Article
How to calculate Scope 1 and 2 carbon emissions: a technical guide for companies
Scope 1 and Scope 2 are the parts of the carbon footprint that every company can and should calculate. They do not involve the methodological complexity of Scope 3, the data is reasonably available, and the calculation can be defended from the first reporting year. This guide explains how to do it properly, which expensive mistakes to avoid and how to build a system the auditor can understand without difficulty.
Key points Scope 1 covers direct emissions: combustion at owned facilities, vehicle fleets, refrigerant gas leaks and industrial processes. Scope 2 covers indirect emissions associated with purchased energy: primarily electricity, but also steam and heat. The reference methodology is the GHG Protocol Corporate Standard, adopted by CSRD/ESRS E1, SBTi, CDP and most banking questionnaires. Scope 2 allows two calculation approaches: location-based (the country's average electricity mix) and market-based (the actual contract's factor, including PPAs and green certificates). ESRS requires both to be reported. The most expensive mistake is not the calculation: it is traceability. A correct figure without documentation will not pass a limited assurance engagement.
Table of contents
- What Scope 1 covers and what it does not
- What Scope 2 covers: location-based vs market-based
- Data required and where to find it
- Step-by-step calculation
- Common mistakes and how to avoid them
- How Voombu fits into this process
- Connecting the calculation to a transition plan
- Frequently asked questions
1. What Scope 1 covers and what it does not
The GHG Protocol defines Scope 1 as direct greenhouse gas emissions from sources owned or controlled by the company. Typical categories are:
Stationary combustion. Boilers, furnaces and generators. Typical fuels: natural gas, diesel, propane and biomass (specific rules apply to biomass).
Mobile combustion. Vehicles owned by the company or leased on a long-term basis: passenger cars, vans, lorries, forklift trucks and machinery. Fuel: petrol, diesel, LPG, CNG, electricity (the last of these is accounted for in Scope 2, not here).
Industrial processes. Chemical reactions that emit GHGs (production of cement, steel and ammonia). This applies only to specific sectors.
Fugitive emissions. Refrigerant gas leaks from air-conditioning and industrial refrigeration equipment (HFCs, HCFCs). This is the most underestimated category in office-based and retail businesses. Annual top-ups reported by the maintenance provider are the data source.
What does not belong in Scope 1: electricity consumption (Scope 2), journeys on public transport or by air (Scope 3), fleets outsourced under a service arrangement (Scope 3, not Scope 1), and emissions from suppliers and the value chain (Scope 3).
The operational criterion is ownership or control. If the company decides when the machine starts, it falls under Scope 1. If it pays for a service and someone else decides how and when it is delivered, it falls under Scope 3.
2. What Scope 2 covers: location-based vs market-based
Scope 2 covers indirect emissions arising from the company's consumption of purchased energy: primarily electricity, and in some cases also steam, heat or cooling supplied by an external network.
In 2015, the GHG Protocol introduced a dual calculation approach for Scope 2, and CSRD/ESRS E1 requires both to be reported. The difference matters because the approaches produce different figures and reflect different realities.
Location-based This applies the average emission factor for the electricity mix of the country or region where the energy is consumed. It reflects the electricity system's average footprint, regardless of the customer's contract. It is the figure that best reflects the system's physical reality.
Market-based This applies the emission factor specific to the electricity contract: supplier, PPA, green certificate or contractual instrument. It reflects the customer's purchasing decision. A company with a renewable PPA has a low or zero market-based factor, even though it physically draws electricity from the same cable as its neighbours.
Both approaches are legitimate. The location-based figure measures the physical impact; the market-based figure measures the contractual decision. CSRD requires both to be published for a sensible reason: to prevent the greenwashing that occurs when a company reports only market-based emissions using low-quality certificates. Banks and scoring questionnaires also examine both.
3. Data required and where to find it
For Scope 1 Litres of fuel consumed by type (heating diesel C, agricultural diesel B, petrol, automotive diesel, LPG, natural gas). Source: fuel invoices, fleet management systems and gas meter readings. Kilometres travelled by company-owned vehicles where direct fuel data is unavailable (the second-best option). Source: fleet management systems, trip sheets and logbooks. Refrigerant gas top-ups by type (R410A, R134a, R32, R407C…). Source: annual reports from the air-conditioning and refrigeration maintenance provider. For industrial processes: physical production by type (tonnes of cement, clinker or steel). This applies only to affected sectors. For Scope 2 Annual electricity consumption per supply point, in kWh. Source: electricity invoices, company meters and the electricity supplier's platform. Applicable electricity contract: supplier, renewable guarantee of origin, PPA, green certificates. Source: signed contracts and certificates issued by the CNMC. Consumption of steam, heat or cooling purchased from an external network (district heating/cooling), in thermal kWh or MWh. Source: invoices and contracts. Emission factors The reference methodology for Spain combines national and European factors:
Fuels: the MITECO (Ministerio para la Transición Ecológica) factor or, failing that, factors from the GHG Protocol and IEA. Location-based electricity mix: the CNMC and Red Eléctrica factor for Spain; the corresponding national mix for other countries. Market-based mix: the supplier's factor, certified by the CNMC. For renewable PPAs, a zero or equivalent factor. Refrigerant gases: GWP (Global Warming Potential) from the latest IPCC report. The platform or spreadsheet must record which factor was applied to each figure and which year it relates to. Factors are updated annually, and the auditor will ask about this.
4. Step-by-step calculation
Step 1: define the consolidation boundary Before calculating, decide which companies, sites and operating units are included. The GHG Protocol offers two criteria: financial control (the company controls operational decisions) or operational control (the company makes day-to-day decisions). For most companies, operational control is the most practical option and the one that best fits the logic of the ESRS.
The ESG boundary must be reconcilable with the financial boundary. Where there are differences (joint ventures, subsidiaries with minority ownership interests, leased facilities), they should be documented from day one.
Step 2: collect activity data For each category, add up the annual physical data (litres, kWh, kg). Validate it against financial accounting (reported litres must match invoiced litres). Cross-validation with finance is what gives the calculation credibility.
Step 3: apply the emission factor Each activity data point is multiplied by its emission factor, normally expressed in kg CO₂e per physical unit (kg CO₂e/litre, kg CO₂e/kWh). The result is kg of CO₂ equivalent. The categories are added together to obtain the total for each scope.
Step 4: document methodology and sources Every figure must remain traceable: source data, factor applied, factor year, responsible person and calculation date. Without traceability, an audit is impossible. This is the operational difference between an amateur spreadsheet and a professional system.
Step 5: internal validation and reconciliation Cross-check against finance, compare with the previous year and analyse significant variations. Any variation of more than 10-15 % from the previous reporting year must have a documented explanation: a boundary change, a change in activity, a factor change or a corrected error. Without that explanation, the auditor will request clarification.
Step 6: reporting and publication Include the figures in the management report under ESRS E1 if the company is subject to CSRD. For companies outside its scope, include them in the VSME report or voluntary sustainability report, explicitly stating the methodology.
5. Common mistakes and how to avoid them
Forgetting refrigerant gas leaks. This is the most underestimated category and, in office-based and retail businesses, can outweigh all mobile combustion. Ask the maintenance provider for the annual top-up report. Mixing location-based and market-based emissions in the same figure. These are two different approaches. Both must be reported separately. Applying outdated factors. They change every year. A serious platform updates them centrally; a spreadsheet depends on someone remembering. Double counting between Scope 1 and Scope 2. Electricity belongs in Scope 2, not Scope 1, even when consumed in an electric boiler. Fuel belongs in Scope 1, not Scope 2, even when purchased from a supplier. Reporting only market-based emissions with a cheap green certificate. Limited assurance will challenge this practice. The location-based figure reveals the physical reality and must always accompany it. Failing to reconcile with finance. Reported litres must match invoiced litres; reported kWh must match electricity billing. Without that reconciliation, the report is vulnerable to any audit.
6. How Voombu fits into this process
Voombu is an artificial intelligence-powered ESG management system. Its carbon footprint module covers all three scopes in an integrated way: Scope 1, Scope 2 (with both location-based and market-based approaches) and Scope 3 (with spend-based and activity-based methodologies running in parallel).
For Scope 1 and 2, it provides:
Connection to primary data. Upload fuel invoices, electricity meter readings and air-conditioning maintenance reports. This reduces manual entry and the associated errors.
A maintained factor database. MITECO, IEA, IPCC and sector databases updated centrally. The company does not depend on an Excel tab that someone has to refresh.
Native dual location/market calculation. Both figures are maintained in parallel, with traceability for the electricity contract and guarantees of origin supporting the market-based approach.
Audit trail by design. Every figure has source data, an applied factor, a date and an owner. The auditor accesses the file without having to reconstruct anything.
Integration with risk and the ESG Score. The footprint feeds the risk management module under COSO ERM, the dynamic ESG Score (Environmental 40 %, Social 35 %, Governance 25 %) and the executive dashboard. One source, multiple views.
For specialist consultancies serving multiple customers, the multi-licence model (MLC) allows several companies to be managed through shared infrastructure.
7. Connecting the calculation to a transition plan
Calculating the footprint does not create value on its own. Value begins when the figure becomes a reduction plan and an investment decision. ESRS E1 formally requires publication of a transition plan aligned with limiting warming to 1.5 °C when climate change is material. For companies not subject to the requirement, it remains recommended practice.
The usual levers for reducing Scope 1 and 2 are well known: Electrifying heating and air conditioning (replacing gas boilers with heat pumps). Electrifying the fleet or converting it to low-carbon fuels. Improving energy efficiency in building envelopes, lighting and processes. A verified electricity contract (a renewable PPA or audited guarantees of origin). Replacing high-GWP refrigerant gases with lower-impact alternatives (R32, R290, CO₂). Each lever has an associated investment curve and return. Companies that link their footprint calculation to their CapEx plan reach a scenario with a cost per tonne avoided and can prioritise investments according to economic efficiency. Those that do not end up making decisions based on intuition or external pressure.
8. Frequently asked questions
How long does calculating Scope 1 and 2 for the first time take? For a mid-market company operating in one or two countries, between six and ten weeks from the project's start. The critical factor is access to electricity and fuel invoices, not the complexity of the calculation.
Do I need an external consultancy? For the first reporting year, targeted consultancy support helps establish the boundary and factors correctly. From the second year onwards, the sensible approach is to operate your own platform and reserve consultancy support for specific cases (auditing, retrospective recalculation, expansion into new countries).
Can I declare zero emissions because I use 100 % renewable electricity? In the market-based calculation, yes, if the contract and certificates are properly substantiated. In the location-based calculation, no: the figure reflects the physical reality of the national electricity system. That is why CSRD requires both to be reported. Declaring only market-based emissions as zero while concealing location-based emissions is a red flag in any serious verification.
Do refrigerant leaks really have such a large impact? More than you might expect. One kilogram of R410A released is equivalent to approximately 2,088 kg of CO₂. In an office-based or retail company with several air-conditioning installations, annual top-ups can represent between 20 and 40 % of its total footprint. Ask your maintenance provider for this information.
How do I treat leased facilities? It depends on the consolidation criterion. Under operational control, facilities operated by the company (where it decides consumption and contracts energy) fall within Scope 1 and 2, even if the building is leased. Under financial control, it depends on who consolidates the activity. The important thing is to be consistent and document the approach.
What about an outsourced fleet? It does not fall within Scope 1. It falls within Scope 3 as upstream or downstream transportation and distribution, depending on the case. A company that outsources its fleet reduces Scope 1 at the expense of increasing Scope 3.
Is publishing the footprint mandatory? For companies subject to CSRD for which E1 is material, yes. For SMEs outside its scope, direct regulation does not require it, but large customers and banks are requesting it. The usual practice is to publish it in the voluntary sustainability report or in a dedicated section of the corporate website, with the methodology explicitly stated.
Next steps Scope 1 and 2 are the foundation. The sensible position for any Spanish company in 2026 is to have calculated them using a defensible methodology, complete traceability and reconciliation with finance. Voombu supports mid-market companies and specialist consultancies in building that system. A 30-minute demo is usually enough to identify the starting point and outline a realistic three-to-six-month plan.