EPFO EO/AO 2023 General Ability Test · Question 117 of 120

Correct — B, (b) 2 only. The three scopes come from the Greenhouse Gas Protocol, the accounting standard companies use to report their emissions, and the paper has kept one pair right while swapping the other two with each other. The definitions are these. Scope 1 covers direct emissions from sources the company owns or controls: fuel burnt in its own boilers, furnaces and process equipment, fuel burnt in vehicles it owns or operates, and fugitive releases such as refrigerant leaks. Scope 2 covers indirect emissions from the generation of the energy the company buys and consumes, which means purchased electricity, steam, heating and cooling. Scope 3 covers every other indirect emission in the company's value chain, upstream and downstream, and the Protocol sets out fifteen categories of it, including purchased goods and services, business travel, employee commuting, waste generated in operations, transportation and distribution, use of sold products and their end-of-life treatment. Now test the paper's pairs. Pair 1 gives Scope 1 the example of emissions from employee commuting, business travel and waste produced. Those are Scope 3 items, all three of them. The company neither owns nor controls the cars its staff drive to work, the airlines they fly or the landfill that receives its waste, so none of these can be direct emissions. Pair 1 is wrongly matched. Pair 2 gives Scope 2 the example of emissions from the purchase of electricity, steam, heating and cooling for own use. That is the Protocol's definition almost word for word. Pair 2 is correctly matched. Pair 3 gives Scope 3 the example of emissions from fuels consumed by company vehicles, owned and leased. Fuel burnt in vehicles the company owns and operates is the standard illustration of Scope 1, because the company controls the source. Pair 3 is wrongly matched. Only the second pair survives, so the answer is (b). The structure repays a moment's attention, because it gives a shortcut. Pairs 1 and 3 have been exchanged with each other: the examples that belong to Scope 3 have been put against Scope 1 and the example that belongs to Scope 1 has been put against Scope 3. A candidate who is sure of only one thing, that a company's own vehicles produce direct emissions, can strike out both pairs at once and reach the answer without adjudicating the third. Note also that this is a 'consider the following pairs' item rather than a List I and List II matching item: the booklet prints each numbered emission type joined by a colon to its example, under two column headings, so the pairs are given rather than to be formed.

• (a)1 and 2 — This accepts pair 2, which is right, and pair 1, which is not. Employee commuting, business travel and waste produced are the standard examples of Scope 3, the value-chain category, precisely because the company does not own or control the emitting source in any of the three cases. The pairing is attractive to a candidate who reasons that the company's own employees and the company's own waste must count as the company's direct emissions. The test the Protocol applies is ownership or control of the emitting source, not whose activity gave rise to it: a car owned by an employee is not a company source, however company-related the journey.
• (c)1 and 3 — This selects exactly the two pairs that have been swapped, and rejects the one that is correct. It is the option a candidate reaches by reading the stem as though it asked which pairs are wrongly matched, and it is worth pausing on because the stem here contains no negative ask at all: it asks which pairs are correctly matched. Choosing the complement of the right answer is the standard failure on matching items, and the guard against it is to write down the ask in words before scoring the pairs. On the substance, pair 1 assigns Scope 3 examples to Scope 1 and pair 3 assigns a Scope 1 example to Scope 3.
• (d)3 only — This accepts only pair 3, which assigns fuels consumed by company vehicles to Scope 3. Fuel burnt in vehicles the company owns and operates is the textbook example of Scope 1, since the company controls the source, and the option also throws away pair 2, which reproduces the Scope 2 definition faithfully. A candidate might arrive here by remembering that transport-related emissions often appear under Scope 3 in company reports, which is true of transport the company buys from others, such as freight carried by a third-party logistics firm or an employee's flight, but not of vehicles in the company's own fleet.

The Greenhouse Gas Protocol is the most widely used accounting framework for corporate emissions, and its central device is the division of a company's emissions into three scopes so that the same tonne of carbon dioxide is not counted twice within one company's inventory. Scope 1 is direct emissions from sources owned or controlled by the company: stationary combustion in boilers and furnaces, mobile combustion in owned or controlled vehicles, process emissions, and fugitive emissions such as leaks of refrigerant gases. Scope 2 is indirect emissions from the generation of purchased energy consumed by the company, covering electricity, steam, heating and cooling; the emissions physically occur at the power station, but they are attributed to the company that consumes the energy. Scope 3 is everything else in the value chain, both upstream and downstream, and the Protocol's separate standard for it lists fifteen categories, among them purchased goods and services, capital goods, fuel and energy activities not already in Scopes 1 and 2, upstream and downstream transportation and distribution, waste generated in operations, business travel, employee commuting, use of sold products and end-of-life treatment of sold products. Scope 3 is usually much the largest of the three for a company that does not itself run heavy industry, and it is also the hardest to measure, since the data belong to suppliers and customers. In India the disclosure obligation runs through the Securities and Exchange Board of India's Business Responsibility and Sustainability Report, which the top 1000 listed companies by market capitalisation have been required to file since 2022-23 and which includes greenhouse gas disclosure, and it sits against the national commitment, announced at the Glasgow climate conference in November 2021, to reach net zero by 2070.

Corporate sustainability vocabulary has moved from specialist reporting into general business news, and the EO/AO General Ability Test now draws on it in the current-affairs and economy block. The three scopes are ideal examination material because they are a small, fixed, mutually exclusive classification with unambiguous standard examples, which lets an examiner build a matching item with no room for argument. The discrimination here is the plainest one available: whether the candidate knows that ownership or control of the emitting source is what separates direct from indirect. The habit rewarded is to fix two or three canonical examples against each scope, since every question in this family is answered by matching an example to a definition.

• Scope 1 is direct emissions from sources owned or controlled by the company, including fuel burnt in its own or leased vehicles and in its own boilers and furnaces.
• Scope 2 is indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the company.
• Scope 3 is all other indirect emissions in the value chain, upstream and downstream, and the Protocol defines fifteen categories of it.
• Employee commuting, business travel and waste generated in operations are Scope 3 categories.
• The test that separates Scope 1 from the rest is ownership or control of the emitting source, not whose activity caused the emission.
• Scope 3 is typically the largest and the hardest to measure, because the underlying data sit with suppliers and customers.
• In India the top 1000 listed companies by market capitalisation have been required to file a Business Responsibility and Sustainability Report with greenhouse gas disclosure since 2022-23.
• India announced a net zero target for 2070 at the Glasgow climate conference in November 2021.

• Assuming that anything done by employees counts as the company's direct emissions.
• Placing purchased electricity in Scope 1 because the company consumes it, or in Scope 3 because it is generated elsewhere.
• Choosing the exact complement of the right answer by reading a positive ask as a negative one.
• Forgetting that transport can fall in Scope 1 or Scope 3 depending on whether the vehicle is the company's own.
• Treating this as a List I and List II item; the pairs are printed already formed and only have to be judged.

Sustainability vocabulary appears in EO/AO papers as a 'consider the following pairs' item like this one, as a 'best describes the term' item on a phrase in the news, or as a two-statement code item combining a definition with a disclosure requirement. The commonest device is a swap between two categories of a small classification, which is exactly what has been done here. Learn the classification with canonical examples attached, and check every pair against the definition rather than against a general impression of the category.

No directly related past PYQ was found.

• practice — not a real PYQ

  Under the Greenhouse Gas Protocol, emissions from the electricity a company purchases and consumes are classified as :

  • (a)Scope 1 emissions
  • (b)Scope 2 emissions
  • (c)Scope 3 emissions
  • (d)They are not part of the company's inventory at all

  Answer(b) Scope 2 emissions

• practice — not a real PYQ

  Which one of the following would be recorded as a Scope 1 emission of a manufacturing company ?

  • (a)Emissions from the daily commute of its employees in their own vehicles
  • (b)Emissions from diesel burnt in the company's own generator set
  • (c)Emissions from the disposal of its products by customers after use
  • (d)Emissions from the electricity it buys from the grid

  Answer(b) Emissions from diesel burnt in the company's own generator set