Glossary entry

Scope 1, 2 and 3 Emissions

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Definitions

Option 1

Scope 1, 2 and 3 Emissions means the three classifications of emissions in the GHG Protocol.

Option 2

Scope 1 Emissions means the direct Greenhouse Gas Emissions from sources directly owned or controlled by the [Company][, including on site fuel combustion and emissions from chemical production in owned or controlled process equipment, refrigerant losses and company vehicles.]

Scope 2 Emissions means the indirect Greenhouse Gas Emissions associated with the generation of electricity[, steam, heat and cooling] purchased or acquired by the Supplier.

Scope 3 Emissions means all indirect Greenhouse Gas Emissions from sources which are not directly owned or controlled by the [Company], excluding Scope 2 Emissions, which occur both upstream and downstream in the [Company]’s supply or value chain [related to the [Product/Services]][, including business travel, procurement, waste and water].

Related Term (Total Emissions)

Total Emissions means the sum of the [Company]’s Scope 1, 2 and 3 Emissions, in each case arising out of the performance of its obligations under this [agreement], in a given [emissions reporting period].

Drafting notes

Drafters using Option 2 may include company-specific examples.

The GHG Protocol constitutes a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It is recognised by the UK government as an independent standard for reporting Greenhouse Gases.

In order to calculate the Carbon Footprint of an organisation or project, the GHG Protocol requires that the 3 types of emissions be accounted for separately. 

The GHG Protocol can be used by a variety of organisations for developing a GHG inventory and reporting on GHG emissions including companies, NGOs, government agencies, and universities.

Application

Supply chain clauses, national climate laws, other agreements or documents that require the measurement and accounting of GHG Emissions.

Scope 1,2 and 3 Emissions is used in the following TCLP clauses:

[Alexandro’s Clause] Net Zero Sponsor Activation Clause; 

[Annie’s Clause] Green Termination Provision (Short Form); 

[Callum & Theo’s Clause] Climate Standard Transaction Terms; 

[Emma’s Clause] Green Residential Lease Clauses; 

[Gordon’s DDQ] Capital Markets ESG Due Diligence Questionnaire; 

[Jessica’s Clause] Carbon Contract Clauses for Environmental Performance, and Associated Incentives and Remedies; 

[Luna’s Clause] Net Zero Aligned Construction Modifications; 

[Maria’s Scorecard] Supply Chain Emissions Scorecard; 

[Ming’s Clause] Target Product Carbon Footprint (Schedule for Consumer Goods Contracts); 

[Scarlett’s Performance Conditions] Environmental, Social and Governance (ESG) Based Performance Conditions for Employee Incentive Awards; and 

[Teddy’s Clause] Supplier Environmental Threshold Obligations.