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

Canonical: https://senseible.earth/climate-intelligence/scope-1-2-3-emissions-simple-guide-small-business

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](https://senseible.earth/climate-intelligence/brsr-reporting-requirements-india) requires Scope 1 and 2; Scope 3 is expanding
- [CBAM](https://senseible.earth/climate-intelligence/cbam-compliance-indian-exporters) focuses on embedded emissions (often Scope 1 from suppliers)
- [Green loans](https://senseible.earth/climate-finance) prioritize businesses tracking all three scopes

Senseible automatically categorizes your emissions by scope when you [upload documents](https://senseible.earth/). Start with your electricity bill: that's your Scope 2 baseline.

## Related guides

- [How do we maintain historical carbon data when methodologies change?](https://senseible.earth/climate-intelligence/maintain-historical-carbon-data-methodology-changes)
- [What are the different types of carbon credits in voluntary markets?](https://senseible.earth/climate-intelligence/carbon-credit-types-voluntary-markets)
- [How do we select the right emission factors for our calculations?](https://senseible.earth/climate-intelligence/emission-factors-selection-guidance)