How to Calculate Your Company's Scope 2 Emissions Accurately

How to Calculate Your Company's Scope 2 Emissions Accurately

🕒 Reading Time: 10 minutes

💡 Key Takeaway:

Understanding How to Calculate Your Company's Scope 2 Emissions Accurately helps your organization take control of its carbon footprint, improve energy efficiency, and prepare for sustainability reporting standards.

How to Calculate Your Company's Scope 2 Emissions Accurately

Introduction (PAS Framework)

Problem:
Most companies today are eager to reduce their carbon footprint — but when it comes to Scope 2 emissions, confusion is everywhere. Many businesses aren’t sure how to track electricity use or convert it into accurate emission numbers.

Agitation:
Without accurate data, your sustainability reports can be misleading. Worse, it could cost your company credibility, compliance opportunities, and even investor trust.

Solution:
This guide breaks down How to Calculate Your Company's Scope 2 Emissions Accurately in simple, practical steps — helping you report confidently, meet ESG targets, and identify real opportunities to cut emissions.

Summary Box

Topic	Details
Title	How to Calculate Your Company's Scope 2 Emissions Accurately
Purpose	To help businesses measure and report indirect emissions from electricity use
Focus Areas	Data collection, emission factors, calculation methods, and reporting standards
Outcome	Gain clarity on Scope 2 calculations and improve sustainability performance

What Are Scope 2 Emissions?

Before diving into How to Calculate Your Company's Scope 2 Emissions Accurately, let’s define what Scope 2 emissions actually are.

Scope 2 emissions refer to indirect greenhouse gas (GHG) emissions from the purchase of electricity, steam, heat, or cooling that your company consumes.

In other words, you didn’t directly burn the fuel — but you’re using the energy that someone else produced.

Examples of Scope 2 Emissions:

Electricity used in offices, factories, or data centers.
Purchased steam or hot water for industrial processes.
Chilled water used in building air-conditioning systems.

Scope 2 sits between:

Scope 1: Direct emissions from company-owned sources (like boilers or vehicles).
Scope 3: Indirect emissions from the supply chain (like business travel or product use).

Why Scope 2 Emissions Matter

When learning How to Calculate Your Company's Scope 2 Emissions Accurately, it’s important to understand why these numbers matter.

1. Corporate Transparency

Investors, customers, and regulators now demand carbon reporting. Scope 2 data demonstrates your company’s energy efficiency and commitment to sustainability.

2. Cost Reduction

Tracking energy use helps identify inefficiencies and potential savings in your operations.

3. Compliance and ESG

Accurate reporting aligns your business with global frameworks like:

GHG Protocol
ISO 14064
CDP (Carbon Disclosure Project)
Malaysia’s National Energy Transition Roadmap (NETR)

4. Competitive Advantage

Companies with verified Scope 2 data gain credibility and often enjoy better investor confidence and market positioning.

Step-by-Step: How to Calculate Your Company's Scope 2 Emissions Accurately

Here’s a practical, no-jargon guide to help your organization calculate Scope 2 emissions the right way.

Step 1: Identify Energy Sources

Start by listing all forms of purchased energy that fall under Scope 2.

Examples include:

Electricity purchased from Tenaga Nasional Berhad (TNB) or local utilities.
District heating or cooling systems.
Purchased steam for industrial use.

Be sure to exclude on-site generation (that’s Scope 1) and supply chain energy (that’s Scope 3).

Step 2: Gather Consumption Data

You’ll need accurate energy consumption data, usually measured in kilowatt-hours (kWh).

Where to get it:

Utility bills or invoices.
Smart meters or energy management systems (EMS).
Facility-level records or sub-metering data.

Pro Tip:
If your company operates across multiple sites, collect data for each one separately. This helps identify high-consumption locations for targeted improvement.

Step 3: Choose Your Calculation Method

According to the GHG Protocol Scope 2 Guidance, there are two recognized methods to calculate emissions:

1. Location-Based Method

Uses average emission factors for the grid where electricity is consumed.
Reflects the overall mix of energy sources (coal, gas, renewables, etc.) used in that region.

2. Market-Based Method

Uses supplier-specific emission factors, often reflecting cleaner energy contracts or renewable energy purchases.
Reflects your company’s actual purchasing choices and agreements.

Most organizations are encouraged to report both methods for transparency.

Step 4: Find the Right Emission Factors

Emission factors tell you how much CO₂ equivalent (CO₂e) is produced per unit of energy consumed.

For Malaysia, refer to official emission factors published by:

Suruhanjaya Tenaga (Energy Commission of Malaysia)
Malaysia Greenhouse Gas Inventory
TNB Sustainability Reports

Example:
TNB’s grid emission factor is typically around 0.581 tCO₂e/MWh, but always check for the most recent value.

Step 5: Apply the Calculation Formula

Now, let’s calculate!
The standard formula is:

\text{Scope 2 Emissions (tCO₂e)} = \text{Electricity Used (kWh)} × \text{Emission Factor (tCO₂e/kWh)}

Example:
If your office consumed 120,000 kWh of electricity in one year, and the grid emission factor is 0.000581 tCO₂e/kWh:

120,000 × 0.000581 = 69.72 \text{ tCO₂e}

Your company’s Scope 2 emissions = 69.72 tonnes of CO₂e per year.

Step 6: Adjust for Green Energy Contracts

If your company purchases renewable energy certificates (RECs) or has a Power Purchase Agreement (PPA) with a solar provider, you can account for that in the market-based method.

These green contracts reduce your reported Scope 2 emissions since they represent low or zero-emission energy sources.

Step 7: Report and Verify Your Data

To maintain credibility, report your Scope 2 results clearly in your sustainability or ESG report.

Recommended Reporting Standards:

GHG Protocol Corporate Standard
ISO 14064-1
CDP or GRI framework

Verification:
Engage a third-party verifier or accredited consultant to review your data for accuracy and compliance.

Common Mistakes When Calculating Scope 2 Emissions

Many companies make errors when trying to figure out How to Calculate Your Company's Scope 2 Emissions Accurately. Here are a few to avoid:

1. Using Outdated Emission Factors

Emission factors can change yearly based on the national energy mix. Always use the latest available data.

2. Mixing Scope 1 and 2 Data

For example, including diesel generator emissions (Scope 1) in your purchased electricity total can distort results.

3. Ignoring Transmission Losses

Energy lost in transmission and distribution can affect total emissions if not properly accounted for.

4. Missing Multi-Site Aggregation

Failing to consolidate data across branches or factories can understate your actual emissions footprint.

5. No Documentation Trail

Auditors and verifiers need proof — always store invoices, meter logs, and calculation sheets.

How Digital Tools Simplify Scope 2 Calculation

Modern energy management platforms make How to Calculate Your Company's Scope 2 Emissions Accurately much easier.

Digital Solutions Can:

Automatically collect utility data from smart meters.
Apply emission factors instantly.
Track year-on-year performance.
Generate ESG or ISO 50001-compliant reports.

Tools like Energy Management Information Systems (EMIS) or carbon accounting software reduce manual work and human error.

Integrating Scope 2 Into ISO 50001

If your organization is ISO 50001-certified, Scope 2 tracking becomes even more relevant.

The standard requires continuous improvement in energy performance, which includes:

Monitoring electricity usage trends.
Measuring carbon reduction outcomes.
Implementing corrective actions based on data insights.

When used together, ISO 50001 and accurate Scope 2 reporting form a strong foundation for corporate sustainability.

Example: Malaysian Manufacturing Company

To illustrate How to Calculate Your Company's Scope 2 Emissions Accurately, let’s consider a local manufacturer.

Scenario:

3 production plants in Selangor, Penang, and Johor.
Combined annual electricity use: 8,500,000 kWh.
Grid emission factor: 0.000581 tCO₂e/kWh.

Calculation:
8,500,000 × 0.000581 = 4,938.5 tCO₂e per year.

Next Steps:

Install solar PV at each site to offset grid energy.
Implement energy-efficient motors and lighting.
Report results in annual sustainability disclosure.

This approach not only improves compliance but also cuts long-term operational costs.

Understanding Scope 2 Reductions

After learning How to Calculate Your Company's Scope 2 Emissions Accurately, the next step is finding ways to reduce them.

Effective Reduction Strategies

Switch to renewable electricity (solar, hydro, wind).
Improve building energy efficiency (HVAC, lighting, insulation).
Use energy-efficient machinery and automation.
Optimize operation schedules to reduce peak demand.
Participate in Malaysia’s Net Energy Metering (NEM) program.

Every kWh saved means fewer emissions and lower bills.

Reporting Example: How It Looks in Your ESG Report

Category	Data
Reporting Year	2024
Electricity Consumption (kWh)	8,500,000
Emission Factor (tCO₂e/kWh)	0.000581
Scope 2 Emissions (tCO₂e)	4,938.5
Reduction vs Last Year	-7.2%
Method Used	Location-based

Transparent reporting builds stakeholder confidence and supports Malaysia’s push toward net-zero carbon goals.

Future of Scope 2 Reporting in Malaysia

Malaysia’s National Energy Transition Roadmap (NETR) and EECA (Energy Efficiency and Conservation Act) will soon make energy reporting a regulatory expectation.

That means businesses that already know How to Calculate Your Company's Scope 2 Emissions Accurately will be better prepared to comply — and to benefit.

Expect to see:

Mandatory reporting for large energy users.
Incentives for verified emission reductions.
Integration of digital tools for carbon tracking.

Final Thoughts

You’ve now learned How to Calculate Your Company's Scope 2 Emissions Accurately — from identifying energy sources and using emission factors to verifying data and reducing impact.

Getting it right builds credibility, saves money, and moves your organization closer to a sustainable, low-carbon future.

If you’re unsure where to start or need expert help to streamline your calculations, Techikara Engineering is here to guide you every step of the way.

📞 WhatsApp or call 013-300 6284 today to get professional support in measuring, managing, and reducing your company’s carbon emissions effectively.

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