Operational vs. Value Chain Emissions: How They Map to Scope 1, 2, and 3

In brief: Most companies describe emissions as either operational (typically Scope 1 and Scope 2) or value chain (typically Scope 3). In the Greenhouse Gas Protocol (GHG Protocol) Corporate Standard, Scope 1 covers direct emissions, Scope 2 covers purchased energy emissions, and Scope 3 covers other indirect emissions across the value chain. The key to accurate reporting is setting clear organizational and operational boundaries—especially for tricky cases like leased assets.

Key takeaways

Scope 1 = direct emissions from sources you own or control (e.g., fuel combustion, refrigerant leaks). See: GHG Protocol Corporate Standard.
Scope 2 = indirect emissions from purchased electricity, steam, heat, and cooling you consume. See: GHG Protocol Scope 2 Guidance.
Scope 3 = other indirect emissions across the upstream and downstream value chain (e.g., purchased goods, transport, product use). See: GHG Protocol Scope 3 Standard.
“Operational vs. value chain” is a helpful shorthand, but your reporting should follow the Scope 1/2/3 definitions and your chosen boundary approach.
Leased buildings and equipment can fall into Scope 1/2 or Scope 3 depending on who controls the asset and the emissions source.

What do “operational” and “value chain” emissions mean in practice?

“Operational emissions” and “value chain emissions” are common working labels used in sustainability teams:

Operational emissions usually means Scope 1 + Scope 2, because these sources are typically closest to day-to-day operations and are often more straightforward to measure.
Value chain emissions usually means Scope 3, because they occur in activities you don’t directly operate (suppliers, logistics providers, customers), even though you can influence them through procurement, design, and policy.

In formal reporting, the more important step is defining your organizational boundary (which entities/assets are included) and operational boundary (which emission sources are included as Scope 1/2/3). A good starting reference is the GHG Protocol Corporate Standard.

Scope 1: Direct emissions

Scope 1 emissions are direct greenhouse gas emissions from sources that a company owns or controls. Typical examples include:

Fuel combustion in owned or controlled equipment (boilers, furnaces, generators)
Emissions from company-owned vehicles
Process emissions from manufacturing (e.g., chemical reactions)
Fugitive emissions, such as refrigerant leakage from owned/controlled HVAC and refrigeration systems

Practical tip: If your team can directly operate the source (turn it on/off, maintain it, change settings), that’s often a clue it may fall within Scope 1—depending on your boundary approach. See: GHG Protocol Corporate Standard.

Scope 2: Indirect, purchased energy emissions

Scope 2 covers emissions from purchased or acquired electricity, steam, heat, and cooling that the company consumes. The emissions physically occur where the energy is generated, but they are accounted for by the organization using the energy.

Common Scope 2 activities include:

Purchased electricity for lighting, servers, and equipment
Purchased district heating/cooling for buildings
Purchased steam or heat for industrial processes

If you report Scope 2, many organizations also distinguish between location-based and market-based methods (where applicable). See: GHG Protocol Scope 2 Guidance.

Scope 3: Indirect emissions across the value chain

Scope 3 includes all other indirect emissions that occur in a company’s value chain (upstream and downstream). Scope 3 is broad by design and often represents a large share of total emissions for many sectors.

Typical Scope 3 examples include:

Emissions from purchased goods and services
Transportation and distribution (upstream and downstream)
Waste generated in operations
Business travel and employee commuting
Use of sold products (downstream)
End-of-life treatment of sold products

The GHG Protocol Scope 3 Standard defines categories that help organizations identify and report these emissions consistently.

A 60-second checklist to classify an activity into Scope 1, 2, or 3

Use this quick decision checklist when you’re unsure where an emission belongs:

Is the emission from a source you own or control?
- If yes → it’s likely Scope 1 (direct emissions), depending on your boundary approach (see: Corporate Standard).
Is it purchased electricity, steam, heat, or cooling you consume?
- If yes → it’s Scope 2 (see: Scope 2 Guidance).
Is it an indirect emission elsewhere in your value chain (suppliers, logistics, customers)?
- If yes → it’s Scope 3 (see: Scope 3 Standard).
Is it related to leased assets (buildings, vehicles, equipment)?
- Determine whether the asset and its emissions source fall inside your organizational/operational boundary (see: Corporate Standard).
- If it’s outside your boundary, it may be Scope 3 (see: Scope 3 Standard).

Good practice: Document your decision rules once and apply them consistently. That consistency matters for auditability and year-over-year comparisons.

Worked example: a leased office building (electricity + heating + HVAC refrigerants)

Leased assets are one of the most common sources of confusion. Here’s a practical example you can reuse.

Scenario: Your company leases office space. You pay the electricity bill, but the building’s heating is provided by the landlord. The office has HVAC equipment that may leak refrigerant.

How this often maps in practice (depending on boundaries and control):

Purchased electricity you consume → Scope 2
(You’re consuming purchased electricity; see: Scope 2 Guidance.)
Landlord-provided heating (e.g., district heat or boiler heat included in rent) → often Scope 3
(If your organization does not control the heat generation source and it’s bundled into rent, it is commonly treated as a value chain emission; see: Scope 3 Standard.)
Refrigerant leakage from HVAC equipment
- If the HVAC equipment is owned/controlled within your boundary → Scope 1 (fugitive emissions; see: Corporate Standard.)
- If the HVAC equipment is owned/controlled by the landlord and outside your boundary → often Scope 3 (see: Scope 3 Standard.)

Why the boundary matters: The same physical building can be classified differently depending on whether you have operational control over the emissions sources. The key is to choose an approach, document it, and apply it consistently.

Common mistakes when mapping operational vs. value chain emissions

Treating “operational emissions” as an official scope category (it’s shorthand; scopes are the reporting framework).
Mixing up Scope 2 with non-energy indirect emissions (Scope 2 is specifically purchased electricity/steam/heat/cooling).
Double counting leased-asset emissions across Scope 2 and Scope 3 due to unclear boundary rules.
Skipping definitions and assumptions (especially for Scope 3 categories and estimation methods).
Using inconsistent naming for the same concept (e.g., “supply chain,” “value chain,” “Scope 3” used interchangeably without clarifying differences).

FAQ

Is “supply chain emissions” the same as Scope 3?

Not exactly. “Supply chain emissions” usually refers to upstream Scope 3 (suppliers, purchased goods, inbound logistics). Scope 3 can also include downstream emissions such as product use and end-of-life treatment, depending on your business model. See: GHG Protocol Scope 3 Standard.

Are Scope 1 and Scope 2 always “operational emissions”?

Many teams use “operational” to mean Scope 1 and 2 because they’re closely tied to operations and easier to influence directly. But “operational emissions” isn’t a formal scope label—your reporting should be anchored in Scope 1/2/3 definitions and your boundary approach. See: GHG Protocol Corporate Standard.

What’s the difference between organizational boundaries and operational boundaries?

Organizational boundaries define which entities/assets are included (e.g., subsidiaries, leased assets), while operational boundaries define which emission sources are counted as Scope 1, 2, or 3. Getting both right improves consistency and auditability. See: GHG Protocol Corporate Standard.

How do leased buildings and equipment affect Scope reporting?

Leased assets can fall into Scope 1/2 or Scope 3 depending on who controls the emissions source and how boundaries are set. The safest approach is to document decision rules for leases and apply them consistently across sites and years. References: Corporate Standard and Scope 3 Standard.

What should I cite for official Scope 1, 2, and 3 definitions?

Use the GHG Protocol Corporate Standard for the core scope framework and boundaries, plus the Scope 2 Guidance and Scope 3 Standard for category-specific reporting rules and definitions. (Optional regulator reference: EPA Scope 1 and Scope 2 inventory guidance.)

Next step: make carbon accounting easier with Coral

Once you’ve mapped activities to Scope 1, 2, and 3, the real work is collecting reliable activity data and turning it into consistent, auditable reporting.

Coral is an AI-native ESG platform that helps organizations streamline emissions measurement and reporting—especially the operational data collection required for Scope 1 and 2—so teams spend less time chasing data and more time acting on it. Learn more about Coral’s approach to emissions management: Emissions Management System.
If you want to see how Coral can fit your reporting workflow, you can book a demo or contact Coral.