Scope 3 emissions: what they are and how to measure them

The GHG Protocol splits a corporate footprint into three scopes. Scope 1 is what you burn, Scope 2 is the energy you buy, and Scope 3 is everyone else's emissions that exist because of your business: your suppliers' factories, the trucks that carry your freight, your employees' commutes, your products in use. The full breakdown of all three sits on our scope 1 2 3 emissions guide.

Scope 3 dominates because a modern company outsources most of its physical activity. A software firm's cloud bill, a manufacturer's steel coil, a retailer's inbound logistics: each is another organization's Scope 1 and 2, and your Scope 3.

Until recently Scope 3 was voluntary territory. That has changed. The EU's CSRD requires material Scope 3 disclosure under ESRS E1, the ISSB's IFRS S2 requires Scope 3 for companies adopting it, California's SB 253 phases in Scope 3 reporting for large companies doing business in the state, and large customers increasingly push supplier questionnaires down their chain. If one of your customers reports Scope 3, your emissions are their category 1, and they will ask you for numbers.

The GHG Protocol Corporate Value Chain Standard defines fifteen categories: eight upstream (purchased goods and services, capital goods, fuel- and energy-related activities, upstream transport, waste, business travel, commuting, upstream leased assets) and seven downstream (downstream transport, processing, use of sold products, end-of-life, downstream leases, franchises, investments). Each is defined precisely, with examples, on our scope 3 categories reference.

Very few companies have all fifteen. A screening pass tells you which three or four actually matter for you; category 1, purchased goods and services, is the largest line for most.

A defensible first inventory uses all three, in that order, and documents which method sits behind every line. That is the core discipline of carbon accounting software: not the arithmetic, but keeping the trail from a reported tonne back to the invoice line and factor that produced it. How to prioritize the move from spend to activity data is covered in our post on what Scope 3 actually includes.

You cannot cut what you cannot attribute. Scope 3 reduction in practice means procurement decisions: supplier selection and engagement, material substitution, modal shift in logistics, product redesign for use-phase energy. Every one of those levers needs the inventory to show which supplier, lane or product carries the tonnes, which is why a classified, evidence-linked ledger beats a one-off consulting PDF that is stale the quarter it lands.