Scope 3 emissions, also known as value chain emissions, encompass all the indirect emissions that occur in a company's value chain, outside of Scope 1 and Scope 2 emissions. These emissions are the result of activities from assets not owned or controlled by the reporting organization but over which it indirectly impacts through its operations and activities.
The Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Standard categorizes Scope 3 emissions into 15 categories, which can be grouped into upstream and downstream emissions:
Purchased goods and services include upstream emissions from the production of goods and services purchased by the company in the year. These could be materials used during production, such as raw materials and parts or goods to support company operations, such as office supplies and other services like consulting and accounting.
Capital goods emissions are associated with final products used by the company to provide goods and services. These include equipment and machinery.
Fuel- and energy-related activities involve the indirect emissions from the production of purchased fuels and electricity. These are not included in Scope1 and 2 calculations.
Upstream transportation and distribution consist of emissions from transporting raw materials and products to the company before the sale. This considers transportation via land, air, and sea and also includes emissions from third-party warehousing.
Waste generated in operations are emissions resulting from the disposal and treatment of waste generated in the company’s operations.
Business travel consists of emissions from activities related to business travel by employees through land, sea, and air. This also considers privately owned vehicles and public transportation.
Employee commuting includes emissions from employees traveling between their homes and their workplace.
Upstream leased assets are emissions from assets leased by the company.
Downstream transportation and distribution relate to the transportation and distribution of products after sale.
Processing of sold products emissions result from the processing of sold products by downstream manufacturers or by another organization. For example, this includes emissions that occur when a food manufacturer sells ingredients to a bakery..
Use of sold products is often the largest category for manufacturers of durable goods and includes emissions from product usage..
End-of-life treatment of sold products emissions are from the disposal and recycling of sold products. This is similar to the upstream waste generated in operations emissions.
Downstream leased assets emissions are from operations leasing assets owned by the company.
Franchise emissions are sourced from franchise operations.
Investment emissions are related to investments made by the company, such as funding provided to other companies.
Methodologies for measuring Scope 3 emissions vary depending on the category. Generally, activity data (eg. miles traveled, amount spent or used) are multiplied by relevant emissions factors to convert the data into carbon dioxide equivalents (CO2e). Emission factors are available from several sources, such as the GHG Protocol, Environmental Protection Agency (EPA), or International Energy Agency (IEA). These factors vary based on region, technology, fuel type, and other specifics.
Supplier engagement is also important when measuring Scope 3 Emissions as emissions can also be measured by gathering information directly from the supplier of a good or service.
Scope 3 emissions often represent the largest share of an organization's carbon footprint and can provide key insights for comprehensive climate action strategies. By understanding its impact, companies can identify efficiency opportunities along the supply chain, potentially reducing costs and improving environmental performance. On a regulatory and compliance standpoint, managing Scope 3 emissions helps companies anticipate regulatory risks and market shifts toward low-carbon technologies. Lastly this demonstrates to customers, investors, and partners a commitment to sustainability.
Reducing Scope 3 emissions are often tailored to specific categories of emissions. These can involve the following:
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