Emissions 101: What businesses actually mean when they talk about carbon

“Carbon emissions”, “emissions footprint”, “Scope 1, 2 and 3 emissions” and “net zero” are now part of everyday business language. Yet for many organisations, these terms remain poorly understood, which can lead to confusion, disengagement or poor decisions. 

At its most basic level, emissions refer to greenhouse gases (GHGs) released into the atmosphere as a result of human activity. For businesses, this includes emissions from fuel use, electricity consumption, industrial processes, transport, and supply chains. Carbon dioxide (CO2) is the most commonly discussed gas, but methane, nitrous oxide and other gases also contribute to climate change. 

Emissions are often reported in tonnes of carbon dioxide equivalent (tCO2e). This is a way of expressing the climate impact of all greenhouse gases together, not just carbon dioxide. Other gases such as methane and nitrous oxide trap more heat than CO₂, so their emissions are converted into an equivalent amount of CO₂ based on how strongly they affect the climate. tCO₂ (tonnes of carbon dioxide) refers only to the amount of carbon dioxide released and is a direct measure of one specific gas. So it is really important to notice the difference signified by the little “e” in the emissions units. 

To bring consistency to how emissions are measured and reported, most organisations use the framework developed by the GHG Protocol. This groups emissions into three categories known as Scopes. 

Scope 1 emissions are direct emissions from sources a company owns or controls, such as fuel burned in company vehicles, generators, or on-site equipment. 

Scope 2 emissions are indirect emissions from purchased energy, typically electricity, steam or heat. 

Scope 3 emissions cover all other indirect emissions across a company’s value chain, including purchased goods, transport, business travel, use of sold products and end-of-life treatment. 

While Scope 3 emissions are often the largest share of a company’s footprint, they are also the least well understood. This has led to a misconception that they can be ignored or are too difficult to quantify. In reality, most regulators, investors and customers increasingly expect organisations to demonstrate at least a basic understanding of their value-chain emissions. 

A carbon footprint is a way of quantifying total greenhouse gas emissions associated with an organisation, activity, product or project over a defined period. It aggregates emissions from multiple sources into a single, comparable metric, usually expressed as tonnes of carbon dioxide equivalent (tCO₂e). In practice, a company’s

carbon footprint is the sum of its Scope 1, Scope 2 and relevant Scope 3 emissions.

It provides a baseline that allows organisations to: 

• understand where emissions are coming from 

• compare activities or scenarios 

• track changes over time 

• assess exposure to regulatory, financial or reputational risk 

Net zero refers to a state where the greenhouse gas emissions caused by an organisation are balanced by the removal of an equivalent amount of greenhouse gases from the atmosphere over a defined period. 

In practical terms, net zero does not mean that a business produces no emissions at all. Instead, it means that: 

• emissions are measured comprehensively across Scopes 1, 2 and, where relevant, 3 

• emissions are reduced as far as reasonably possible through operational and value-chain changes 

• any remaining, hard-to-eliminate emissions are neutralised through removals, such as permanent carbon removal projects 

This distinction matters. Credible net zero strategies prioritise actual emissions reductions first, with removals used only for residual emissions. Heavy reliance on offsets without a clear reduction pathway is widely viewed as higher risk, less robust and opens companies to greenwashing accusations, particularly where the carbon offsets used are low quality. 

Net zero targets are typically set for a specific year, often 2050 or earlier, and are expected to be supported by interim targets, governance arrangements and transparent assumptions. For many organisations, net zero is therefore not a single commitment, but a long-term transition plan that evolves over time. 

Importantly, emissions reporting is not just for heavy industry. Every organisation has a carbon footprint, whether it operates an office, manages assets, runs projects or purchases goods and services. Establishing a simple, transparent baseline is often the most effective first step, both for understanding emissions today and for assessing what net zero could realistically mean in practice.