Understanding Your Business’s Carbon Footprint through Emissions Reporting
With mandatory climate disclosures now in effect under the Australian Sustainability Reporting Standards (ASRS), businesses must understand and accurately report their greenhouse gas (GHG) emissions. But what exactly are Scope 1, Scope 2, and Scope 3 emissions, and why do they matter for your business?
If your company is involved in energy procurement, your emissions profile is directly impacted by the electricity and natural gas contracts you sign. Choosing the right energy supplier and contract terms can help reduce your emissions and ensure compliance with sustainability reporting requirements.
Scope 1, Scope 2 & Scope 3: Breaking It Down
Scope 1: Direct Emissions
Scope 1 emissions are direct GHG emissions from sources that your company owns or controls. This includes emissions from:
- On-site fuel combustion (e.g., natural gas used in boilers or generators).
- Company-owned vehicles.
- Industrial processes that release emissions.
For businesses with high energy consumption, on-site generation and fuel use are the primary contributors to Scope 1 emissions.
Scope 2: Indirect Emissions from Purchased Energy
Scope 2 emissions come from the generation of electricity, steam, heating, or cooling that your business purchases from an external provider. These emissions occur at the power plant supplying your business, but they are accounted for in your company’s carbon footprint.
The Importance of Scope 2 Emissions in Energy Procurement
- Businesses can reduce Scope 2 emissions by sourcing electricity from retailers that offer renewable energy options, Power Purchase Agreements (PPAs), or GreenPower-certified contracts.
- Retailers with detailed GHG reporting capabilities can help businesses accurately track and report their Scope 2 emissions.
- Choosing the right electricity and gas contracts can improve corporate sustainability metrics and regulatory compliance under the ASRS.
Scope 3: Indirect Value Chain Emissions
Scope 3 emissions are all other indirect emissions from sources not owned or directly controlled by your business but linked to your operations. These include:
- Emissions from your supply chain (e.g., production and transport of goods).
- Employee commuting and business travel.
- Waste disposal.
- The energy used by customers when they use your products.
Scope 3 emissions often represent the largest share of a company’s total carbon footprint, but they can be difficult to measure. Businesses must collaborate with suppliers and partners to improve transparency and emissions tracking.
Why Accurate Emissions Reporting Matters for Businesses?
1. Regulatory Compliance – Large Australian businesses must comply with ASRS, requiring them to disclose climate-related risks and emissions.
2. Investor and Customer Expectations – Stakeholders demand greater transparency and sustainability commitments.
3. Competitive Advantage – Businesses that proactively manage and reduce emissions will be better positioned for future energy market changes.
4. Energy Cost Savings – Improving energy efficiency and sourcing lower-emission energy can reduce operational costs.
How Leading Edge Energy Can Help
At Leading Edge Energy, we specialize in helping commercial and industrial energy users navigate the complexities of energy procurement and emissions reduction. Our services include:
- Comparing energy retailers to find the best contracts for a low-carbon energy supply.
- Advising on renewable energy options, such as PPAs and GreenPower.
- Providing expert guidance on emissions reporting and regulatory compliance.
- Conducting energy audits to identify cost-saving and sustainability opportunities.
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