To kick off your carbon accounting journey, we recommend configuring your Emission Source Catalogue, which enables you to identify, collect, and track emission footprint data material to your organization. It’s worth noting that any action taken during this first step is not permanent and can be easily changed.

By the end of this lesson, you'll:

Let’s get started!

Key Carbon Accounting Concept: Emissions Scopes

Whether you’re using Newtral or spreadsheets and calculators, the first step to any carbon accounting process is identifying which Emissions Scopes you wish to account for.

Because you’re using Newtral, you can get pretty far without knowing what Emissions Scopes are, as the platform makes recommendations for you and guides you through the carbon accounting process. Read along below to learn more about Emissions Scopes, a fundamental of carbon accounting, and the first thing mentioned in Newtral’s Emission Source Checklist.

Emissions Scopes are internationally recognized emissions categories established by the Greenhouse Gas Protocol (GHGP), the world's most widely recognized carbon accounting standard.

They organize corporate emissions into scope 1, scope 2, or scope 3 based on the emissions source. Organizations must include scope 1 and scope 2 emissions when reporting and disclosing their GHG emissions, while scope 3 emissions are generally optional.

The Greenhouse Gas Protocol (GHGP) and the Partnership for Carbon Accounting Financials (PCAF), the carbon accounting standard utilized by the finance industry, honor the same definitions for Emissions Scopes. Newtral has codified 750+ pages of both accounting standards and a complete catalog of Emission Sources (categorized by scope) and Calculations Methods they establish.

Scope 1

Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization, such as emissions associated with fuel combustion in boilers, furnaces, and vehicles.

Common sources of scope 1 emissions for offices include natural gas combustion in furnaces, boilers, and company-owned or -operated fleet vehicles. Process emissions and refrigerants also fall under scope 1 emissions but are only likely to be significant for organizations with manufacturing or refrigeration.

Scope 2

Scope 2 emissions are indirect GHG emissions associated with purchasing electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organization's GHG inventory because they directly result from the organization's energy use.

Common sources of scope 2 emissions include electricity use and purchased steam or heat.

Scope 3

Scope 3 emissions are also indirect GHG emissions. These emissions are the result of activities from assets not owned or controlled by the reporting organization but that the organization indirectly impacts its value chain.

Scope 3 emissions also often represent the majority of an organization's total GHG emissions and, by extension, offer the most opportunities for emissions reductions.

A CDP analysis from 2022 highlighting the makeup of scope 1, 2, and 3 Emissions by Sector shows that scope 3 emissions are the largest source of emissions for most industries. Click here for a link to the full CDP document.

The diagram below is an overview of Scopes and their associated emissions across the corporate value chain:

The image above is adapted from page 5 of the WRI/WBCSD Corporate Value Chain (Scope Three) Accounting and Reporting Standard.

Key Concept: Understanding Emission Sources And How Newtral Transforms Business Data Into Emission Footprint Data

In addition to Emissions Scopes, it’s helpful to understand some key platform terms related to calculating your footprint before configuring your Emission Source Catalogue.

In Newtral, emissions-producing business activities are organized into Emission Categories, Emission SubCategories, and Emission Sources.

A Emission Activity is a single instance of a Emission Source uploaded to your Newtral account. Each Emission Activity uploaded to Newtral, whether a Commercial Air Flight or Purchased Electricity, is categorized into a different Emission Category, Emission SubCategory, and Emission Source. Let's walk through an example of how a Emission Activity is categorized in Newtral using a fictional retailer, Acme Retail.

Acme Retail is a general merchandise store (including warehouse clubs and supercenters) that is calculating its carbon footprint. They're looking to calculate the footprint associated with an employee’s work trip on a commercial flight. The Emission Activity would be categorized as follows:

Full GHGP and PCAF coverage enable Newtral to support each Emission Source, as well as calculate both operational and financed emissions by transforming financial, operational, and supply chain data into disclosure-grade Emission Activity data.

However, that also means a considerable number of options to sift through as a user.

Newtral’s Emission Source Catalogue removes the guesswork from identifying which Emission Sources are material. Think of it as an interactive to-do list that helps your team identify, organize, and track the Emission Sources relevant to your organization's climate management goals.

Let’s configure your checklist!

Configuring Your Emission Source Catalogue

Configure the catalogue by:

Pro-tip:

The inclusion of each Emissions Scope populates a broad range of potential Emission Sources in your Emission Source Catalogue. Not every Emission Source in the Catalogue needs to be calculated, and further guidance is available in upcoming articles on materiality.