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 procurement. For most SMEs, Scope 2 emissions represent the largest single item in their carbon footprint and are a mandatory data point within the VS basic module of ESG reporting.
What is Included in Scope 2 Emissions?
Scope 2 emissions are generated from the purchase of externally produced energy:
• Electricity: The largest Scope 2 category for most businesses
• District Heating: Heat sourced from thermal power plants or local heating networks
• Steam and Cooling: Process energy procured from external suppliers
How are Scope 2 Emissions Calculated?
There are two recognised methodologies under the GHG Protocol:
• Location-based: Based on the grid emission factor of the national electricity mix (approximately 350-400 g CO₂/kWh for Germany)
• Market-based: Based on the emission factor of the energy actually procured (e.g. 0 g CO₂/kWh for certified green electricity)
Best practice in ESG reporting recommends disclosing both figures.
How Can SMEs Reduce Their Scope 2 Emissions?
The most effective measure for Scope 2 reduction is transitioning to renewable energy:
• Switching to a green electricity tariff (for immediate impact on your carbon footprint)
• Installing an on-site solar PV system (for long-term sustainability and emission reduction)
• Procuring district heating derived from renewable sources
What is Required for Scope 2 Carbon Accounting?
For Scope 2 calculation, SMEs only need their annual electricity bills (in kWh) and, if applicable, district heating invoices. This energy consumption data is readily available in standard billing. ESG Lift automatically calculates your CO₂e emissions using up-to-date, verified emission factors.
Scope 2 emissions explained: What indirect emissions from purchased electricity are, how they are calculated, and how SMEs can measure them for ESG and sustainability reporting.