy-intensive industries, making internal carbon accounting a regulatory necessity. In Australia, Treasury's mandatory climate-related financial disclosure regime (aligned with ISSB IFRS S2) requires large entities (revenue >$500M or assets >$1B from FY2025) to disclose Scope 1, 2, and material Scope 3 emissions with third-party assurance. Mid and smaller entities phase in through 2027.
From Measurement to Reduction
A carbon footprint baseline is only valuable if it drives action. Best practice is to set a science-based target (SBT) covering at least Scope 1, 2, and material Scope 3, then develop a decarbonisation roadmap prioritising the highest-emission categories. High-impact actions depend on your sector but typically include: switching to 100% renewable electricity via Power Purchase Agreement or on-site solar; electrifying fleet vehicles; implementing energy efficiency measures; reducing business air travel; engaging key suppliers on their emission reductions; and measuring and managing building embodied carbon. Organisations should also establish an internal carbon price to embed emission costs into investment decisions — $50-$150/tonne is a common range that influences real business choices.