Scope 1, 2 and 3 emissions explained for small businesses

Scope 1, 2 and 3 are the three groups used to sort a business’s greenhouse gas emissions. Scope 1 is fuel you burn directly, such as gas in your boiler or diesel in a company van. Scope 2 is the electricity you buy. Scope 3 is everything else your business causes but doesn’t directly control, from flights and train trips to waste, water and the things you purchase.

The scopes come from the GHG Protocol, the global standard almost every carbon footprint follows. They exist so that emissions aren’t double-counted or missed, and so a buyer reading your figures knows exactly what’s in them.

What are Scope 1 emissions?

Scope 1 covers emissions from sources your business owns or controls. For a small business that usually means:

• Gas heating. The boiler in an office, shop or workshop you lease or own.
• Company vehicles. Petrol, diesel and hybrid cars and vans owned or leased by the business.
• Other fuel use. An oil-fired heater, a generator, LPG for a forklift or kitchen equipment.
• Refrigerant leaks. Air conditioning and commercial fridges lose small amounts of very potent gases. These count too, though they’re often left out of a first footprint because the data is hard to get.

Scope 1 is usually the easiest to measure. Gas bills show kWh, and fuel cards or receipts show litres.

What are Scope 2 emissions?

Scope 2 is the electricity you buy. The emissions happen at the power station, but they’re caused by your use, so they’re counted separately from Scope 1. Electricity bought to charge company electric vehicles also sits here.

There are two ways to report it, and good reports show both:

• Location-based uses the average emissions of the UK grid. In the 2026 government factors that is roughly 0.13 kg CO2e per kWh.
• Market-based reflects the tariff you actually buy. A renewable tariff backed by REGOs counts as zero.

So a business on a REGO-backed green tariff can show a market-based Scope 2 of zero while its location-based figure still shows real usage. Our glossary entry on location-based vs market-based reporting explains why both matter.

What are Scope 3 emissions?

Scope 3 is the broadest group. The GHG Protocol splits it into 15 categories, from purchased goods to the end of life of products you sell. Most won’t apply to a small service business. The ones that usually do are:

• Business travel. Flights, trains, taxis, hotels and journeys in employees’ own cars.
• Waste. Everything that leaves in your bins and how it is treated.
• Water. Supply and wastewater treatment.
• Employee commuting. How staff get to work, with homeworking included here as an optional extra.
• Purchased goods and services. Laptops, software, professional services, stock, packaging.
• Transport and distribution. Couriers and delivery firms moving your goods.

Scope 3 is often the largest part of a footprint, especially for businesses that buy or sell physical products. It’s also the hardest to measure, which is why most small firms start with the categories they have good data for.

If a customer does ask about purchased goods and services, there’s a shortcut. Alongside the main conversion factors, the government points to DEFRA’s spend-based emissions multipliers, which estimate emissions from how much you spend in each category of goods or services. They’re rough, but they give an initial view of supply chain emissions from your accounts alone. Say clearly that the figure is spend-based, and swap in supplier-specific data over time as your bigger suppliers start publishing their own footprints.

How do you tell which scope something falls into?

Ask who owns or controls the thing producing the emissions, and what form the energy arrives in. Some common examples:

Activity	Scope
Gas boiler in your leased office	Scope 1
Diesel in a company-owned van	Scope 1
Office electricity	Scope 2
Charging a company EV	Scope 2
Train to a client meeting	Scope 3
Employee’s own car, paid by mileage claim	Scope 3
General waste collection	Scope 3
Staff working from home	Scope 3 (optional)
New laptops bought this year	Scope 3

Two cases trip people up. A company car is Scope 1 even if the employee mostly drives it themselves, because the business controls it. And a desk in a co-working space is a judgement call: many small firms report their estimated share of heating and electricity as Scope 1 and 2, while some treat it as Scope 3. Either is fine if you say which you chose.

A worked example: a 12-person consultancy with two vans

Here’s how a typical footprint splits. The figures use rounded 2026 UK government factors and are approximate.

• Scope 1: about 9.5 tCO2e. 15,000 kWh of gas (about 2.7 t) plus two diesel vans covering 16,500 miles between them (about 6.8 t at roughly 0.41 kg per mile).
• Scope 2: about 1.6 tCO2e. 12,000 kWh of electricity at roughly 0.131 kg per kWh. On a REGO-backed tariff the market-based figure would be zero.
• Scope 3: about 3.0 tCO2e. One long-haul economy return to a client in the US (about 1.6 t using the average long-haul distance), regular rail travel (about 0.6 t), and waste and water (about 0.8 t).

Total: around 14 tCO2e. The vans account for nearly half. That’s very common for trades and field service businesses, and it tells you exactly where an electric van or better route planning would make the biggest difference.

Which scopes do small businesses need to report?

No law requires most small businesses to report any of them. SECR only applies to large and quoted companies. What you need depends on who’s asking:

• Large customers typically want Scope 1 and 2, plus whatever Scope 3 you can measure.
• Central government tenders under PPN 006 require Scope 1, Scope 2 and a defined set of Scope 3 categories, including business travel, waste, employee commuting and transport, in a published Carbon Reduction Plan. Our PPN 006 guide covers what goes in it.
• Grant funders and banks usually want a total in tonnes and a sense of where the biggest sources are.

The ESG Now footprint covers Scope 1 heating fuels, plant fuel, refrigerants and company vehicles, Scope 2 electricity and EV charging, and Scope 3 water, waste, courier deliveries, flights, rail, mileage claims, taxis and hotels. It also estimates commuting and homeworking, and can add an optional spend-based estimate of purchased goods and services. It doesn’t include inbound freight paid for by suppliers or the downstream categories, such as the use and disposal of products you sell.

If you’d like your own split by scope, start the questionnaire. Your first report is free and most small businesses finish in under 30 minutes. There’s more on how we use the scopes on our small businesses page.