Scope 3 emissions: the 15 categories explained, and how to start measuring them

For most companies, Scope 3 is the largest part of the carbon footprint and the hardest to measure. It covers emissions that happen in your value chain rather than your own operations. This guide explains the 15 categories, the main calculation methods and a realistic path from a first estimate to supplier-specific data.

Scope 1, 2 and 3 in one paragraph

The GHG Protocol divides a company's emissions into three scopes. Scope 1 covers direct emissions from sources the company owns or controls, such as boilers, kilns, furnaces and vehicles. Scope 2 covers indirect emissions from purchased electricity, steam, heat and cooling. Scope 3 covers all other indirect emissions in the value chain, both upstream (from what you buy) and downstream (from what happens to what you sell). The GHG Protocol Corporate Value Chain (Scope 3) Standard sets out how to measure them. The GHG Protocol is revising its standards, so check for updates before each reporting cycle.

The 15 categories

Upstream categories:

1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities not included in Scope 1 or 2
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets

Downstream categories:

9. Downstream transportation and distribution
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products
13. Downstream leased assets
14. Franchises
15. Investments

Not every category applies to every company. A software firm may have little in categories 10 to 12, while an automotive manufacturer's use of sold products can dwarf everything else. A bank's largest category is usually 15, its financed emissions.

Start with a screening

Before investing in detailed data collection, run a screening of all 15 categories. Use spend data from your finance system, multiplied by environmentally extended input-output emission factors, and simple activity data such as distance travelled or tonnes of waste. The result will be imprecise, but it will show which categories matter most.

Use the screening to decide where to focus. Typically a handful of categories account for the large majority of Scope 3 emissions. Those are the categories where better data will change the result and support real reductions.

Calculation methods, from rough to precise

• Spend-based method: emissions are estimated from the money spent on a product or service, using emission factors per unit of currency. It is fast and covers everything in the ledger, but it cannot show the effect of choosing a lower-carbon supplier.
• Average-data method: emissions are estimated from physical quantities, such as tonnes of steel or kilometres travelled, multiplied by industry-average emission factors. It is more accurate than spend-based and still practical.
• Hybrid method: a mix of supplier-specific activity data and secondary emission factors.
• Supplier-specific method: suppliers provide product-level emissions data, ideally a product carbon footprint calculated to a recognized standard. It is the most accurate and the only method that rewards suppliers for decarbonizing.

Most companies use different methods for different categories and suppliers, and improve the method year by year.

Data quality matters as much as the number

Assess data quality for each category on criteria such as technological, temporal and geographical representativeness, completeness and reliability. Record which method and which emission factors you used, and why.

This transparency protects you when numbers change. If your Scope 3 total rises because you moved from spend-based to supplier-specific data, you can explain it as a methodology change rather than an increase in real emissions, and recalculate the base year if the change is significant.

Engaging suppliers

Supplier engagement turns Scope 3 from an accounting exercise into a lever for reductions. Practical steps include:

• Prioritise the suppliers that account for most of your emissions, often a small share of the supplier base.
• Ask for simple data first: their Scope 1 and 2 emissions and revenue, so you can allocate a share to your purchases.
• Move toward product-level footprints for the most important materials.
• Give suppliers a simple, consistent way to submit data, with guidance, instead of a different spreadsheet every year.
• Build emissions criteria into procurement decisions over time.

Why it matters now

Scope 3 disclosure is increasingly expected. IFRS S2 requires Scope 3 emissions, with transition relief in the first year. The ESRS require them where material. CDP scores reward Scope 3 coverage, the SBTi expects larger companies to cover their significant Scope 3 categories with targets, and many large customers now ask their suppliers for emissions data.

NCV builds Scope 3 inventories with the right method for each category, and SustainOS collects supplier data through a structured portal, calculates emissions with documented factors and tracks data quality, so the inventory improves every year instead of being rebuilt from scratch.