What Are Scope 3 Emissions? A Guide to the 15 Categories

Most organisations have a reasonable understanding of their Scope 1 and Scope 2 emissions. The bigger challenge, and often the biggest opportunity for meaningful reduction, lies in Scope 3.

Scope 3 emissions occur throughout a company’s value chain. They include emissions from the goods and services a business purchases, employee travel, transportation, product use, waste disposal, investments, and many other activities outside its direct operational control.

For many organisations, Scope 3 represents the largest share of their total carbon footprint. Yet these emissions are also the most difficult to measure because the necessary data often sits with suppliers, customers, logistics providers, and other third parties.

Understanding where Scope 3 emissions come from is the first step towards building a credible reduction strategy.

Scope 1 vs. Scope 2 vs. Scope 3 emissions

The Greenhouse Gas Protocol divides corporate greenhouse gas emissions into three scopes.

Scope 1: Direct emissions

Scope 1 covers emissions from sources that a company owns or directly controls.

Examples include:

• fuel burned in company-owned vehicles;
• emissions from boilers and furnaces;
• manufacturing processes;
• and refrigerant leaks from company equipment.

Because these emissions come directly from an organisation’s operations, the company often has the greatest control over how they are reduced.

Possible actions include improving energy efficiency, electrifying vehicle fleets, replacing fossil-fuel equipment, and changing industrial processes.

Scope 2: Indirect emissions from purchased energy

Scope 2 includes emissions associated with the generation of electricity, heating, cooling, or steam purchased and consumed by the organisation.

The emissions occur at the facility where the energy is generated rather than at the company’s own site, but they are still linked to its energy consumption.

Companies can reduce Scope 2 emissions by improving efficiency, purchasing renewable electricity, installing on-site renewable energy, or choosing lower-carbon energy suppliers.

Scope 3: Other indirect value chain emissions

Scope 3 includes all other indirect emissions associated with an organisation’s activities.

These emissions are not generated directly by the company and are not included in the energy it purchases. Instead, they occur across the organisation’s upstream and downstream value chain.

Examples include:

• the production of purchased materials;
• supplier operations;
• business travel;
• employee commuting;
• third-party transportation;
• the use of sold products;
• product disposal;
• and financed emissions.

Although these activities may not be directly controlled by the reporting company, they are influenced by its purchasing decisions, product design, supplier relationships, and business model.

Why Scope 3 emissions matter

Measuring Scope 3 provides a more complete view of an organisation’s climate impact.

A company may significantly reduce emissions from its offices, vehicles, and purchased electricity while leaving the much larger emissions embedded in its supply chain or products untouched.

Understanding Scope 3 helps organisations identify where their biggest emissions hotspots exist and where intervention can create the greatest value.

Evaluate performance more accurately

Scope 3 measurement allows organisations to assess their total carbon footprint rather than focusing only on operational emissions.

It can reveal which suppliers, products, materials, transport routes, or business activities generate the most emissions. This helps businesses set meaningful priorities and compare performance over time.

Identify climate risks and opportunities

Mapping the value chain can highlight exposure to carbon-intensive suppliers, rising energy costs, regulation, supply disruption, and changing customer expectations.

It can also reveal opportunities to develop lower-carbon products, improve supply-chain efficiency, reduce waste, and build stronger supplier relationships.

Create impact beyond direct operations

Scope 3 reduction often requires collaboration with suppliers, customers, logistics providers, and business partners.

By influencing how goods are produced, transported, used, and disposed of, companies can support emissions reductions far beyond their own facilities.

The 15 Scope 3 emissions categories

The GHG Protocol divides Scope 3 emissions into 15 categories.

The first eight cover upstream activities that occur before goods or services reach the company. The remaining seven cover downstream activities that occur after products or services leave the organisation.

Upstream Scope 3 categories

1. Purchased goods and services

This category covers the emissions generated when producing the goods and services purchased by an organisation.

It may include:

• raw materials;
• product components;
• packaging;
• office supplies;
• software and IT services;
• consultancy;
• marketing;
• and other professional services.

For many organisations, purchased goods and services are one of the largest sources of Scope 3 emissions.

2. Capital goods

Capital goods are long-term assets purchased by the company, such as:

• buildings;
• machinery;
• manufacturing equipment;
• vehicles;
• and IT infrastructure.

This category includes the emissions generated during the extraction of raw materials, manufacturing, and production of those assets.

3. Fuel- and energy-related activities

This category covers emissions related to fuels and energy purchased by the company that are not already included in Scope 1 or Scope 2.

Examples include:

• extracting and processing purchased fuels;
• producing electricity before it reaches the grid;
• transporting fuel;
• and electricity transmission and distribution losses.

4. Upstream transportation and distribution

This includes emissions from transporting and storing goods purchased by the company when the vehicles or facilities are not owned or controlled by the organisation.

Examples include:

• inbound freight;
• third-party shipping;
• air cargo;
• rail transport;
• and external warehouses or distribution centres.

5. Waste generated in operations

This category includes emissions from the treatment and disposal of waste produced by the company but managed by third parties.

It may cover:

• landfill;
• incineration;
• recycling;
• wastewater treatment;
• and composting.

The impact depends on the type of waste and the treatment method used.

6. Business travel

Business travel includes emissions from employee travel for work in vehicles not owned or operated by the company.

Examples include:

• flights;
• trains;
• taxis;
• rental cars;
• hotel stays;
• and other business-related transport.

This category is often relatively easy to identify because companies usually have travel and expense records.

7. Employee commuting

This category covers emissions generated when employees travel between their homes and workplaces.

It can include travel by:

• private car;
• bus;
• train;
• motorcycle;
• cycling;
• and other forms of transport.

It may also include emissions associated with remote working, depending on the reporting methodology used.

8. Upstream leased assets

Upstream leased assets are assets used by the company but not owned by it, where the related emissions are not already reported in Scope 1 or Scope 2.

Examples may include leased offices, warehouses, vehicles, or equipment where energy consumption is controlled or reported by the owner.

Downstream Scope 3 categories

9. Downstream transportation and distribution

This category covers the transportation, storage, and distribution of sold products after they leave the reporting company.

It applies where the vehicles and facilities are not owned or controlled by the organisation.

Examples include:

• outbound freight;
• retail distribution;
• third-party warehouses;
• and delivery to the end customer.

10. Processing of sold products

This includes emissions from further processing intermediate products sold by the reporting company.

For example, a business that sells steel, timber, chemicals, or electronic components may report emissions generated when another company processes those materials into finished products.

11. Use of sold products

This category includes emissions generated when customers use the products sold by the company.

For some industries, this can be the largest source of emissions.

Examples include:

• fuel burned by vehicles;
• electricity consumed by appliances;
• energy used by electronic devices;
• and emissions from products that directly consume fuel during use.

12. End-of-life treatment of sold products

This category covers emissions produced when sold products and packaging are disposed of at the end of their useful life.

Treatment methods may include:

• landfill;
• recycling;
• incineration;
• composting;
• and wastewater treatment.

Product design, material selection, durability, repairability, and recyclability can all affect these emissions.

13. Downstream leased assets

Downstream leased assets are assets owned by the reporting company but leased to another organisation or individual.

Examples include buildings, vehicles, or equipment whose operational emissions are generated by the lessee and are not already included in Scope 1 or Scope 2.

14. Franchises

This category applies to franchisors and includes emissions generated by franchise operations that are not already included in the reporting company’s Scope 1 or Scope 2 inventory.

Examples may include energy use, vehicles, equipment, and operational activities across franchise locations.

15. Investments

The investments category covers emissions associated with financial investments.

It is especially important for:

• banks;
• asset managers;
• insurers;
• pension funds;
• and other financial institutions.

It can include emissions connected to equity investments, corporate debt, project finance, and lending. These are commonly referred to as financed emissions.

Why Scope 3 emissions are difficult to measure

The main challenge is data.

Scope 1 and Scope 2 information usually comes from internal fuel records, utility bills, and company-owned assets. Scope 3 data must often be collected from hundreds or thousands of external organisations.

This creates several problems:

• suppliers use different calculation methods;
• reporting periods may not align;
• emissions boundaries may be inconsistent;
• data may be incomplete or outdated;
• smaller suppliers may not calculate emissions at all;
• and information may arrive in spreadsheets, PDFs, surveys, or incompatible platforms.

As a result, organisations often rely on a mixture of supplier-specific data, spend-based estimates, activity data, product carbon footprints, public disclosures, and industry averages.

This is not necessarily a weakness. A strong Scope 3 programme usually begins with estimates and improves data quality over time.

Waiting for perfect primary data from every supplier can delay meaningful action indefinitely.

How to simplify Scope 3 reporting

A practical Scope 3 strategy should turn complex value-chain information into clear priorities and reduction opportunities.

Automate data collection

Centralising supplier information reduces manual follow-up and makes it easier to see which suppliers have responded, where data gaps remain, and what information is already publicly available.

Automation can also reduce dependence on repeated annual surveys by reusing existing disclosures and previously submitted information.

Standardise and verify the data

Data from different suppliers must be converted into a consistent format before it can be compared.

This may involve:

• aligning reporting periods;
• converting different units;
• mapping emissions to the correct Scope 3 category;
• checking methodologies;
• documenting data sources;
• and assessing data quality.

A clear audit trail is important for internal decision-making and credible external reporting.

Identify emissions hotspots

The goal is not simply to calculate a total number.

Organisations need to understand which categories, suppliers, products, and activities generate the greatest impact.

Hotspot analysis helps teams prioritise limited resources instead of treating every supplier or emissions source equally.

Prioritise reduction opportunities

Once the main hotspots are understood, organisations can focus on the actions most likely to produce meaningful results.

These may include:

• engaging high-emitting suppliers;
• changing materials;
• redesigning products;
• improving logistics;
• reducing waste;
• switching to lower-carbon providers;
• and incorporating emissions into procurement decisions.

Improve data progressively

Scope 3 reporting should become more accurate over time.

An organisation may begin with spend-based estimates, then replace them with activity-based calculations, supplier-specific data, or verified product carbon footprints where better information becomes available.

The first baseline does not need to be perfect. It needs to be credible enough to guide action.

Turning Scope 3 data into action

Measuring emissions is only the starting point.

The real value comes from using the information to influence sourcing, supplier management, product development, logistics, investment, and customer behaviour.

A strong Scope 3 programme should help an organisation answer three practical questions:

1. Where are our largest value-chain emissions?
2. Which of these emissions can we influence most effectively?
3. What specific action should we take next?

By combining reliable data, clear prioritisation, and collaboration across the value chain, businesses can move beyond annual carbon reporting and begin delivering measurable emissions reductions.

‍