Carbon footprint made simple: Scopes 1, 2 & 3 for SMEs

Carbon jargon, busted: What scopes 1, 2, and 3 actually mean for your SME

Let’s be honest. As a business leader, you’re juggling a dozen priorities at any given moment. When you hear terms like 'tCO2e', 'carbon intensity', and 'Scope 3 emissions', it’s easy to feel overwhelmed or assume it’s a problem for big corporations, not you.

But what if understanding this language could bring cost savings, win you new business, and attract better talent?

Sustainability isn’t about confusing acronyms; it’s about running a smarter, stronger, more resilient business. So let’s break down what carbon emissions are really about, in plain English.

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First things first: What is 'tCO2e'?

You've probably seen CO2 emissions measured in tCO2e. It stands for tonnes of CO2 equivalent.

Think of it like a common currency. Different business activities release different types of greenhouse gases. Methane from waste, for example, is far more potent than carbon dioxide from your boiler.

To make sense of it all, we convert every gas into its equivalent impact in CO2. So, releasing one tonne of methane is like releasing 25 tonnes of CO2. By using a single unit (tCO2e), we can get a clear, simple picture of our total impact. No complex maths needed.

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Why bother? The commercial case for counting carbon

Calculating your carbon footprint isn’t just an environmental exercise. It’s an important business strategy tool. Here’s why it matters for your bottom line:

• It reveals hidden costs: Measuring your emissions helps you spot operational inefficiencies. Reducing energy use or waste doesn't just lower your footprint; it directly cuts your operational costs.
• It opens doors to new business: Larger companies are now required to report on their supply chain emissions (your emissions!). Being able to provide your carbon data can be the deciding factor that wins you a major contract.
• It attracts and retains talent: Great employees want to work for businesses that share their values. A clear commitment to sustainability makes you a more attractive employer, reducing recruitment costs and improving team morale.
• It prepares you for the future: Regulations are only getting tighter. Investors and lenders are increasingly looking at sustainability performance as a measure of risk. Getting ahead of this now builds a more resilient, future-proof business.

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The three scopes: Made simple

Once you have your total emissions (your tCO2e), they are organised into three categories, or 'Scopes'. It sounds technical, but the logic is simple.

Scope 1: The fuel you burn. These are the direct emissions from sources your company owns or controls.

• In simple terms: The gas for your office heating, the fuel in your company vehicles, or emissions from any manufacturing processes you run on-site.
• Why it matters: This is your most direct area of control and often the easiest place to start making savings.

Scope 2: The power you buy. These are indirect emissions from the electricity, heating, or cooling you purchase.

• In simple terms: The emissions produced by the power station that generates the electricity for your lights, computers, and machinery.
• Why it matters: While you don't generate the emissions yourself, your choice of supplier has a huge impact. Switching to a renewable energy tariff is a powerful, simple way to slash your Scope 2 footprint.

Scope 3: Everything else in your value chain. This is the big one. Scope 3 covers all other indirect emissions from activities linked to your business.

• In simple terms, it includes everything from the carbon footprint of the goods and services you buy to your employees' commutes, business travel, and how customers use your products.
• Why it matters: For most SMEs, Scope 3 is the largest source of emissions and the most complex to tackle. But don't let that put you off. It's also where the biggest opportunities for innovation and collaboration lie. You don’t have to tackle it all at once. Start with what's material and actionable for you, like waste management or choosing local suppliers.

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A final thought: What is carbon intensity?

You might also hear the term carbon intensity. In essence, it’s a measure of efficiency. It asks: how much carbon do you emit for every pound of revenue you generate (tCO_2e/text£revenue)?

Lowering your carbon intensity means you’re growing your business more efficiently, creating more value with less environmental impact. It’s the ultimate proof that you can do good and do well.

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Ready to find your starting point?

Understanding the language of carbon is the first step. The next is understanding where your business stands today.

Take our free 'Know Your Number' quiz to get a clear, personalised baseline for your sustainability journey. It’s quick, it’s simple, and it will give you the clarity you need to take meaningful action.

Take the free 'Know Your Number' quiz today 

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