Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur across a company’s value chain , both upstream and downstream , that are not covered by Scope 1 or Scope 2. For most companies, Scope 3 represents the largest share of their total carbon footprint, often accounting for 70–90% of emissions.
The GHG Protocol defines 15 categories of Scope 3 emissions:
Upstream categories (1–8):
- Purchased goods and services
- Capital goods
- Fuel- and energy-related activities
- Upstream transportation and distribution
- Waste generated in operations
- Business travel
- Employee commuting
- Upstream leased assets
Downstream categories (9–15):
- Downstream transportation and distribution
- Processing of sold products
- Use of sold products
- End-of-life treatment of sold products
- Downstream leased assets
- Franchises
- Investments
Under the CSRD, companies must report material Scope 3 categories as part of their ESRS E1 climate disclosures. The Science Based Targets initiative requires companies with significant Scope 3 emissions (typically over 40% of total) to set Scope 3 reduction targets.
Measuring Scope 3 is challenging because it relies on data from suppliers, customers, and third parties. Companies often begin with spend-based estimates and progressively shift to activity-based calculations as data quality improves.
Dcycle’s supplier engagement tools help companies collect primary data from their value chain to improve Scope 3 accuracy.
