What are Scope 3 emissions?
Scope 3 covers value-chain emissions outside Scope 1 and Scope 2. The GHG Protocol Scope 3 Standard groups them into eight upstream categories linked to purchased or acquired goods and services and seven downstream categories linked to sold goods and services and investments.
- 1. Purchased goods and services: production of what you buy.
- 2. Capital goods: production of equipment and buildings you buy.
- 3. Fuel- and energy-related activities: energy production outside Scope 1 and Scope 2.
- 4. Upstream transportation and distribution: inbound third-party freight and storage.
- 5. Waste generated in operations: third-party waste treatment.
- 6. Business travel: work travel in vehicles you do not control.
- 7. Employee commuting: travel between home and work; you may also include the additional energy used for homeworking.
- 8. Upstream leased assets: leased assets outside Scope 1 and Scope 2.
- 9. Downstream transportation and distribution: third-party freight and storage after sale.
- 10. Processing of sold products: further processing by customers.
- 11. Use of sold products: emissions during customer use.
- 12. End-of-life treatment of sold products: disposal and recycling.
- 13. Downstream leased assets: owned assets leased to others.
- 14. Franchises: franchise operations outside Scope 1 and Scope 2.
- 15. Investments: emissions linked to loans and investments.
Why do Scope 3 emissions matter to you?
For service suppliers, requests focus on purchased services, upstream energy, travel, commuting, and waste. Manufacturers may also need freight, processing, product use, and end-of-life treatment.
A customer's category 1 covers cradle-to-gate emissions, meaning raw-material extraction through the supplier's factory gate. Your Scope 1 and Scope 2 become part of the customer's category 1. The customer needs the share tied to its purchases, plus upstream inputs, not your whole corporate total. CDP 2026 Questions 7.26 and 20.12 ask suppliers to allocate emissions to requesting customers.
How are Scope 3 emissions calculated?
Use the method that matches the data available for each category. Supplier-specific data uses emissions tied to the actual product or service bought. An average-data method multiplies a physical quantity, such as kilograms, kilometres, or nights, by a matching emission factor. Spend-based data multiplies invoice value by an industry factor, while a hybrid method combines supplier data with estimates for gaps. Spend-based estimates can give you a first pass across many purchases, but price changes can move the result without any physical change. Replace important estimates with well-matched supplier or physical data, avoid counting the same line twice, and record the method for each line.
What mistakes should you avoid?
- Filling all 15 categories with estimates because the list has 15 rows. Screen each category, calculate applicable emissions, and justify exclusions.
- Adding a spend result to supplier-specific data for the same purchase. Different methods can cover different lines, but each line should appear once.
- Changing methods between years without explaining the effect on the comparison.
- Reporting one total with no boundary note for entities, period, categories, data sources, assumptions, and exclusions.
Are Scope 3 emissions mandatory?
Not for every company. For entities in scope of Australian climate reporting, AASB S2 paragraphs 29(a) and B32 require gross Scope 3 emissions, meaning totals before offsets, consideration of all 15 categories, and disclosure of those included. Paragraph C4(b) allows omission of Scope 3 in the first annual reporting period. Where the European Sustainability Reporting Standards (ESRS) E1 applies and climate change is material, ESRS E1-6 paragraphs 44(c) and 51 require gross Scope 3 emissions for each significant category. Customer requests are separate from legal duties.
Do suppliers need to calculate all 15 categories?
Not every category applies. A GHG Protocol Scope 3 Standard claim must cover applicable emissions and justify exclusions. A narrow customer allocation does not need 15 unsupported estimates.
What should you send when a customer asks for Scope 3 data?
Send the reporting period, entity and site boundary, Scope 1 and Scope 2 totals, the share allocated to the customer's purchases, the allocation method, factor sources, relevant upstream inputs, exclusions, and any verification. State clearly whether the figure is corporate, product-level, or customer-specific.