How to align with a 1.5°C scenario to reduce financial and legal risk while building business resilience

As climate regulations tighten and stakeholder pressure intensifies, organizations worldwide are recognizing that effective emissions management is no longer optional—it's a business imperative. With over 10,000 companies now setting science-based targets and emissions reduction becoming central to corporate strategy, understanding how to create credible Scope 1-3 emission reduction strategies has become critical for long-term business success.

Why Scope 1-3 Emissions Matter More Than Ever

The importance of comprehensive emissions tracking has reached unprecedented levels in 2025. According to recent data from the Science Based Targets initiative (SBTi), there has been a 227% jump in companies setting comprehensive climate targets, with 66% of all submissions now aligned with 1.5°C pathways—the most ambitious threshold under the Paris Agreement.

This surge isn't just about environmental responsibility—it's about business resilience. Companies with science-based targets are demonstrating that ambitious climate action goes hand-in-hand with successful business operations. Moreover, aligning with a 1.5°C scenario significantly reduces both financial and legal risks, as regulators worldwide implement stricter climate disclosure requirements and investors increasingly factor climate risk into their decisions.

Understanding the Three Scopes

Before diving into reduction strategies, it's crucial to understand what each scope encompasses:

Scope 1 Emissions are direct greenhouse gas emissions from sources owned or controlled by your organization, including:

• Fuel combustion in company-owned vehicles and equipment

• On-site energy generation

• Manufacturing processes

• Fugitive emissions from refrigeration systems

Scope 2 Emissions are indirect emissions from purchased energy:

• Electricity purchased from the grid

• Steam, heating, and cooling purchased from third parties

• Energy consumed in leased facilities

Scope 3 Emissions encompass all other indirect emissions across your value chain:

• Purchased goods and services (often the largest category)

• Business travel and employee commuting

• Transportation and distribution

• Use of sold products

• End-of-life treatment of products

According to the Greenhouse Gas Protocol, Scope 3 emissions typically represent 70-90% of a company's total carbon footprint, making them critical for any comprehensive reduction strategy.

Setting Science-Based Targets Aligned with 1.5°C

The SBTi has fundamentally shifted the landscape by raising minimum ambition from "well below 2°C" to "1.5°C", recognizing that limiting global warming to 1.5°C above pre-industrial levels requires global emissions to be halved by 2030 and reach net zero by 2050.

The Business Case for 1.5°C Alignment

Organizations setting 1.5°C-aligned targets benefit from:

• Enhanced investor confidence: Companies with science-based targets represent $13 trillion in market capitalization

• Regulatory preparedness: Proactive compliance with emerging requirements like the EU's CSRD and California's SB-253

• Competitive advantage: Differentiation in markets where sustainability is increasingly valued

• Risk mitigation: Reduced exposure to carbon pricing, stranded assets, and climate-related disruptions

Target-Setting Framework

Effective science-based targets should include:

1. Near-term targets (5-10 years) covering Scope 1 and 2 emissions

2. Long-term net-zero targets by 2050 or earlier

3. Scope 3 targets for companies where these emissions represent 40% or more of total emissions

4. Interim milestones to track progress and maintain accountability

Quantifying Emissions Across All Scopes

Accurate measurement forms the foundation of any credible reduction strategy. A recent study revealed that 85% of organizations want to reduce emissions, yet only 9% can accurately track their total emissions across all activities.

Scope 1 and 2 Measurement

For direct and energy-related emissions, organizations should:

• Implement continuous monitoring systems where feasible

• Use the GHG Protocol Corporate Standard as the foundation for calculations

• Apply location-based and market-based methods for Scope 2 emissions

• Ensure data quality through regular calibration and verification

The EPA provides comprehensive guidance for Scope 1 and 2 inventory development, including tools for calculating emissions from mobile combustion sources, purchased electricity, and fugitive emissions.

Scope 3 Measurement Challenges and Solutions

Scope 3 emissions present unique challenges due to their complexity and the need for value chain collaboration. The GHG Protocol Scope 3 Standard provides a framework for measuring emissions across 15 categories.

Best practices for Scope 3 measurement include:

• Supplier engagement programs to collect primary data

• Spend-based calculations using environmentally-extended input-output models

• Hybrid approaches combining primary data with industry averages

• Regular data quality assessments to improve accuracy over time

Leading companies like Apple are investing heavily in Scope 3 measurement, with the tech giant using a "Clean Energy Portal" to help suppliers find renewable energy resources and track their progress.

Implementing Renewable Energy and Efficiency Measures

With measurement systems in place, organizations can implement targeted reduction strategies across all scopes.

Scope 1 Reduction Strategies

Energy Efficiency Improvements:

• Building automation systems and smart HVAC controls

• LED lighting upgrades (The Home Depot reduced emissions by 127,000 metric tons in 2020 through LED installations)

• Equipment optimization and maintenance programs

• Process efficiency improvements in manufacturing

Fuel Switching and Electrification:

• Fleet electrification (Amazon committed to 100,000 electric delivery vehicles by 2030)

• Heat pump installations for heating systems

• Alternative fuel adoption where electrification isn't feasible

• On-site renewable energy generation

Scope 2 Reduction Strategies

Renewable Energy Procurement:

• Power purchase agreements (PPAs) for utility-scale renewable projects

• On-site solar and wind installations

• Renewable energy certificates (RECs) for immediate impact

• Green tariff programs with utilities

TotalEnergies exemplifies ambitious Scope 2 reduction, committing to 100% low-carbon electricity supply for European and US facilities by 2025 through their Go Green initiative.

Energy Efficiency:

• Smart building technologies and energy management systems

• Upgraded insulation and building envelope improvements

• Efficient equipment procurement policies

• Real-time energy monitoring and optimization

Scope 3 Reduction Strategies

Given that Scope 3 emissions typically represent the largest portion of most companies' footprints, these strategies often provide the greatest impact:

Supplier Engagement:

• Dual-mission sourcing that minimizes both cost and carbon footprint

• Supplier sustainability requirements and audits

• Collaborative reduction programs and shared best practices

• Long-term partnerships with sustainability commitments

Product and Service Innovation:

• Circular design principles to reduce material intensity

• Extended producer responsibility programs

• Product-as-a-service models to optimize utilization

• Sustainable material selection and sourcing

Logistics Optimization:

• Transportation mode shifting (road freight is 5x more efficient than air freight, while rail and ocean are up to 20x more efficient)

• Supply chain localization to reduce transport distances

• Warehouse and distribution center efficiency improvements

• Packaging optimization and waste reduction

Monitoring and Reporting Tools for 2025

The emissions management software landscape has evolved rapidly to meet growing regulatory and stakeholder demands. Leading platforms now offer TÜV-certified methodologies, automated reporting aligned with recognized standards, and AI-powered analytics for reduction planning.

Key Features to Look For

Comprehensive Scope Coverage:

• Support for all 15 Scope 3 categories

• Integration across direct and indirect emissions

• Automated data collection from multiple sources

• Real-time monitoring and alerts

Regulatory Compliance:

• CSRD and ESRS E1 alignment for EU operations

• ISSB S1 and S2 compatibility for global reporting

• SEC climate rule preparation (when reinstated)

• California SB-253 and SB-261 compliance tools

Advanced Analytics:

• Scenario modeling for reduction planning

• AI-powered hotspot identification

• Benchmarking against industry peers

• Progress tracking toward science-based targets

Leading Platform Examples

Several platforms have emerged as leaders in the 2025 landscape:

• Pulsora: Recognized for audit-ready dashboards and comprehensive Scope 3 capabilities

• Persefoni: Known for audit-grade carbon and climate disclosure with strong regulatory alignment

• Plan A: Offers TÜV-certified tools with a reduction-first philosophy

• Watershed: Provides enterprise-grade platform for large corporations

Adapting to Evolving Policy Landscape

The regulatory environment for climate disclosure is rapidly evolving, creating both challenges and opportunities for organizations with robust emissions management systems.

EU Corporate Sustainability Reporting Directive (CSRD)

The CSRD represents a groundbreaking shift in sustainability reporting, requiring detailed disclosures aligned with the Paris Agreement's 1.5°C goal. First reports under CSRD will be published in 2025, covering financial years starting in 2024.

Key CSRD Requirements:

• Double materiality assessment covering impact and financial materiality

• Detailed transition plans with interim targets

• Third-party assurance requirements

• Extensive data points across all ESG topics

ISSB Standards (IFRS S1 and S2)

The International Sustainability Standards Board has created global baseline standards for sustainability disclosure, with jurisdictions representing over 50% of global GDP taking steps toward adoption.

ISSB Implementation Timeline:

• Standards effective from January 2024 on voluntary basis

• UK-endorsed versions expected in 2025

• First-year relief provisions allowing focus on climate disclosures

California Climate Disclosure Laws

California's SB-253 and SB-261 create first-in-the-nation mandatory climate disclosure requirements for large companies doing business in the state.

Implementation Timeline:

• 2026: Scope 1 and 2 emissions disclosure

• 2027: Scope 3 emissions disclosure

• January 1, 2026: Climate-related financial risk reporting

Real-World Success Stories

Leading organizations are demonstrating that ambitious emissions reduction is not only possible but profitable.

Corporate Leadership Examples

Amazon's Comprehensive Approach: Amazon has achieved 100% renewable electricity matching for two consecutive years while maintaining rapid business growth. Their Climate Pledge Fund has invested $2 billion in sustainable technologies, demonstrating how emissions reduction can drive innovation.

Starbucks' Operational Excellence: The coffee giant set an ambitious goal to certify 10,000 "Greener Stores" by 2025, implementing third-party-verified standards for energy, water, and waste efficiency across their global operations.

Tesla's Manufacturing Innovation: Tesla has achieved carbon-neutral Supercharger networks worldwide for four consecutive years while converting manufacturing facilities to renewable energy, demonstrating that heavy industry can align with net-zero pathways.

Financial Sector Leadership

Barclays' Transition Finance: The bank generated $982 million in sustainable finance income in 2024 and set a 29% absolute emissions-reduction target for facilitated emissions by 2030—the first such goal by a global systemically important bank.

Industrial Efficiency Gains

TotalEnergies' Energy Efficiency Program: The energy company launched a $1 billion energy efficiency plan targeting 2 million tons of CO2 equivalent reduction through 2025, demonstrating how traditional energy companies can lead decarbonization efforts.

Building a Resilient Reduction Strategy

Creating a credible Scope 1-3 emission reduction strategy requires more than good intentions—it demands systematic planning, robust measurement, and continuous improvement.

Strategic Framework

Phase 1: Foundation Building (Months 1-6)

• Establish comprehensive emissions baseline across all scopes

• Set science-based targets aligned with 1.5°C pathway

• Implement measurement and monitoring systems

• Engage leadership and secure organizational buy-in

Phase 2: Implementation (Months 6-24)

• Deploy efficiency measures and renewable energy solutions

• Launch supplier engagement programs

• Begin reporting to relevant frameworks (SBTi, CDP, etc.)

• Establish governance structures and accountability mechanisms

Phase 3: Optimization (Months 24+)

• Continuously improve data quality and measurement accuracy

• Adapt strategies based on performance and new opportunities

• Expand scope 3 engagement and collaboration

• Prepare for evolving regulatory requirements

Success Factors

Executive Leadership: 91% of executives have maintained or increased low-carbon investment over the past year, with 92% judging the cost of inaction to exceed transition costs.

Stakeholder Engagement: Successful programs require collaboration across the value chain, from suppliers to customers to industry peers.

Technology Integration: Leading emissions management platforms now offer AI-powered analytics, automated data collection, and scenario modeling to support strategic decision-making.

Continuous Improvement: Regular target review and strategy updates ensure alignment with evolving science, technology, and regulatory requirements.

Conclusion: The Path Forward

Creating credible Scope 1-3 emission reduction strategies is no longer a choice for forward-thinking organizations—it's a business necessity. With over 5,000 climate laws and policies proposed worldwide and 83% of employees considering job changes based on company sustainability practices, the pressure for authentic climate action continues to intensify.

Organizations that act now to establish comprehensive emissions measurement, set science-based targets, and implement systematic reduction strategies will not only contribute to global climate goals but also position themselves for long-term success in a carbon-constrained world. The tools, frameworks, and technology needed for success are available today—the question is not whether to act, but how quickly to begin.

By aligning with a 1.5°C pathway, companies can reduce financial and legal risks while building the operational resilience needed to thrive in an increasingly sustainability-focused economy. The time for incremental action has passed; the future belongs to organizations bold enough to lead the transition to a net-zero economy.

Ready to develop your organization's science-based emissions reduction strategy? Council Fire's team of climate experts can help you navigate the complexities of Scope 1-3 emissions measurement, target setting, and implementation. Contact us to discuss how we can support your journey to net zero.