Many small businesses want to reduce their environmental impact, but don’t know where to begin with carbon tracking

Making Sense of Carbon Emissions in Business

Earlier this month, we marked Earth Day, which offered a moment to reflect more seriously on how businesses affect the planet and how we, as individuals within them, can do better. Even in environmentally conscious teams, I’ve seen confusion around carbon emissions—especially the different categories, known as Scope 1, Scope 2 and Scope 3.

When people talk about reducing carbon footprints, they often mean different things. Some are referring to electricity bills. Others are thinking about delivery trucks, or maybe the plastic in their packaging. But without clarity on the three scopes of emissions, even the most sustainability-minded teams can struggle to track progress or make real change. I’ve seen this firsthand: teams that care deeply about the environment, but don’t always know where their biggest impact lies. That’s why I wanted to write this blog—to break down the different scopes in a simple, honest way and share how small businesses can start measuring their emissions without having to bring in a consultant or external service.

Scope 1: Direct Emissions From Company Operations

Scope 1 covers emissions that come directly from activities your business controls. Think of things like gas boilers in your office, company-owned vehicles, or on-site generators. If your company burns fuel for any reason, those emissions fall under Scope 1. It is the most straightforward category because it deals with things you can touch, measure and control directly.

For example, a small office-based business without delivery trucks or machinery might have relatively limited Scope 1 emissions. But if you own a small production facility or operate a fleet of vehicles, tracking these emissions becomes essential. Fortunately, this is one of the easier areas to monitor. You can start by looking at gas or fuel purchase records. If you have a company van, how much fuel does it use in a month? Are there boilers or gas heaters on-site and how much gas do they consume annually? These numbers are already sitting in invoices or internal logs—you just need to gather them. Free tools like the UK Government's GHG Conversion Factors or the CoolClimate Calculator can help convert usage into estimated carbon emissions.

Scope 2: Indirect Emissions From Purchased Energy

Scope 2 refers to the emissions generated from the energy you buy, like electricity or steam. Your office lights, computers and manufacturing equipment all run on electricity that likely comes from a national grid. Even if you never see the power plant that produces it, your business is indirectly responsible for the emissions caused by generating that power.

When I was working in a shared workspace, we didn’t always have a clear idea of what kind of energy the building used. But when we moved into our own office space, we had the option to switch to a green electricity provider. It was a relatively small decision with a noticeable impact. Choosing a supplier that uses renewable sources such as wind or solar can drastically lower your Scope 2 emissions.

You can calculate Scope 2 by checking your energy bills. Most suppliers will include a breakdown of how much energy your business uses monthly or quarterly. If your provider does not include emissions data directly, you can use conversion factors from trusted environmental agencies to estimate the emissions based on kilowatt-hours used. Again, this can all be done internally with a spreadsheet and many small businesses are surprised by how quickly these numbers add up.

Scope 3: Indirect Emissions From Your Supply Chain and Customers

Scope 3 is where things become more complex and often overwhelming. This scope includes all other indirect emissions that occur in your value chain, both upstream and downstream. That means the emissions created by your suppliers, distributors and even your customers when they use your products.

In a cosmetics startup I previously worked at, this was the biggest and hardest area to track. From the plastic packaging that came from abroad, to the raw ingredients sourced from farms, to the transportation emissions from international shipping—Scope 3 was everywhere. And then there were the customers: every time someone used our product and threw the container in the bin, that counted too.

Because Scope 3 includes so many factors, it's tempting to ignore it or assume it's too complex to tackle. But there are manageable ways to begin. One starting point is to map out your supply chain and identify the biggest contributors. If you import raw materials, ask suppliers about their own sustainability practices. Are they tracking their emissions? Are they using renewable energy in production? For packaging, look at where it’s made and how far it travels. The more you ask these questions, the better you understand where your real impact lies.

Customer emissions can also be estimated based on typical usage. For instance, how often is a product used? Does it require energy or water to use? What happens at the end of its life—can it be recycled, or does it end up in landfill? These questions help build a picture, even if it’s not perfect.

Tracking Emissions Without Hiring a Consultant

I know that many startups, especially in the early stages, can’t afford to hire a carbon accountant or sustainability lead. The good news is that you can still start tracking emissions in-house with the right tools and mindset.

Start by listing all your known sources of emissions across the three scopes. Use utility bills, purchase records and supplier data where possible. Tools like the SME Climate Hub, the Carbon Trust’s calculators, or even basic Excel templates can help you estimate total emissions based on consumption data. The key is not to be perfect, but to be consistent.

Over time, as you gather more data, you’ll start seeing patterns. Maybe your electricity usage spikes in winter. Maybe your packaging footprint is higher than you realised. These insights help inform real decisions—whether that’s switching to a local supplier, choosing recycled materials, or setting reduction targets.

Final Thoughts

Understanding Scope 1, 2 and 3 emissions isn’t just for large corporations or environmental consultants. It’s a practical skillset that every small business can begin to develop, regardless of their size, sector, or budget. When we start viewing carbon tracking as part of day-to-day business awareness rather than a specialist task, it becomes much easier to approach. This isn’t about having all the answers from day one, but about starting a process of learning, questioning and improving over time. By building familiarity with where emissions occur and how they’re calculated, small businesses gain the clarity needed to act with intention and consistency.

Tracking carbon emissions may not always feel urgent or exciting, but it can be one of the most insightful things a team does. It gives shape to abstract concepts like "impact" or "sustainability," and shows you where your business has real leverage to reduce harm. It allows you to set priorities, measure progress and speak more confidently about what you’re doing and why. Whether it’s through more thoughtful energy use, closer engagement with your suppliers, or better design choices for packaging and logistics, the improvements that follow are grounded in knowledge, not just intention.

Join the IoA and prepare for the future of business

Sign up now to access the benefits of IoA Membership including 1400+ hours of training and resources to help you develop your data skills and knowledge. There are two ways to join: