Scope 1 vs Scope 2 vs Scope 3: A Simple Guide for Small Businesses

Published 2025-01-15.

Every carbon footprint calculation starts with understanding the three scopes. Here's what they mean for your small business.

Scope 1: Direct Emissions

Emissions from sources you own or control.

Fuel burned in your generators, vehicles, boilers
Refrigerant leaks from your AC units
Process emissions from manufacturing

Scope 2: Indirect Energy Emissions

Emissions from purchased electricity, heat, or steam.

Your electricity bill represents Scope 2
Grid emission factors vary by country and region (in India, use the CEA's published grid factor)
Renewable energy purchases can reduce Scope 2

Scope 3: Value Chain Emissions

Everything else, often the largest category.

Raw materials you purchase
Transportation of goods
Employee commuting
Product use by customers
Waste disposal

Why It Matters for MSMEs:

BRSR reporting requires Scope 1 and 2; Scope 3 is expanding
CBAM focuses on embedded emissions (often Scope 1 from suppliers)
Green loans prioritize businesses tracking all three scopes

Senseible automatically categorizes your emissions by scope when you upload documents. Start with your electricity bill: that's your Scope 2 baseline.