Measuring and reporting greenhouse gas emissions has become an essential component of corporate environmental, social, and governance (ESG) strategies. In particular, Scope 2 emissions are a critical area for companies to focus on when it comes to corporate responsibility in carbon accounting.
Scope 2 emissions refer to indirect greenhouse gas (GHG) emissions that result from the generation of purchased electricity, heat or steam. These emissions are produced by sources that are owned or controlled by another entity, but are consumed by the reporting entity. They can be split into two categories; location-based and market-based emissions:
These are calculated based on the average emission factor of the electricity grid where the organization operates. It takes into account the emissions associated with the generation of electricity in a specific geographical area. This approach assumes that organizations are responsible for emissions corresponding to the average grid emissions in their location.
These take into consideration the specific contractual instruments used by an organization to procure electricity. It accounts for the emissions associated with the electricity generated specifically for the organization, including any renewable energy certificates (RECs). This approach allows organizations to take credit for the environmental attributes of the specific electricity sources they choose.
Scope 2 emissions are those that include the indirect greenhouse gas (GHG) emissions that result from the purchase of electricity, heat, or steam used in their operations. These emissions can come from a variety of sources, including:
Overall, understanding and managing Scope 2 emissions is an important part of any business's sustainability strategy
Accounting and reporting scope 2 emissions will highlight opportunities to improve performance and business operations. From a business perspective, reporting on Scope 2 emissions is important for several reasons:
Overall, reporting on Scope 2 emissions is important for companies from a regulatory compliance, stakeholder expectations, cost savings, and competitive advantage perspective. By managing and reducing their Scope 2 emissions, companies can drive positive environmental outcomes while also improving their bottom line and building trust with their stakeholders.
Minimum helps organizations measure, report and reduce their emissions across Scope 1, 2 and 3. Speak to one of our experts to learn more.
Scope 1 and Scope 2 emissions are two different categories of greenhouse gas (GHG) emissions, as defined by the Greenhouse Gas (GHG) Protocol, which is a widely recognised global standard for accounting and reporting GHG emissions.
Renewable energy should be accounted for in Scope 2 reporting using the market-based method, which involves the use of contractual instruments such as Renewable Energy Certificates (RECs) to represent the environmental attributes of renewable energy.
A renewable energy purchase is the acquisition of electricity generated from renewable sources such as solar, wind, geothermal, hydroelectric, and biomass. Renewable energy purchases can take many forms, including purchasing renewable energy directly from a renewable energy project, buying Renewable Energy Certificates (RECs), entering into Power Purchase Agreements (PPAs), or participating in green power programs offered by utilities.
To see how Minimum's Emissions Data Platform can streamline carbon accounting for your organization, book a demo with our Sustainability Experts today.