Step-by-Step Guide: How SMEs Can Report Scope 1 and Scope 2 Emissions

For many small and growing businesses (SMEs), sustainability reporting starts with two numbers: your Scope 1 and Scope 2 greenhouse gas (GHG) emissions.

It may sound technical, but in practice it’s about gathering your fuel and electricity bills, converting them into energy use, and applying standard emission factors. Here’s a simple, step-by-step guide to get you started. For more context, check out our guide on what is CSRD reporting.

Step 1. Gather Your Data Sources

Collect the documents that show your energy use for the past year:

• Fuel receipts or invoices — for company vans, trucks, heating oil, or natural gas boilers (Scope 1).
• Utility bills — electricity, district heating, or cooling you purchase (Scope 2).
• Meter readings — if you have fuel tanks or on-site generation.

💡 Tip: Keep all of these in one folder (digital or paper). You’ll reuse them every year.

Step 2. Separate Scope 1 from Scope 2

• Scope 1 (direct): Fuel you burn directly — petrol, diesel, gas, heating oil, or refrigerants from cooling systems.
• Scope 2 (indirect): Electricity, heating, steam, or cooling you buy from a supplier.

Think: Scope 1 is “your own chimney”, Scope 2 is “someone else’s chimney, but your bill”. Learn more about what counts as Scope 1 vs Scope 2 and how to report electricity use.

Step 3. Convert Units into Standard Energy Values

Bills and receipts use different units (litres, m³, or kWh). To compare them, convert everything into Megawatt hours (MWh), the VSME standard.

• Electricity: Already shown in kWh — just divide by 1,000 to get MWh.
• Fuel: Convert litres or m³ using standard factors from suppliers or national energy agencies.

👉 Example (Scope 1, diesel): You bought 2,000 litres of diesel. Diesel has an energy content of about 10 kWh per litre. = 2,000 × 10 = 20,000 kWh, or 20 MWh.

Step 4. Apply Emission Factors

Now translate energy use into GHG emissions. Use emission factors (standard values showing how much CO₂ equivalent is released per unit of fuel or electricity).

Sources include:

• National environmental agencies.
• The SME Climate Hub.
• The Greenhouse Gas Protocol.

👉 Example (Scope 2, electricity in France, 2022): 10,000 kWh × 0.073 kg CO₂e per kWh = 0.73 tonnes CO₂e.

👉 Example (Scope 1, diesel fuel): 2,000 litres × 2.68 kg CO₂e per litre = 5.36 tonnes CO₂e.

Step 5. Calculate Totals

Add everything together:

• Scope 1 total = all fuels you burned directly.
• Scope 2 total = all purchased electricity, heat, steam, or cooling.
• Grand total = Scope 1 + Scope 2.

You can also calculate your emissions intensity (total emissions ÷ turnover in euros), as required by the VSME.

Step 6. Document Your Method

Don’t worry if your data isn’t perfect. What matters is that you’re transparent. Make a short note of:

• What data you used (fuel receipts, bills, estimates).
• Which emission factors you applied.
• Any assumptions (e.g. shared office space or estimated mileage).

This helps your report look professional and makes it easy to repeat next year.

Step 7. Present the Results Clearly

A simple table is enough:

Banks, clients, and auditors want clarity, not jargon.

At a Glance: The 7 Steps

1. Gather your bills and fuel receipts.
2. Separate Scope 1 (fuel) from Scope 2 (purchased energy).
3. Convert everything into MWh.
4. Apply emission factors to calculate CO₂e.
5. Add up totals for Scope 1 and Scope 2.
6. Write down your method and assumptions.
7. Present results in a simple table.

Key Terms

• Corporate Sustainability Reporting Directive (CSRD) — An EU law that requires large companies — and eventually some medium-sized ones — to report on their environmental and social impacts. Smaller suppliers are not directly in scope but may be asked for CSRD-style data by banks or bigger clients.
• Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified framework designed to help SMEs share sustainability information. It is voluntary but can help SMEs respond to client or bank requests.
• Basic Module — The minimum set of sustainability disclosures under the VSME. It covers essential topics such as energy use, greenhouse gas emissions, waste, workforce data, and basic governance issues.
• Scope 1 emissions — Direct greenhouse gas emissions from sources a company owns or controls, such as fuel burned in vehicles or gas boilers.
• Scope 2 emissions — Indirect greenhouse gas emissions from purchased energy, such as electricity, heating, or cooling.
• Emission factor — A standard value that shows how much CO₂ equivalent is released per unit of energy or fuel.

While this guide focuses on Scope 1 and 2 emissions, you may also need to report Scope 3 emissions. Use our interactive selector to identify which Scope 3 categories are relevant to your business:

This tool will help you understand the full picture of emissions reporting, including indirect emissions from your value chain.