Scope 1 emissions are direct greenhouse gas emissions from sources a company owns or controls: fuel burned in boilers, furnaces, ovens and kilns; process emissions from chemical reactions; company-owned vehicles; and refrigerant losses. Scope 2 emissions are the indirect emissions generated when someone else produces the electricity, steam, heat or cooling that the company purchases and consumes.
Why It Matters for Manufacturers
Scope 1 and 2 are where the factory shows up in the inventory, and where most industrial emissions are actually measurable.
The difficulty is not the calculation. It is that the inputs sit in meter reads, utility invoices, fuel deliveries, refrigerant service logs and process records spread across plants that run different systems in different countries, often on different fiscal calendars.
Scope 2 is really two numbers, not one. The location-based figure uses average grid intensity for the region. The market-based figure reflects what the company actually contracted for, which means power purchase agreements, energy attribute certificates and supplier-specific factors have to be traceable to documents, not to a spreadsheet assertion.
The organizational boundary decision comes first and shapes everything after it. The GHG Protocol Corporate Standard offers three approaches — equity share, financial control and operational control — and the one a company picks determines which joint ventures, leased sites and partly owned plants land inside the inventory. For manufacturers with contract sites and JVs, this single choice can move the total materially. The reporting regimes narrow the menu. The revised ESRS, once in force, take financial control as the starting point and direct companies to an operational control basis in defined circumstances, without offering equity share at all.
Scope 1 and 2 are also the first emissions to face outside scrutiny. Every regime that phases in assurance starts here, so these numbers need an evidence trail before Scope 3 gets attention.
U.S. and EU Applicability
Scope 1 and 2 are required everywhere emissions are disclosed. ESRS E1 requires gross Scope 1 and 2, with the share of Scope 1 covered by the EU Emissions Trading System and with Scope 2 reported on both a location-based and a market-based basis. IFRS S2 requires all three scopes measured in accordance with the GHG Protocol Corporate Standard, except where a jurisdiction or an exchange requires a different method. California’s SB 253 begins with Scope 1 and 2, with Scope 3 following later.
California’s regime also sits under an unresolved constitutional challenge. In Chamber of Commerce v. California Air Resources Board, the Ninth Circuit heard oral argument on Jan. 9, 2026 and has not issued a decision. California SB 253 remains in effect and enforceable — the court declined to enjoin it — but a ruling could disturb these requirements at short notice. The companion law SB 261 is separately enjoined pending appeal and CARB has said it will not enforce it in the meantime.
A single GHG Protocol-aligned Scope 1 and 2 inventory can feed all three regimes, which is why the boundary and methodology work is worth doing once and doing carefully.
Current Status
Last updated: Aug. 31, 2026
- CARB has proposed moving the first SB 253 reporting deadline for Scope 1 and 2 emissions from Aug. 10 to Nov. 10, 2026, and making Nov. 10 the recurring annual deadline. Modified regulatory text was released July 27, 2026 for a comment period that closed Aug. 11, and the package awaits Office of Administrative Law approval. As of Aug. 31, 2026, OAL had not approved the regulation, so the November date is not yet final.
- For the first filing, CARB has said it will not require strict conformity to its draft reporting template, and its regulation does not require limited assurance until reports submitted in 2027. Under CARB’s Dec. 5, 2024 enforcement notice, companies may report using information they already possessed or were already collecting as of that date, and CARB will exercise enforcement discretion for incomplete first-cycle reports where a company made a good-faith effort and retained the relevant data. SB 253 as enacted calls for limited assurance on Scope 1 and 2 beginning in 2026, so the first-filing relief rests on CARB’s regulation and enforcement posture rather than on the statute.
- The Ninth Circuit heard argument in the challenge to California’s climate disclosure laws on Jan. 9, 2026 and had not ruled as of Aug. 31, 2026. SB 253 is in effect; SB 261 is enjoined pending appeal.
- The revised ESRS, adopted by the European Commission July 3, 2026, add flexibility on the GHG inventory boundary. Financial control is the starting point, and a company reports on an operational control basis where the financial-control figures do not adequately capture emissions from operated assets outside the boundary. As of Aug. 31, 2026 the acts remain in the Parliament and Council scrutiny period and are not yet published in the Official Journal.
- The GHG Protocol‘s Scope 2 revision drew nearly 1,100 consultation responses from 56 countries in a consultation that opened Oct. 20, 2025 and closed Jan. 31, 2026 after an extension. Proposals include hourly matching and deliverability requirements for market-based reporting, with phased implementation. Scope 2 will be folded into the consolidated Corporate Standard, and the GHG Protocol’s Independent Standards Board will decide in Q2 2027 whether any Scope 2 topics need a dedicated second round of consultation.
Learn more
- Carbon Compliance for Industrial Manufacturers: Programs, Penalties and Deadlines That Can’t Wait.
- California’s first mandatory corporate emissions reports are due Nov. 10. Are you ready?
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