What are Scope 2 emissions in ESG reporting?
Scope 2 emissions are indirect greenhouse gas emissions resulting from the consumption of purchased energy – primarily electricity, district heating, and steam. Although the company does not generate these emissions directly, it is responsible for them through its energy consumption. For most SMEs, Scope 2 emissions represent the largest single item in their carbon footprint and are a mandatory ESG data point in the VSME basic module.
What is Included in Scope 2 Emissions?
Scope 2 emissions stem from the purchase of externally generated energy:
• Electricity: The largest Scope 2 category for most businesses
• District heating: Heat sourced from combined heat and power plants or thermal networks
• Steam and cooling: Process energy obtained from external suppliers
How are Scope 2 Emissions Calculated?
There are two recognised methodologies according to the GHG Protocol:
• Location-based: Average grid emission factors of the national electricity mix (approx. 350-400 g CO₂/kWh for Germany)
• Market-based: Specific emission factors of the electricity actually purchased (e.g. 0 g CO₂/kWh for certified green electricity tariffs)
The VSME standard recommends disclosing both figures to ensure transparent ESG reporting.
How Can SMEs Reduce Their Scope 2 Emissions?
The most effective measure for Scope 2 reduction is transitioning to renewable energy sources:
• Switching to a certified green electricity tariff (for immediate impact on carbon reduction)
• Installing a solar photovoltaic (PV) system (for long-term sustainability and onsite generation)
• Sourcing district heating from renewable sources
What is Required to Track Scope 2 Emissions?
For carbon accounting of Scope 2 emissions, SMEs only need their annual electricity bills (in kWh) and, if applicable, district heating bills. This data is readily available on any energy invoice. ESG Lift automatically calculates the CO₂e output based on current emission factors to streamline your ESG reporting process.
Scope 2 emissions explained simply: What indirect emissions from purchased electricity are, how they are calculated, and how SMEs record them for their VSME report.