How to track Scope 1 and Scope 2 emissions for small businesses

Tracking Scope 1 and Scope 2 emissions is often the first step in understanding your organisation’s carbon footprint. Whether you’re responding to a client request, preparing for procurement questionnaires, or building a credible reduction plan, having a clear and consistent approach to measuring these emissions makes reporting far simpler, and far more useful.

For most small businesses, Scope 1 and 2 data is already available in everyday operational records, such as energy bills, fuel receipts, and maintenance logs. Once you know what to collect and how to categorise it, you can turn emissions tracking into a straightforward routine that becomes easier each year.

What are Scope 1 and Scope 2 emissions?

Carbon accounting groups emission sources into three ‘scopes’ so businesses can categorise what they’re responsible for in a consistent way. You can think of each scope as a bucket: Scope 1 covers direct emissions from assets you own or control, Scope 2 covers emissions from the energy you buy, and Scope 3 covers everything else up and down your value chain.

Scope 1: direct emissions you own or control

Scope 1 emissions are the direct greenhouse gas emissions from sources your business owns or controls, for example burning fuel on site, running company vehicles, or using equipment that leaks refrigerants (such as air conditioning units).

In practice, Scope 1 is often easiest to picture in two parts: emissions from facilities (like boilers or onsite equipment) and emissions from vehicles you own or control. Refrigerant leaks can also sit in Scope 1, and they’re a common missed source because the data lives with maintenance rather than finance.

Scope 2: emissions from the energy you buy

Scope 2 emissions are the indirect emissions caused from the electricity, heat or steam your organisation buys and uses. You don’t burn the fuel yourself, the emissions happen offsite (at the power plant), but they’re part of your footprint because your energy use drives them.

For most organisations, Scope 2 mainly means grid electricity, but it can also include bought-in heat, or steam. And because purchased electricity is such a common source of confusion, you’ll often see Scope 2 reported in two ways, location-based and market-based, which we’ll cover in Step 4 of this article.

Why track Scope 1 and 2 first?

For many small businesses, Scope 1 and 2 are the most practical place to begin because they’re more closely controlled and typically easier to measure (and act on) than supply chain emissions. Once you can see your energy and fuel clearly, it’s much easier to spot sensible ways to reduce your emissions (and cut costs), often through efficiency and operational choices.

Step 1: map your Scope 1 and 2 sources

Before you get into calculation spreadsheets, take a little time to map your emissions-generating activities in a way that lines up with the Scope system. This makes the next steps much quicker, because you’ll know exactly which bills, logs, and maintenance records you need to pull, and you’ll be less likely to miss a source.

A simple approach is to walk through your operations and list: anything that burns fuel, any vehicles you own or control, any equipment that might use refrigerants, and the energy you buy (electricity, and any purchased heat/steam). Then you can turn that into a clean data request list for whoever holds the information.

A quick mapping exercise helps you avoid missed sources and mis-categorisation.

Step 2: collect the right activity data

The most useful rule of thumb is: use activity data wherever you can.

Activity-based data goes straight to the source (kWh used, miles driven, litres consumed). The GHG Protocol recommends it because it’s more precise and gives better insight into what’s driving emissions. Spend-based data (combining cost with emissions factors) can be a reasonable fallback when data is hard to access or not material, but for Scope 1 and 2, activity data is usually achievable.

Scope 1 data checklist

For most small businesses, Scope 1 comes down to three areas:

1) Fuel you burn on site (stationary combustion)

• Gas usage (often kWh on bills/meter)

• Other fuel consumption (e.g., LPG/oil) in litres, where relevant

2) Company vehicles (mobile combustion)

• Litres of petrol/diesel (fuel card or receipts), or mileage by vehicle/fuel type

3) Refrigerants

• Refrigerant type and any recorded leakage/top-ups from servicing records

Scope 2 data checklist

1) Electricity

• Electricity consumption (kWh) by site/meter (energy bills or smart meter exports)

2) Tariff / supplier documentation (for market-based reporting)

• Supplier name and tariff details

• Any supporting evidence the supplier provides for renewable claims

3) Purchased heat/steam (if applicable)

• Consumption data or contract information

Step 3: calculate carbon emissions (the simple logic)

Most emissions calculations follow the same structure:

Activity data × emission factor = emissions (CO₂e)

Activity data is your real-world usage: kWh of electricity, litres of fuel, miles driven, etc.  
Emission factors are the multipliers that convert that activity into emissions. In the UK, DEFRA publishes annual emission factors for business reporting, and factors are also compiled by organisations like the IPCC and the US EPA

The outcome is an emissions figure, measured in Carbon Dioxide Equivalent (CO₂e). This is used to convert the climate impact of different natural gases and fossil fuels (like methane or nitrous oxide) into the equivalent warming effect of carbon dioxide, to provide a single, comparable metric for carbon footprints.

Step 4: Scope 2 electricity - location-based vs market-based (and why you need both)

Scope 2 is where a lot of businesses get stuck, especially if you’ve moved to a renewable tariff and want to report that properly.

The GHG Protocol sets out two ways to report Scope 2 electricity emissions:

• Location-based: reflects the intensity of greenhouse gasses emitted by the grid where you consume electricity, using a national average emissions factor (your supplier/tariff doesn’t change this number).

• Market-based: reflects what you’ve chosen to buy through contracts/tariffs and certificates (e.g. REGOs in the UK).

Dual reporting: why it matters

The GHG Protocol requires both location-based and market-based Scope 2 figures to be reported, because they tell different (but equally important) stories when it comes to energy consumption:

• Location-based shows emissions based on where you are

• Market-based shows emissions based on what you buy

This dual approach helps avoid accidental greenwash whilst still giving credit where renewable procurement is genuinely robust.

Market-based: what you can (and can’t) claim

Market-based reporting can use:

1. A supplier-specific emission factor (if it meets GHG Protocol quality criteria)

2. A residual mix factor when supplier-specific data isn’t available (this reflects the grid after renewable claims are stripped out)

3. The national average only as a last resort (because it undermines the purpose of market-based reporting)

And importantly: not all ‘green tariffs’ are equal. To count towards market-based Scope 2 claims, the GHG Protocol’s Scope 2 quality criteria include things like proof of origin, temporal matching, and geographic relevance.

Where do solar panels fit?

If you generate electricity on site and consume it (e.g. rooftop solar), Seedling’s guidance is clear: it reduces both location-based and market-based emissions because you’re buying less electricity from the grid overall.

Step 5: set up a tracking routine you can repeat

The best tracking systems are a simple routine that makes reporting faster and helps you improve your data naturally over time.

1) Choose your reporting period

Most businesses track annually, but you can pull data monthly or quarterly so that year-end doesn’t turn into a scramble.

2) Keep your ‘organisational boundary’ consistent

Start by defining what parts of the business are included (the ‘organisational boundary’). Under the GHG Protocol, this can be approached based on equity share or operational control, the key is to be consistent and include entities you can influence.

3) Store evidence as you go

Save resources such as:

• Energy/utility bills & meter exports

• Fuel card summaries or mileage logs

• Refrigerant servicing records

• Electricity supplier and tariff documentation (for market-based Scope 2)

4) Improve year-on-year (without perfectionism)

If one data point is hard to get this year, note it, and set targets to collect better activity data next year. Even small improvements make your carbon emissions data more accurate and your reduction planning more useful.

Common pitfalls (and how to avoid them)

• Using spend data for fuel or electricity when activity data exists (spend-data is more likely to reduce the accuracy of your overall carbon footprint, by showing more or less energy usage than is actually accurate).

• Forgetting refrigerants (often missed, but explicitly part of Scope 1 when equipment leaks refrigerants).

• Reporting only one Scope 2 method (the GHG Protocol requires dual reporting for electricity).

• Assuming ‘renewable tariff = zero emissions’ without quality documentation (market-based claims need to meet Scope 2 quality criteria).

• Overconfident sustainability messaging (best practice is accuracy and transparency to avoid greenwashing).

What credible Scope 1 & 2 reporting looks like

Credible reporting is less about having a perfect number on day one, and more about being consistent, transparent, and aligned with best practice:

• Use clear Scope definitions (what’s included and why).

• Prefer activity-based data where feasible.

• Report Scope 2 both ways (location-based and market-based).

• Be specific about energy procurement claims and the evidence behind them.

• Communicate your environmental impact carefully - accuracy and transparency reduce the risk of greenwashing.

Want help making carbon footprinting straightforward?

Seedling’s carbon footprint calculator is built around making carbon accounting simple, credible, and aligned with best practice. That includes Scope 2 dual reporting by default, support with residual mix calculations, and tracking onsite generation like solar.

The Seedling platform, combined with 1:1 support from one of our expert advisors, is the quick and easy way to get started. Try out our free version, or book a call to find out how our team can help.