Scope 1, 2 and 3: a complete guide to calculating greenhouse gas emissions for Italian companies

Scope 1, 2 and 3: a complete guide to calculating the environmental impact of Italian companies

28 ott 2026 · @Francesco

“How much CO₂ does your company emit? We need the figure for our Scope 3.” It is a question that many Italian companies, especially SMEs, hear more and more often: from large customers that have to report on their supply chain, from banks that factor ESG into credit assessments, from public tenders that reward applicants with figures ready. For anyone who has never tackled the topic in a structured way, the first reaction is often a mix of confusion and anxiety: what Scope 3 means, where to start, where to find the data, how much effort it takes to do it properly.

The good news is that behind the apparent complexity lies a clear, universally accepted framework. The GHG Protocol Corporate Standard defines the three categories of emissions (Scope 1, 2 and 3) and the calculation methods, and it underpins most of the tools you will come across (VSME, ESRS, the Italian Ministry of Economy and Finance document for the sustainability dialogue between SMEs and banks). Learn the logic of the three scopes once, and you have the framework to answer almost every ESG questionnaire that lands on your desk.

This guide is written for the finance manager, business owner or advisor who has to produce a company’s first emissions calculation: what each scope covers, how to calculate it in practice, where to find emission factors, which mistakes are most common, and how the numbers line up with regulatory frameworks.

The GHG Protocol Corporate Standard

The GHG Protocol Corporate Standard is the methodology document first published in 2001 and revised in 2004 by the World Resources Institute (WRI) together with the World Business Council for Sustainable Development (WBCSD). It is the international reference standard for corporate greenhouse gas accounting.

The VSME, in disclosure B3, asks companies to estimate their emissions taking into account the 2004 version of the GHG Protocol Corporate Standard. ISO 14064-1, the standard for quantifying and reporting an organisation’s emissions, is compatible with the GHG Protocol, although its 2018 version classifies emissions into six categories rather than three scopes. CBAM is the exception: it follows its own methodology, set by EU implementing regulations, and calculates the emissions embedded in individual imported products rather than those of a company.

The seven greenhouse gases covered

The GHG Protocol measures emissions of the seven greenhouse gases covered by the Kyoto Protocol and its amendments:

• carbon dioxide (CO₂);
• methane (CH₄);
• nitrous oxide (N₂O);
• hydrofluorocarbons (HFCs), typical of refrigeration systems;
• perfluorocarbons (PFCs), emitted by some industrial processes;
• sulphur hexafluoride (SF₆), used in electrical equipment;
• nitrogen trifluoride (NF₃), added to the scope in 2013.

All gases are converted into CO₂ equivalent (CO₂e) using the Global Warming Potentials (GWPs) published by the IPCC, so that gases with very different warming effects can be compared. According to the IPCC Sixth Assessment Report, one kg of fossil methane warms the climate as much as about 30 kg of CO₂ over a 100-year horizon. The value changes slightly from one IPCC edition to the next: the calculation must state the edition used, and the same edition must be applied to all gases.

The three scopes in a sentence

A company’s emissions fall into:

• Scope 1: direct emissions from sources the company owns or controls (boilers, vehicle fleet, industrial processes);
• Scope 2: indirect emissions from the generation of the electricity, heat, steam or cooling the company purchases and consumes;
• Scope 3: all other indirect emissions that occur in the company’s value chain, upstream and downstream.

Within a single company’s inventory, the three categories are mutually exclusive (no emission is counted twice) and collectively exhaustive (every emission attributable to the company falls into one of the three scopes).

Scope 1: direct emissions

Scope 1 covers greenhouse gas emissions from sources owned or controlled by the company. The most widely used boundary criterion is operational control: if the company decides how and when a source emits, those emissions are attributed to it.

What typically falls under Scope 1

• Stationary combustion: boilers, steam generators, industrial furnaces, generator sets. The fuel is almost always natural gas, sometimes diesel or LPG.
• Mobile combustion: the company fleet (cars, vans, heavy vehicles, diesel forklifts). The key figure is the litres of fuel consumed.
• Process emissions: typical of specific sectors. Cement releases CO₂ from limestone calcination; nitrogen fertiliser production releases N₂O from chemical processes; aluminium production releases PFCs during electrolysis.
• Fugitive emissions: refrigerant leaks from air conditioning systems and cold rooms. They are often overlooked because they are hard to see, but with many systems the contribution can be significant: one kg of R-410A refrigerant warms the climate as much as about 2,100 kg of CO₂, according to the values in the EU F-gas Regulation, which are based on the IPCC Fourth Assessment Report. Using Sixth Assessment Report values, the figure is higher.

How to calculate them in practice

For stationary and mobile combustion the formula is simple:

Scope 1 emissions = fuel consumption × emission factor

Emission factors for the most common fuels in Italy come from the Italian Ministry’s table of national standard parameters. For diesel, petrol and LPG the table gives tonnes of CO₂ per tonne of fuel; the per-litre values are converted using average densities. They should be checked every year against the latest edition:

• natural gas: about 2.02 kgCO₂ per Sm³ (standard cubic metre);
• diesel (heating and road transport): 3.17 tCO₂ per tonne, about 2.65 kgCO₂ per litre;
• petrol: 3.15 tCO₂ per tonne, about 2.35 kgCO₂ per litre;
• LPG: 3.03 tCO₂ per tonne, about 1.6 kgCO₂ per litre.

Use a single source for all fuels: mixing factors from different sources (or for different blends, with and without a biofuel component) makes the calculation inconsistent. These values cover CO₂ only; methane and nitrous oxide from combustion usually add a marginal share.

Example. A small manufacturing company has a boiler that burns 50,000 Sm³ of natural gas a year: its Scope 1 from stationary combustion is about 101 tCO₂ (50,000 × 2.02 / 1,000). If it also runs 5 vans that each cover an average of 25,000 km a year, using 8 litres of diesel per 100 km, its Scope 1 from mobile combustion is about 26.5 tCO₂ (5 × 25,000 × 0.08 × 2.65 / 1,000).

Where to find the data

Scope 1 consumption data sits in documents the company already has: gas bills, fuel receipts (or, better, the monthly fuel card report), maintenance contracts showing the quantities of refrigerant topped up, and declarations in the Italian F-gas Database. Process emissions require the plant’s technical documentation and production volumes.

Scope 2: indirect emissions from purchased energy

Scope 2 is the easiest part to calculate and the one where companies most often get it wrong, because there are two methods that produce different numbers, and the standards do not require them consistently.

It covers the emissions associated with generating the electricity, heat, steam or cooling that the company buys from third parties and consumes. The company does not emit directly, but its consumption causes emissions upstream, at the producer.

Location-based and market-based

The 2015 GHG Protocol Scope 2 Guidance introduced two parallel methods.

Location-based method: uses the average emission factor of the electricity grid where the energy is consumed. For Italy, ISPRA (the Italian Institute for Environmental Protection and Research) publishes emission factors for electricity generation and consumption every year. The factor for electricity consumption fell from 523 g CO₂/kWh in 1990 to about 193 g in 2024. In 2025, however, it rose back to about 200 g, according to preliminary estimates, because of lower hydroelectric output: it does not necessarily fall every year. This is the method that reflects the physics of the grid.

Market-based method: uses the factor tied to the company’s supply contracts. With a renewable energy contract backed by Guarantees of Origin, the market-based factor is zero or close to it. With a standard contract, you use the specific factor provided by the supplier, if available; otherwise the national residual mix, which is higher than the location-based factor because it excludes renewable energy already claimed by others. For 2025 ISPRA estimates it at about 391 g CO₂/kWh. Many companies use the European residual mix published by the AIB (Association of Issuing Bodies) instead, which gives different values from ISPRA’s. Either way, the source used must be stated.

The GHG Protocol is revising its Scope 2 rules, particularly for the market-based method: the final version is not expected before 2027. Until then, the 2015 rules apply.

What the standards require

• VSME B3: requires location-based Scope 2; market-based is optional but recommended.
• ESRS E1 (CSRD): requires both methods, side by side.
• CDP Climate Change: requires both.
• MEF document for the SME–bank dialogue: asks for Scope 1 and Scope 2 emissions and, for Scope 2, suggests a national factor, i.e. the location-based method.

Good practice is to calculate both. Location-based is always needed; market-based shows the value of renewable contracts in discussions with banks and customers.

Example

An SME consumes 200,000 kWh of electricity a year (ISPRA 2025 factors, preliminary estimates: update with the latest edition):

• Scope 2 location-based: 200,000 × 0.201 / 1,000 = about 40 tCO₂e;
• Scope 2 market-based, standard contract with residual mix: 200,000 × 0.391 / 1,000 = about 78 tCO₂;
• Scope 2 market-based, renewable contract with Guarantees of Origin: about 0 tCO₂e.

The gap is wide. For an SME considering a renewable supply contract, this calculation is a concrete negotiating argument.

Scope 3: the fifteen value chain categories

Scope 3 is the broadest and most complex category, and the one Italian companies know least. The GHG Protocol Corporate Value Chain (Scope 3) Standard, published in 2011, divides it into 15 categories: 8 upstream and 7 downstream.

The 15 categories

Upstream (categories 1–8):

1. purchased goods and services;
2. capital goods (machinery, buildings);
3. fuel- and energy-related activities not included in Scope 1 or 2;
4. upstream transportation and distribution;
5. waste generated in operations;
6. business travel;
7. employee commuting;
8. upstream leased assets.

Downstream (categories 9–15):

1. downstream transportation and distribution;
2. processing of sold products;
3. use of sold products;
4. end-of-life treatment of sold products;
5. downstream leased assets;
6. franchises;
7. investments.

Which categories really matter

For most Italian companies (especially SMEs), only a few categories carry weight. The most common are 1 (purchases), 4 (upstream transport), 6 and 7 (business travel and commuting). For companies selling products that consume energy in use, category 11 can become the largest. For a service company, categories 1 and 7 often cover most of the total.

The principle is relevance: you calculate the significant categories and declare the marginal ones excluded, with a justification. Attempting a full calculation of all 15 categories, when some account for fractions of a percentage point, is wasted time.

When Scope 3 is required

• VSME Basic Module (B3): Scope 3 is not required. If the company reports it, it must be presented together with the Scope 1 and 2 data.
• VSME Comprehensive Module (C3): if the company has set reduction targets, it discloses them in absolute terms for Scope 1 and 2; if it has also set Scope 3 targets, it discloses them for the significant categories. Calculating Scope 3 remains optional.
• ESRS E1 (CSRD): significant categories are mandatory. The ESRS have been simplified and streamlined following the Omnibus.
• CDP Climate Change: asks for all 15 categories, with an indication of relevance.

The limit on what large customers can ask for

Directive (EU) 2026/470 (Omnibus I) narrowed the CSRD to companies with more than 1,000 employees and more than €450 million in net turnover. It also introduced the value chain cap: companies subject to the CSRD cannot require suppliers with up to 1,000 employees to provide information beyond the European voluntary standard, adopted by the Commission on 3 July 2026 on the basis of the VSME. If they ask for more, they must state which information exceeds the limit and that the supplier is entitled to refuse it. In practice, the VSME becomes both the format for answering customer questionnaires and the boundary beyond which you are not obliged to go. Having a VSME report ready, with solid Scope 1 and 2 figures, is the most efficient move. For many SMEs outside the CSRD, a full Scope 3 calculation is not a priority today. It becomes useful when the company decides to set structured reduction targets (for example Science Based Targets), when most of its emissions lie in the supply chain, or when it wants to use the figure as a commercial lever with customers who value it.

Where to find the right emission factors

Having the consumption data is half the job; the other half is applying the right factor. The most reliable sources for Italy and internationally:

• ISPRA (Italian Institute for Environmental Protection and Research) publishes emission factors for electricity generation and consumption in Italy every year, at national and regional level. It is the reference for Italian location-based Scope 2.
• MASE and ISPRA (MASE is the Italian Ministry of the Environment and Energy Security) publish the table of national standard parameters for fuels every year, the most consistent reference for Scope 1 in Italy.
• DEFRA (the UK Department for Environment, Food and Rural Affairs) publishes a very broad set of factors every year for fuels, energy, transport and materials, also used outside the UK when local data is missing.
• Ecoinvent is the reference database for detailed LCA analysis, useful above all for Scope 3 category 1 (purchases). It is a paid service.
• IEA (International Energy Agency) publishes electricity generation factors for major countries, useful for suppliers or sites abroad.

Factors must be updated every year. The correct rule is to use the most recent factor available at the time of reporting and to state the source and edition.

The five most common calculation mistakes

A first emissions calculation almost always contains at least one of these mistakes. Recognising them in advance is the simplest way to avoid them.

1. Confusing location-based and market-based

The typical case: the company calculates Scope 2 with the ISPRA average factor and reports it as “market-based” because it has a renewable contract. The number may be right, but the declared method is wrong. In an ESG questionnaire or an audit, this confusion can come to light, and it undermines the credibility of the whole figure.

2. Estimating Scope 3 without a method

Under pressure from a customer, the company enters an arbitrary number so as not to leave the cell empty. A made-up Scope 3 estimate can be several times off the real value. Better to state “not yet calculated, in progress” with a timeline than to invent a figure.

3. Double counting between Scope 1 and Scope 2

Typical cases: an electric boiler whose consumption is counted both as electricity (Scope 2) and as combustion (Scope 1, where there is in fact no combustion); a company-owned cogeneration unit whose gas is counted in Scope 1 and whose self-generated electricity is counted again in Scope 2. The boundary is clear: Scope 1 is combustion in plants the company controls, Scope 2 is energy purchased from third parties.

4. Ignoring refrigerant leaks

A few kg of gas seem irrelevant. But many common HFCs, such as R-134a, R-410A and R-404A, have GWPs of roughly 1,400 to 4,000 according to the values in the F-gas Regulation. In companies with cold rooms or large air conditioning systems, fugitive leaks can weigh significantly on Scope 1. Top-up data is already in the equipment logs and in the Italian F-gas Database.

5. Not documenting sources

Every number should have its source document: gas bill, fuel card report, the maintenance contractor’s invoice showing the kg of refrigerant topped up, emission factor with source and edition. Without documentation the calculation cannot be verified and, if a customer or bank asks for clarification, it becomes hard to defend.

Frequently asked questions

Do I have to calculate Scope 3 even if I am a small SME?

Almost never as an obligation. The VSME Basic Module, the reference standard for companies outside the CSRD, does not require it. Under the value chain cap, for financial years starting from 2027, if you have up to 1,000 employees you can refuse requests that customers make for their CSRD reporting when they go beyond the voluntary standard. Scope 3 becomes useful if you decide to set structured reduction targets, if most of your emissions lie in the supply chain or in the use of your products, or if you want to use it as a commercial lever.

What is the difference between location-based and market-based?

Location-based uses the average factor of the electricity grid where you consume. Market-based uses the factor tied to your supply contracts. With a renewable contract backed by Guarantees of Origin, market-based is close to zero, while location-based remains the Italian average factor. The VSME requires location-based; the ESRS require both.

Can I use an emission factor from a few years ago?

Always use the most recent factor available when you do the calculation, and state the source and edition. ISPRA publishes its estimates for the year just ended in spring, then consolidates them. An outdated factor can skew the figure in either direction: over the long term the electricity mix improves, but in some years power sector emissions rise again.

Is the calculation based on turnover or on consumption?

On physical consumption: kWh of electricity, Sm³ of gas, litres of fuel, kg of refrigerant topped up. Turnover is used instead to calculate carbon intensity (emissions per euro of turnover), an efficiency indicator that helps compare companies of different sizes but does not replace the absolute figure.

What is carbon intensity?

It is the ratio between total emissions and a denominator: usually turnover, or alternatively production volume or floor area. It is used to compare companies of different sizes and to track efficiency gains over time: absolute emissions can grow while intensity falls. Banks and investors use it widely, but the main standards also require the absolute figure.

Can I offset my emissions with carbon credits?

Not in the total. The GHG Protocol and almost all standards require gross emissions to be reported separately from any offsets. The VSME specifies that removals and offsetting programmes outside the value chain must not be counted in the emissions calculation or in gross reduction targets.

What do I write if I have not yet calculated Scope 3?

“Scope 3 not yet calculated, in progress”, with the categories you consider significant and a realistic timeline. That is better than an invented number or an empty cell. A reasonable sequence: year 1, Scope 1 and 2; year 2, Scope 3 categories 1, 6 and 7, the easiest to source; year 3, Scope 3 extended to the other significant categories.

Conclusion: carbon accounting as an investment

The first emissions calculation comes with a learning cost; the second, if the first was done well, costs much less. From the third year, data collection runs smoothly and the calculation takes a few hours. The most common strategic mistake is treating the calculation as a one-off task, done under pressure for a specific request and then filed away. The most effective practice is the opposite: use the first calculation to build an internal system in which every item has a consumption figure, a source document and an emission factor with its source, and update it every year alongside the financial statements. At that point, answering an ESG questionnaire, bidding for a tender with environmental criteria or explaining an improved ESG profile to the bank becomes quick and predictable.

Scope 1, 2 and 3 data is not just a compliance exercise: it is an operational snapshot of the company from an angle many companies have never considered. Understanding where emissions really come from, in what proportion and why, is almost always the first step towards measures that cut costs even before they cut emissions: more efficient boilers, cost-effective renewable contracts, optimised fleets, fewer refrigerant leaks.

This article is for information purposes only and does not constitute technical or environmental advice. The emission factors shown are indicative and should be checked against official sources updated to the reporting period. For a formal calculation of their emissions, companies should rely on a qualified professional.