When measurement meets motivation, markets move - and that’s where real change happens.

Since 2010, more than 50,000 companies worldwide have been tracking and reporting their Scope 1 and 2 greenhouse-gas emissions, a major step in corporate climate accountability. Now, as mandatory Scope 3 reporting takes hold across global markets, over 4,000 of those businesses face a far greater challenge: measuring and managing emissions across their entire value chain. It’s a shift from counting what we control, to confronting what we influence and it’s where the real transformation begins.    

The Origins of Scopes 1, 2 and 3    

The concept of Scopes 1, 2 and 3, covering direct emissions, purchased-energy emissions, and full value-chain emission, emerged from the Kyoto Protocol, adopted on 11 December 1997 (entered into force 16 February 2005) by 192 Parties to the United Nations Framework Convention on Climate Change (UNFCCC). It matters because it established a universal framework for measuring, managing, and reducing corporate greenhouse-gas impact.    

Building on Kyoto’s foundation, the Greenhouse Gas Protocol was launched in 2001 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It turned international climate commitments into practical corporate accounting tools, defining:    

• Scope 1: Direct control — combustion, processes, vehicles
• Scope 2: Indirect consumption — purchased electricity
• Scope 3: Full value-chain emissions

     What began as a mechanism for governments to meet national targets has evolved into the backbone of global sustainability reporting. Proof that what began as policy is now a cornerstone of business accountability, environmental impact and a driver of innovation.    

Timeline of Change:  Why Did We Wait?    

• 1997 — Kyoto Protocol adopted (192 countries)
• 2001 — Greenhouse Gas Protocol launched (Scopes 1–3 defined)
• 2005 — Kyoto enters into force
• 2015 — Paris Agreement signed (196 Parties commit to limiting warming to 1.5 °C and improving transparency)
• 2010–2020 — Global adoption of Scope 1 & 2 reporting (Over 50,000 companies begin annual disclosure via CDP, national registries, and ESG reporting)
• 2025–2026 — Mandatory Scope 3 reporting phase-in (Australia, EU, UK, and Japan extend disclosure to full value chains — affecting more than 6,000 Australian organisations)

Measurable Impact    

Scope 1 and 2 Emissions – Australia 2010–2022    

29% Reduction CO₂-e    

Since 2010, Australia’s emissions have fallen from 609 → 433 Mt CO₂-e, driven by the phase-out of coal, growth of large-scale renewables, corporate power-purchase agreements, energy-efficiency gains, improvements to land use and improved industrial efficiency.    

That’s a reduction of an indicated 176 million tonnes CO₂-e per year (29% reduction), tangible proof that consistent measurement under the NGER framework has delivered real impact. The data represents actual measured emissions, reported annually under the National Greenhouse and Energy Reporting (NGER) scheme and compiled in the National Inventory Report, not adjusted for GDP or population.    

Per-capita, this equates to 34% reduction in emissions    

When adjusted for population growth, this equates to a 34% reduction in per-capita emissions, a powerful indicator of real decarbonisation relative to national growth.    

Department of Climate Change, Energy, the Environment and Water (DCCEEW) 2024, National Inventory Report 2022, Vol. 1. The Australian Government Submission to the United Nations Framework Convention on Climate Change, p.36, Table 2.1.    

Policy Matters    

While Scope 1 & 2 reporting brings methodological complexity, its contribution to climate accountability cannot be overstated. Over more than a decade, the framework has built one of the world’s most transparent emissions datasets. It enables government, business, and investors to measure progress confidently, benchmark performance, and direct capital toward decarbonisation.    

Consistent policy has underpinned measurable reductions — proving that what gets measured, gets managed, and what’s managed, improves.    

Scope 3: The Next Wave of Change    

Scope 3 covers everything beyond a company’s gates, the emissions from materials, transport use and end-of-life. Globally, these value-chain emissions account for around 90 % of corporate carbon footprints, meaning the biggest opportunities for reduction lie outside company walls.    

For packaging, Scope 3 includes:

• Purchased goods and materials: embodied carbon in paper, board, plastic, glass, or aluminium before they even reach a factory floor.
• Transportation and logistics:  emissions from moving packaging through the supply chain
• Use and reuse packaging performance during product use (e.g. refrigeration or refill systems)
• End-of-life treatment: collection, recycling, incineration, or landfill outcomes
• Upstream supply chain impacts:  feedstocks, resins, coatings, inks, and adhesives

These touch points define the true climate footprint of packaging systems and the strategic levers for brand owners seeking to meet EPR targets, reduce cost, and align with consumer and regulation expectations.    

Emissions reporting works because it’s a universal language, harmonised definitions enable data sharing across sectors and geographies. Like any reporting process, the value lies in what the data reveals: hotspots, inefficiencies, and opportunities for improvement at scale!    

Data and Policy:  Drives Innovation    

Leading companies are already using Scope 1 & 2 data to target high-emission operations. Heineken, for example, partnered with Siemens to build a digital twin of its breweries, using emissions data to identify that 70 % of its carbon footprint came from heating and cooling. By focusing optimisation efforts there, Heineken projects a 50 % reduction in CO₂ emissions across its 167 brewery sites by 2025. Active reporting driving innovation, cost and impact reduction!    

Data & Policy, Drives Reduction    

This same principle identifying the “70%” and going after it, shows how data helps businesses focus effort where it delivers the greatest impact.    

At Phantm, we see this daily in packaging. Manufacturers, suppliers, distributors, and retailers each hold parts of the emissions and materials puzzle, but data sharing is fragmented. Packaging data may be imperfect, but it’s not unusable. Starting with the products or suppliers that matter most can yield powerful insights and build momentum for a more complete, connected dataset over time.    

Mandatory Scope 3 disclosure will push companies to engage suppliers, rethink procurement, and innovate in material design, logistics, reuse, and recovery. For many, it will expose the true impact of what they make and move, not just what they power, it will distinguish those genuinely transforming their value chains.    

Aligning Scope 3 reporting with packaging reform is critical. Each brings complexity and cost, but both can be managed together, one informs the other. Scope 1 & 2 have shown, transparency and policy breed’s progress.    

Innovation & Investment    

Australia’s next phase of climate reporting won’t just quantify emissions, it will catalyse collaboration and innovation and drive investment, empowering the packaging sector and its supply chains to design materials and systems that work for impact, people and planet.

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