Scope 1, 2 & 3 Emissions

Our comprehensive model on Scope 1, 2, and 3 emissions combines information gathered from multiple sources of emissions from your organization(s) such as process emissions and emissions from your company's fleet of vehicles. By understanding the scale of both direct and indirect emissions, we can work to reduce your company’s contribution to global greenhouse gas emissions. This information can be used to develop more efficient fleet management, improve energy usage, monitor progress over time, and help you in meeting your climate goals. 

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Why do we look at Scope 1, 2 and 3 Emissions in ESG Evaluation?

Scope 1, 2, and 3 emissions refer to different levels of a company's greenhouse gas (GHG) emissions, and analyzing them through the lens of ESG can provide valuable insights into a company's environmental impact, risks, and opportunities. Here's a breakdown of these scopes and how examining them aligns with ESG principles:

Scope 1 Emissions (Direct Emissions):

These are emissions from sources owned or controlled by the organization, such as company vehicles, manufacturing facilities, etc.

Why Analyze Scope 1?

  • Compliance and Regulation Risks: Understanding direct emissions helps ensure compliance with existing and future environmental regulations.
  • Reputational Considerations: Direct control over these emissions means that significant reductions can be a positive public relations boost.
  • Cost Savings Opportunities: Implementing emission reduction technologies may lead to long-term cost savings.

Data Points to Consider:

  • Total amount and types of Scope 1 emissions.
  • Energy efficiency of facilities and vehicles.
  • Adoption and plans for cleaner energy sources.

Scope 2 Emissions (Indirect Emissions from Purchased Energy):

These emissions come from the generation of electricity, heating, cooling, or steam purchased by the company.

Why Analyze Scope 2?

  • Transition Risks: As the world moves toward cleaner energy, reliance on fossil fuels could pose strategic and financial risks.
  • Sustainability Alignment: Demonstrating a commitment to reducing Scope 2 emissions aligns with broader sustainability goals.
  • Operational Efficiency: Lowering these emissions often correlates with increased energy efficiency, leading to cost savings.

Data Points to Consider:

  • Total amount of Scope 2 emissions.
  • Sources of purchased energy and their environmental impact.
  • Initiatives to shift toward renewable energy sources.

Scope 3 Emissions (Indirect Emissions in the Value Chain):

These emissions occur in the company's value chain but are not controlled by the company itself, such as in the supply chain, product use, etc.

Why Analyze Scope 3?

  • Supply Chain Risks: Understanding these emissions can highlight vulnerabilities in the supply chain.
  • Long-term Strategic Alignment: Scope 3 emissions often represent a significant portion of a company's total carbon footprint, making them crucial for long-term sustainability planning.
  • Competitive Advantage: By working to reduce Scope 3 emissions, companies can differentiate themselves in the market.

Data Points to Consider:

  • Total amount of Scope 3 emissions, broken down by category (e.g., supply chain, product use).
  • Supplier environmental practices and collaboration on reduction initiatives.
  • Product life cycle analysis, including end-of-life management.

Why Look at Scope 1, 2, and 3 Emissions Through ESG?

  • De-Risking Investments: Understanding these emissions helps identify potential environmental risks and regulatory compliance challenges, which can be factored into investment decisions.
  • Attracting Acquisitions: Companies with robust emission reduction strategies and transparent reporting may be more attractive to sustainability-minded investors.
  • Increasing Profitability: Emission reduction often aligns with efficiency improvements, leading to cost savings.

In conclusion, examining Scope 1, 2, and 3 emissions through the lens of ESG can provide a comprehensive understanding of a company's environmental impact and strategic alignment with global sustainability goals. This analysis can play a crucial role in investment decision-making by identifying risks, opportunities, and potential competitive advantages. It aligns with the growing emphasis on responsible investing and the acknowledgment that environmental factors are integral to long-term business success.

Data in Context

What are we talking about when we're talking about Benchmarking? Let's be careful when we throw that word around.

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