Scope 1, 2 and 3 emissions
Classification of greenhouse gas emissions by direct, energy-related or indirect value-chain origin.
The scope classification, from the GHG Protocol, splits an organization's greenhouse gas emissions into three categories. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from purchased energy. Scope 3 covers all other indirect value-chain emissions, upstream and downstream, and is generally the largest and hardest to measure. For an insurer, scope 3 includes emissions financed by its investments and, more controversially, emissions associated with underwritten risks. This perimeter is where most of a financial actor's real footprint lies, and it is also where data is most uncertain, leaving net zero commitments vulnerable to greenwashing criticism when they exclude scope 3.
Hypothetical case: an insurer emits 20,000 tonnes of CO2 in scope 1 and 2, for its offices, fleet and servers, but its investment portfolio carries 6 million tonnes of financed emissions, three hundred times more. It is this scope 3 that shapes its climate profile, not its own consumption.
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