CSRD Glossary

Scope 1, 2, 3

Under CSRD, companies will have to report their greenhouse gas (GHG) emissions. The reporting is divided over scope 1, 2, 3 emissions: direct energy production, energy consumption, and emissions throughout the chain.

Scope 1: “Burned on Site” or Direct Emissions

Emissions from direct or on-site energy production. It involves the emissions caused by producing energy, generally through burning fuels or coals. Important here is that the emissions in scope 1 must be under a company’s direct control.

  • Fleet Fuel Combustion: Emissions from company cars, trucks, airplanes, etc. It does not matter whether the vehicles are company-owned or leased. However, commuter traffic does not fall under this category, as it is not under the company’s direct control.
  • On-Site Industrial Processes: Emissions from industrial processes like manufacturing, mining, and chemical production.
  • Fuel Combustion for Heating and Cooling Buildings: Greenhouse gases released from burning fuels to heat or cool company buildings.

Scope 2: Energy Consumption

The emissions in scope 2 are the indirect emissions associated with the electricity, heat, or steam that a company purchases (so from external energy suppliers). While the company doesn't directly generate these emissions, their choices about energy suppliers impact the overall footprint.

  • Emissions from Power Plants: When a company buys electricity, they are indirectly responsible for the emissions produced by the power plant that generates that electricity.
  • Grey versus Green Energy: Buying green energy will significantly lower scope 2 emissions since the CO2 emitted in producing the energy is much lower.
  • What about Energy Companies? Since these are the ones producing the energy, they will need to report the emissions in scope 1. This is a good example on how scope 1, 2, 3 are interrelated for different companies, since in the end we all work together in the business landscape.

Scope 3: Indirect Emissions

These are all the other indirect emissions that occur across a company's value chain. They are often the most complex and challenging to measure, but can represent a significant portion of a company's total footprint. The emissions for scope 3 are divided between upstream (purchased goods) and downstream (emissions associated with sold goods/services). Here are some examples:


  • Purchased Goods and Services: Emissions associated with the production, transportation, and use of goods and services that a company purchases. For example, the emissions generated by a supplier during the manufacturing of a product a company sells.
  • Business Travel: Emissions from employee air travel, car rentals, and other forms of transportation used for business purposes.
  • Employee Commuting: Emissions from employees commuting to and from work.


  • Use of Sold Products: Emissions that arise from the use of a company's products after they are sold. For example, the emissions generated when a customer drives a car manufactured by the company.
  • End-of-Life Treatment of Sold Products: Emissions generated during the disposal or treatment of products after a company sells them. For example, when disposing of a bookcase, it will go to landfill, which will make it release methane. This would be downstream scope 3 for a furniture company.
  • Other Examples are Investments, Franchises: the emissions caused by investee’s or franchiser’s operations fall under the downstream scope 3 emissions of the company who has made the investment or gives out the franchise.

Especially for assessing the scope 3 reporting, the double materiality analysis is helpful. It is a great tool to determine which items and topics should exactly be included in the reporting.

By understanding and measuring all three scopes of emissions, companies can get a comprehensive picture of their environmental impact and identify areas for improvement. We usually see some items sticking out in the analysis — making it easy to pick the low-hanging fruit.

Here's a handy way to remember the scopes:

  • Scope 1: Burned on-site (by the company)
  • Scope 2: Bought (the energy the company purchases)
  • Scope 3: Beyond (everything else in the company's value chain)