Net-Zero Value Chain - Support Hub

2.1 Key sustainability concepts and terminology

  • Scope 1-3 Emissions
  • Absolute Emissions vs. Emissions Intensity
  • Emissions Hotspot
  • Product Life Cycle (PCF) vs. Life Cycle Assessment (LCA)
  • Science-based emission reduction targets
  • Net Zero

Scope 1-3 emissions

The Greenhouse Gas Protocol, which is the gold standard for carbon accounting, has thoroughly defined emissions and classifies a company’s GHG emissions into three scopes:

Scope 1 

Direct emissions from owned or controlled sources, or in other words, emissions that occur from your direct operations. To provide an example, if you operate a cement factory, it includes:

  • Emissions from burning fossil fuels (e.g., coal or natural gas) to power your blast furnace.
  • Process emissions as a by-product of clinker production, an intermediate product in the production of cement.
Scope 2 

Indirect emissions from the generation of purchased electricity, heat, or cooling. 

In the example of our cement manufacturer, it refers to all the electricity that the company purchases from the local utility company to power its offices. If the cement factory purchases heat or cooling for its production, it would also fall under Scope 2 emissions.

Scope 3

Indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both:

  • Upstream: emissions in the supply chain, including those created through the production of all input factors of a company. 
  • Downstream: emissions that occur through the company’s products, after they “leave” the company’s operations.
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Example: Scope 3 emissions of a cement manufacturer


Again, using above example of our cement manufacturer, the following Scope 3 emissions might occur:

  • Upstream emissions may include the emissions generated by production and transport of clinker, one of the main input factors 
  • Downstream emissions may include emissions generated through the downstream transport, distribution, and processing of the cement. In addition, it includes potential emissions that occur through the eventual “end of life” of the product, i.e., if the cement ends up in a landfill and any potential emissions it would then emit through its decay. Admittedly, a less relevant example in the case of cement. If you are a food and beverage company, however, the end-of-life emissions would be a larger share of your total Scope 3 emissions.


The GHG Protocol has developed standards that do not only describe each emissions scope, but also outline how you can calculate them. The Scope 3 Standard is an internationally accepted method for companies to account for value chain emissions across different categories of Scope 3 activities. Check the GHG protocol guidance to calculate Scope 3 emissions.

Absolute Emissions vs. Emissions Intensity

  • Absolute emissions are the emissions that a supplier contributes on an absolute basis, where higher emissions mean a higher risk. For example, a supplier may contribute 100,000 tons of CO2e to your total Scope 3 balance. Please refer to chapter “Establish Supplier and Category Emissions Baseline” for more information on identifying high-emitting suppliers in specific categories.
  • Emission intensity measures the amount of CO2 emitted per unit of relevant activity. For example, a car’s emission intensity metric might be in units of kg CO2e per kilometer driven. The reporting company must decide on the applicable unit of measure for the product. A high emission intensity indicates that a certain product or service has a relatively high emissions exposure and therefore bigger decarbonization potential per unit. Higher emission intensity means higher risk. For more guidance on calculating emissions intensity metrics, reference the GHG Protocol’s guideline.

Emissions Hotspot


An emissions hotspot generally refers to a concentration of carbon emissions. This can be within a particular supplier, procurement category, emissions scope, or others. For example, a supplier that accounts for a large share of your Scope 3 emissions can be referred to as an emissions hotspot (in your Scope 3 emissions).


Product Life Cycle (PCF) vs. Life Cycle Assessment (LCA)

Whether to calculate a PCF or LCA will ultimately depend on what you want to measure and achieve:

  • If you want to measure the climate impact of a product, you should calculate the PCF. 
  • If you want to evaluate broader environmental impacts of your product (e.g., including land use, ozone depletion, etc.), you should conduct an LCA.
A Product Carbon Footprint (PCF) 

Examines the GHG emissions of one product across its life cycle, from raw material extraction to recycling or disposal. There are several standards and frameworks that explain how to calculate a PCF, including:

  • The PACT Pathfinder Framework: developed by WBCSD, a framework that explains and illustrates how to calculate a PCF. Within the boundary of the Pathfinder Framework, only “cradle-go-gate” emissions are included in your emissions calculations. This includes all materials upstream of your own operations, i.e., material acquisition, preprocessing, production, distribution, and storage. Emissions after the material has reached your company's gate are not considered. For further information, please refer to the Pathfinder Framework. 
  • The ISO 14067: specifies principles, requirements and guidelines for the quantification and reporting of the carbon footprint of a product and is consistent with other Standards on life cycle assessment. For more information, please look here.


Life Cycle Assessment (LCA)

Compiles and evaluates the inputs, outputs, and potential environmental impacts of a product throughout its entire life cycle. The concept is therefore somewhat like a PCF, whilst its impact assessment might be broader than that of a PCF.

A common framework to assess the LCA is the ISO 14040 and 14044, which provide the requirements and guidelines (ISO 14044), principles and framework (ISO 14040) for a Life Cycle Assessment. Click here for more information on ISO 14040 and ISO 14044.

The PCF and LCA can be done on an end-to-end basis (“cradle-to-grave”) or partially (“cradle-to-gate” meaning from the raw material extraction – the “cradle” – until the last manufacturing process before entering your factory’s “gate”).

Both have their respective advantages and disadvantages: while a PCF is less complex to calculate and focuses on a KPI frequently asked for by customers and an increasing number of regulators, it may oversimplify the environmental impacts a product may have.

Science-based emission reduction targets

1.5°C aligned, science-based emissions reduction targets limit global warming to a maximum of 1.5°C above pre-industrial levels. Science shows that this global temperature increase limit is necessary to avert the worst impacts of climate change.

Net Zero emissions

A company reaches net zero when its value chain results in no net accumulation of greenhouse gases in the atmosphere, i.e., emissions are balanced by emissions reductions. Achieving net zero means eliminating emissions as much as possible, while also offsetting residual emissions. It is widely understood that to limit global temperature increase to 1.5°C above pre-industrial levels, global greenhouse gas emissions should reach net zero by 2050. To find out more about net zero, please reference the SBTi’s Corporate Net-Zero Standard here.

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