Scope 3 covers the indirect emissions in a company's value chain that are not included in Scope 2. The GHG Protocol Scope 3 Standard (2011) divides them into 15 categories: 8 upstream (suppliers and purchasing) and 7 downstream (sales and use of products). The best way to start is to screen all categories for significance and then calculate the few largest in detail.
The 15 Scope 3 categories
Upstream:
- Purchased goods and services.
- Capital goods (equipment, buildings).
- Fuel- and energy-related activities not included in Scope 1 or 2 (extraction and transportation of fuels, grid losses).
- Upstream transportation and distribution.
- Waste generated in operations.
- Business travel.
- Employee commuting.
- Upstream leased assets.
Downstream:
- Downstream transportation and distribution.
- Processing of sold products.
- Use of sold products.
- End-of-life treatment of sold products.
- Downstream leased assets (assets leased out to others).
- Franchises.
- Investments.
For banks and investors, category 15 is the main one: its methodology is set out in detail in the PCAF standard; see Financed emissions.
How to assess significance
The first step is screening: a rough estimate of each category to see where the bulk of emissions lies. Significance criteria:
- size — the category's share of the total footprint;
- influence — whether you can reduce these emissions;
- risks — regulatory, reputational, buyer requirements;
- expectations of stakeholders, such as a bank or a buyer in the EU.
Categories that do not apply to the company are excluded with a justification.
Calculation methods
From least to most accurate:
| Method | Data | Example |
|---|---|---|
| Spend-based | Purchase value × emission factor per unit of currency | Spending on metal |
| Average-data | Mass or quantity × industry-average emission factor | Tonnes of cement × average emission factor |
| Supplier-specific | Emissions reported by the supplier | Carbon footprint of the supplier's product |
An average-data example: a company bought 500 t of products, and the industry emission factor in this worked example is 0.9 t CO₂e/t. The estimate for category 1 is 500 × 0.9 = 450 t CO₂e. If the supplier reports the actual footprint of its product, the estimate is replaced with the supplier's data, which improves data quality.
Where to start
- First, set up Scope 1 and 2 accounting, since this is your own data; see Scopes 1, 2 and 3.
- Screen all 15 categories using spend-based or average data.
- Pick the 2–4 categories that are largest or most important to report users.
- Request data from key suppliers and refine the calculation.
- Describe the boundaries, methods and exclusions in the report.
For exporters, the reverse also matters: your Scopes 1 and 2 become part of your buyer's Scope 3, so good data on your own emissions is a competitive advantage.
How it works in the platform
- Scope 3 is entered on the Data entry screen, in the same monthly form as Scopes 1 and 2: categories 1–14, and for each one you choose a calculation method based on the data you have.
- Category 3 is calculated automatically from the Scope 1 and 2 data already entered: the “Automatically from Scope 1 and 2” block suggests a value for the month, and you apply it with one click.
- A category that does not apply is removed from accounting with “Does not apply to us” and a reason, and a month without that activity is marked “This month: none”.
- Supporting documents are attached to Scope 3 values, and totals by month, quarter and year are shown alongside Scopes 1 and 2.
- Category 15 (Investments) is not part of GHG accounting: it will be calculated by a separate PCAF service, which is currently marked “Soon”.
Frequently asked questions
Do all 15 categories have to be calculated?
No. You need to assess the significance of all of them and calculate the significant ones in detail. Categories that do not apply or are immaterial are excluded with a justification.
How does category 3 differ from Scope 2?
Scope 2 covers emissions from generating the energy you buy. Category 3 covers emissions before and around that stage: extraction and transportation of fuels, and grid losses.
Can Scope 3 be calculated on a spend basis?
Yes, it is a common method for initial screening. But it is rough, so for significant categories move on to average data or supplier data.