How carbon footprints work
Good on you for wanting to understand before you dive in. This page covers the essential concepts – enough to feel confident when you start gathering data.
What gets measured? The three scopes.
Greenhouse gas emissions are divided into three categories, called “scopes.” Think of them as three concentric circles around your business.
Scope 1: Direct emissions
Emissions you produce directly, from sources your business owns or controls.
Examples: petrol or diesel in your vehicles, LPG for heating, refrigerants in your air conditioning.
Scope 2: Indirect emissions from energy
Emissions generated by producing the electricity or heat you purchase.
In New Zealand, our electricity grid is highly renewable, which means our Scope 2 emissions tend to be relatively low compared to many other countries.
Scope 3: Everything else
Emissions that occur in your value chain, both upstream and downstream. This is the broadest category and often the most significant for service businesses.
Examples: staff commuting, air travel, waste sent to landfill, working from home, freight, and emissions embedded in goods and services you purchase.
You don’t have to measure everything at once. Most businesses start with Scope 1 and 2, then add Scope 3 categories over time as they build confidence.
How are emissions calculated?
The formula is simpler than it sounds:
Emissions (tCO₂e) = Activity Data × Emission Factor
Activity data is the operational data from your business – things like litres of fuel used, kilowatt-hours of electricity purchased, or kilometres travelled.
Emission factors are published conversion rates that tell you how many tonnes of CO₂e (carbon dioxide equivalent) are produced per unit of activity. In New Zealand, the most commonly used emission factors are published by the Ministry for the Environment (MfE) and updated every two years.
Quick example: if your business used 500 litres of regular petrol last year, you’d multiply that by MfE’s emission factor for petrol to get your Scope 1 transport emissions. Simple as.