There are 3 Scopes of Carbon Reporting, which are:
- Direct Emissions (e.g. burning gas on site to heat buildings)
- Indirect Emissions (e.g. electricity consumed on site and delivered via the Nation Grid, which is partially produced via gas turbines generating electricity)
- Supply Chain Emissions (e.g. emissions relating to raw materials used in producing a sold product or service)
In the UK there is a legal requirement for large companies to comply with the Streamlined Energy and Carbon Reporting (SECR) regulations, whereby all Scope 1 and Scope 2 emissions must be reported on, in addition with some Scope 3 emissions.
Carbon reporting sits within Sustainability reporting, which encompasses other aspects of Environmental, Social and Governance (ESG) factors. UK businesses need to report in line with UK legislation in the form of United Kingdom Sustainability Reporting Standards (UK SRS), as well other geographic legislation (e.g. EU’s Corporate Sustainability Reporting Directive, CSRD) where the business operate in these geographies. There has been a lot of change to sustainability regulations over the last few years, with the Task Force for Climate Related Disclosure (TCFD) reporting requirements being rolled into UK SRS and being overseen by the Financial Conduct Authority (FCA). The requirements of these regulations remain evolving and therefore attention needs to be drawn to the current requirements.
All of the legislation and reporting requirements use the underlying methodology described in detail within PAS 2050 created by the BSI and the Green House Gas (GHG) Protocol Standards. An encompassing graphic produced within the GHG Protocol guidance explains the Scopes including the more complicated Scope 3 emissions categorisation, into upstream and downstream emissions, as below:
