Purchased goods and services emissions: how to calculate Scope 3 category 1, and which emission factors to use

Purchased goods and services emissions are Scope 3 category 1: the cradle-to-gate emissions of everything your company buys, from raw materials to software subscriptions. You calculate them by multiplying what you bought by an emission factor, using one of four GHG Protocol methods, and for most companies category 1 is the single largest line in the entire footprint. The practical question is not whether to calculate it. It is which of the four methods each supplier deserves.

Last updated August 2026. This category absorbs almost every purchase a business makes, which is what makes it both the biggest number and the messiest one. Your activity data is already sitting in accounts payable, but it is organized for paying invoices, not for measuring emissions. Below: what belongs in category 1, the four calculation methods and the arithmetic each one uses, which US emission factors to apply, a worked example, and how companies move off spend-based estimates once the first inventory is done.

What are purchased goods and services emissions?

Category 1 covers the extraction, production and transportation of goods and services purchased or acquired by your company in the reporting year, up to the point of receipt. That last phrase is the boundary: cradle-to-gate, not cradle-to-grave. What happens to the product after you receive it sits in other categories or in your own Scope 1 and 2.

It is a catch-all by design. If a purchase is not captured by one of the other fourteen categories, it belongs here. Raw materials, components, packaging, office supplies, professional services, cloud hosting, marketing agencies, legal fees. Services count, and people routinely forget them: a consulting engagement has an emissions footprint made of offices, laptops and flights, and the GHG Protocol expects it in your inventory.

Two exclusions are worth memorizing. Capital equipment goes in category 2, capital goods, not here, and the line between them follows your own capitalization policy rather than any emissions logic. Fuel and electricity you purchase are Scope 1 and Scope 2, with their upstream production emissions in category 3, so none of that belongs in category 1 either. Getting these boundaries wrong is the most common source of double counting in Scope 3.

How do you calculate purchased goods and services emissions?

Multiply what you bought by an emission factor. The GHG Protocol sets out four ways to express "what you bought", and they differ only in how specific that quantity is. Every method produces a figure in tonnes of CO2 equivalent, and every method is acceptable for reporting as long as you say which one you used.

Almost nobody uses one method for the whole category. A typical mature inventory has supplier-specific data covering the top ten or twenty suppliers by spend, average-data on the commodities where physical quantities are tracked, and spend-based factors carrying the several thousand small suppliers who will never respond to a data request. That mix is the hybrid method, and it is what the GHG Protocol expects. The wider version of this decision, across all fifteen categories, is on how to calculate Scope 3 emissions.

What emission factors are used for purchased goods and services?

For a US company using the spend-based method, the default set is the EPA Supply Chain Greenhouse Gas Emission Factors. Version 1.3 covers 1,016 US commodities keyed to six-digit 2017 NAICS codes, was published on July 5 2024 using 2022 greenhouse gas data, and expresses factors as kilograms of CO2e per 2022 US dollar using 100-year global warming potentials from the IPCC Fifth Assessment Report. Electricity, government and households are excluded from the set, which is correct: those are Scope 2 or out of scope.

One detail in that dataset decides whether your number is right or roughly 20% low. Each record carries three factor types: supply chain emissions without margins, the margins themselves, and the two combined. Margins are the wholesale, retail and transportation costs baked into a purchase price. Your accounts payable data records what you actually paid, margins included, so the with-margins factor is the one that matches. Using the without-margins factor against purchase prices understates the category, and it is a common error precisely because the without-margins column tends to come first in the file.

Where a supplier publishes a verified product carbon footprint, it outranks any average factor, and you should keep the document rather than just the number. It is the first thing a verifier asks to see. Which federal factor set applies to which part of an inventory is set out in which EPA emission factors to use.

A worked example

Suppose a US manufacturer spends $4.2 million with a plastics supplier in the reporting year, and the applicable NAICS commodity carries a with-margins factor of 0.62 kg CO2e per dollar. The spend-based calculation is 4,200,000 multiplied by 0.62, giving 2,604,000 kg, or 2,604 tCO2e.

Now suppose that same supplier publishes a verified cradle-to-gate footprint of 2.4 kg CO2e per kilogram of resin, and the manufacturer bought 900 tonnes. The supplier-specific calculation is 900,000 kg multiplied by 2.4, giving 2,160 tCO2e. Same purchase, roughly 17% lower, and the second number is the defensible one because it reflects what the supplier actually did rather than what the average firm in that NAICS code does.

The gap between those two figures is the entire argument for supplier engagement. It is also why a spend-based number should never be used as a reduction claim: if the manufacturer had simply negotiated a 10% price cut on the same 900 tonnes, the spend-based figure would have fallen to 2,344 tCO2e while nothing physical changed at all. The full comparison is in spend-based vs activity-based emissions.

Why category 1 is usually the largest Scope 3 category

Because it is the widest. Categories 4 through 8 each cover one operational activity. Category 1 covers everything the company buys to exist, which for a services business is close to the whole cost base. For manufacturers it carries the embodied emissions of every input, and those inputs were made in processes far more energy-intensive than anything happening on your own site.

The exceptions are worth knowing before you start. If your products consume energy in use, category 11 usually dwarfs category 1 and often dwarfs everything else combined. If you are a financial institution, category 15 is the whole story. Everyone else should assume category 1 is the priority and plan data collection accordingly. The relative sizes across all fifteen are covered on the 15 Scope 3 categories.

How to move from spend-based to supplier-specific data

Start by finding out where the money actually is. In most companies, somewhere between 60% and 80% of category 1 spend sits with a few dozen suppliers, and the remaining thousands account for a tail that no amount of engagement will make material. Rank suppliers by calculated emissions rather than by spend, because a high-factor commodity at moderate spend can outrank a large software contract.

Then ask, specifically. A request for "your carbon data" gets ignored. A request for a cradle-to-gate product carbon footprint in kg CO2e per unit, with the standard it was calculated to and whether it has been verified, gets an answer or a clear no. Suppliers who already respond to CDP have the number ready, which is one practical reason to check whether your key suppliers disclose before you draft the email. What that disclosure involves on their side is covered in our note on the CDP supply chain questionnaire.

The unglamorous prerequisite is getting a clean year of purchase ledger out of your ERP in the first place, with supplier names normalized and expense categories consistent. Most finance teams find it faster to connect the systems directly than to reconcile three exports by hand, and the effort pays for itself because the same file gets rebuilt every year.

How to reduce emissions from purchased goods and services

There are only three levers, and one of them is not real. You can buy less, buy differently, or get your suppliers to emit less. Reporting a lower number because prices fell is the one that is not real, and any assurance provider will treat it as such.

Buying differently means substituting materials or suppliers with lower verified footprints, which requires supplier-specific data to demonstrate. Supplier decarbonization means engagement, and it moves slowly: a supplier changing its energy contract or process shows up in your inventory a year or two later. This is why companies with credible category 1 reduction stories almost always started their supplier data programs three or four years earlier. A spend-based inventory cannot show any of it, which is the strongest practical argument for making the move.

Common mistakes in category 1

• Using without-margins factors against purchase prices. Understates the category systematically. Match the factor variant to what your data actually represents.
• Excluding services. Professional fees, cloud spend and agency costs are in scope and are often a large share for services businesses.
• Mixing GWP sets. The EPA supply chain factors are built on AR5 values while CDP and several frameworks now expect AR6. Pick one basis and record it, as explained in what CO2e and GWP mean.
• Capitalized purchases counted twice. If it went to the fixed asset register it belongs in category 2, and it should not also be in the AP extract feeding category 1.
• No factor version recorded. When EPA publishes a new version, last year's number becomes unreproducible unless you noted which release produced it.
• No trail back to source. A pivot table total that cannot be traced to an invoice fails sampling, whatever the arithmetic says. See what a carbon audit checks.

The classification work underneath all of this, assigning a category and a factor to every purchase line, is mechanical and enormous, which is exactly why our carbon accounting software automates it: the AI drafts the mapping line by line with a stated confidence, a reviewer handles the low-confidence tail, and every tonne stays attached to the document it came from. The fastest way to get a first category 1 number is the method in calculating Scope 3 emissions from spend.

Methods described here follow the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard and its Technical Guidance for Calculating Scope 3 Emissions. Emission factor details describe EPA Supply Chain Greenhouse Gas Emission Factors version 1.3 as published at August 2026; check the current release before use, since values and versions are revised. The worked example uses illustrative figures to show the arithmetic, not real supplier data. Nothing here is legal, accounting or assurance advice.

Purchased goods and services emissions FAQ