Scope 1, 2 and 3 Emissions Explained: A Practical Guide for Kenyan Businesses

Why scope matters before anything else in carbon strategy

Every meaningful carbon strategy begins with a GHG inventory — a systematic measurement of the greenhouse gases your organisation produces. But not all emissions are created equal, and the distinction between Scope 1, 2, and 3 is the most important framework concept for any organisation beginning its carbon measurement journey.

The three-scope framework was established by the GHG Protocol Corporate Standard, the most widely used international accounting tool for corporate emissions, and is required by every major reporting framework in use in Kenya: the NSE ESG Disclosures Guidance Manual, the CBK Guidance on Climate-Related Risk Management, IFC Performance Standards, and the forthcoming CMA ESG Code aligned with IFRS S2.

Understanding what each scope covers — and why most Kenyan organisations are measuring only a fraction of their actual footprint — is the starting point for credible climate action.

Scope 1: direct emissions you own

Scope 1 covers all greenhouse gas emissions from sources that your organisation owns or controls. These are the emissions you produce directly.

What's included: Combustion of fuel in company-owned vehicles and equipment; combustion of fuel for on-site heat or power generation (diesel generators, gas boilers); industrial process emissions (e.g. from cement production or chemical manufacturing); fugitive emissions from refrigerant leaks in air conditioning and refrigeration systems; and direct emissions from company-operated agricultural or land-use activities.

Why it matters: Scope 1 is the easiest scope to measure and is typically the starting point for any GHG inventory. It is also the most directly controllable — fleet electrification, generator fuel switching, and refrigerant management are all Scope 1 reduction strategies within a company's direct operational control.

For Kenyan businesses specifically: Generator usage is a significant Scope 1 source for many Kenyan organisations given grid reliability constraints. Accurate fuel consumption data from diesel generators — often excluded from preliminary inventories — can substantially change a company's reported footprint.

Scope 2: indirect emissions from purchased energy

Scope 2 covers the greenhouse gas emissions associated with the electricity, steam, heat, or cooling that your organisation purchases and consumes. These emissions occur at the power station or energy provider's facilities, not at your premises — but they are attributed to your organisation as the energy consumer.

What's included: Electricity purchased from the national grid or an energy provider; district heating or cooling; purchased steam. In Kenya, this means all electricity purchased from Kenya Power or an Independent Power Producer.

Why it matters: For most office-based organisations, Scope 2 is the largest single source of emissions. Kenya's electricity grid is predominantly renewable (geothermal, hydro, and wind), which means Kenya Power electricity has a relatively low emissions factor compared to grids dominated by coal or gas — but Scope 2 emissions must still be measured and reported.

Market-based vs. location-based accounting: The GHG Protocol allows two calculation methods. The location-based method uses the average emissions factor for the national grid. The market-based method uses the specific emissions factor of the energy supplier or renewable energy certificate. As Kenya's renewable energy market matures and green tariff products become available, the market-based method will become relevant for organisations seeking to report zero Scope 2 emissions through renewable energy procurement.

Scope 3: value chain emissions — the largest and most complex category

Scope 3 covers all other indirect emissions that occur as a result of your organisation's activities but from sources not owned or controlled by you. These are emissions in your upstream and downstream value chain.

The GHG Protocol identifies 15 categories of Scope 3 emissions, spanning both upstream activities (what suppliers do to produce goods and services for you) and downstream activities (what happens to your products and services after they leave your organisation).

Upstream Scope 3 categories include: Purchased goods and services (emissions from your suppliers' production); capital goods; fuel and energy-related activities not in Scope 1 or 2; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; and upstream leased assets.

Downstream Scope 3 categories include: Downstream transportation and distribution; processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; and investments (financed emissions).

Why Scope 3 often dominates the picture: For most organisations, Scope 3 emissions dwarf Scope 1 and 2 combined. A bank's largest climate exposure is in its lending and investment portfolio (Scope 3 Category 15 — financed emissions), not in its office energy use. A manufacturer's largest footprint is often in purchased raw materials. A retailer's biggest impact is in the use of its products by consumers. Ignoring Scope 3 produces an inventory that systematically understates an organisation's climate impact.

What's mandatory versus voluntary in Kenya

Under the frameworks currently in force or forthcoming in Kenya:

IFRS S2 (forthcoming CMA ESG Code, mandatory for PIEs) requires disclosure of Scope 1 and 2 emissions, and Scope 3 emissions where material. The ISSB has confirmed that Scope 3 will be phased in, but organisations in sectors where value chain emissions are clearly material — banks (financed emissions), manufacturers (supply chain), and companies with large distribution networks — should not plan on a lengthy Scope 3 exemption.

CBK Guidance on Climate-Related Risk Management requires banks to assess climate-related risks in their lending and investment portfolios — which is effectively a Scope 3 Category 15 (financed emissions) assessment, even if not labelled as such.

IFC Performance Standards (PS 3) require GHG emissions quantification for projects above defined thresholds (25,000 tonnes CO₂e per year), covering Scope 1 and project-attributable Scope 2 emissions.

NSE ESG Disclosures Guidance Manual encourages disclosure of Scope 1 and 2, and recommends Scope 3 for material categories.

How to build your GHG inventory

A credible GHG inventory follows a defined structure regardless of scope.

Step 1 — Define the organisational boundary. Decide whether you are reporting on an equity share basis (proportional to ownership) or operational control basis (100% of emissions from operations you control). Most Kenyan organisations use operational control.

Step 2 — Map activity data sources. For each emissions category in scope, identify the activity data needed: fuel purchase records, electricity bills, fleet mileage logs, waste transfer records, supply chain spend data. The quality of your inventory is directly determined by the quality of this underlying data.

Step 3 — Apply emissions factors. Convert activity data to CO₂ equivalent emissions using published emissions factors — the Kenya Power grid emissions factor, IPCC default factors for fuel combustion, or supplier-specific factors where available.

Step 4 — Verify, document, and disclose. A credible inventory includes uncertainty analysis, a clear methodology note, and ideally third-party verification. For reporting against IFRS S2 or IFC PS 3, third-party assurance will become standard.

Step 5 — Set reduction targets. An inventory is the baseline, not the endpoint. Science-based targets aligned with the Science Based Targets initiative (SBTi) are increasingly expected by institutional investors and DFI lenders.

3 critical questions for Kenyan businesses

1. Does your current GHG inventory include all three scopes, or only Scope 1 and 2 — and if Scope 3 is excluded, have you assessed whether value chain emissions are material to your sector?

2. Is your emissions data collected through a systematic, auditable process with source documentation, or assembled manually from estimates at year-end for reporting purposes?

3. Have you identified the most significant GHG reduction opportunities within your operational footprint and supply chain, and set time-bound targets against which you are reporting annually?

*Ardena's Carbon Advisory service covers GHG inventories across all three scopes, SBTi alignment, decarbonization roadmaps, and carbon reporting aligned with IFRS S2, TCFD, and IFC Performance Standards. Contact us to get started.*