Scope 3 emissions (supply chain)

Scope 3 emissions are all indirect greenhouse gas emissions generated along a company’s value chain that do not fall under Scope 1 or Scope 2. The Greenhouse Gas Protocol classifies them into 15 categories, eight of which are upstream and seven downstream. These emissions are not generated at the company’s own facilities, but rather by suppliers, transporters, customers, and investments.

How does Scope 3 differ from Scope 1 and Scope 2?

The three accounting categories are distinguished by control over the emission source, not by the magnitude of the emissions. Anyone who understands this distinction also understands why Scope 3 is more difficult to quantify: the data lies outside the organization.

A detailed breakdown of Scope 1, 2, and 3, complete with calculation examples, provides a deeper understanding of each area.

What are the 15 categories included in Scope 3?

The GHG Protocol’s Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) defines 15 categories. The numbering is mandatory and is used in CSRD reports, CDP questionnaires, and SBTi submissions alike.

This framework is currently under revision. In the Phase 1 interim report from March 2026, the relevant GHG Protocol working group discusses, among other things, a minimum coverage of 95 percent of reportable Scope 3 emissions, as well as a new Category 16 for value-added activities that cannot be classified under any of the existing 15 categories. The document is explicitly marked as a draft and has not yet been submitted for consultation.

Where is Scope 3 regulated?

For companies subject to reporting requirements in the EU, Scope 3 is not a voluntary addition. Disclosure requirement E1-6 of Delegated Regulation (EU) 2023/2772 mandates the disclosure of gross Scope 3 emissions in metric tons of CO₂ equivalent, in addition to Scope 1, Scope 2, and total emissions.

Climate targets follow their own logic: The Science Based Targets initiative’s Corporate Net-Zero Standard V2 requires a reduction target for each Scope 3 category that, on its own, accounts for 5 percent or more of total Scope 3 emissions—as assessed across categories 1 through 14. This replaces the previous rule from Version 1, under which Scope 3 targets were mandatory only if they accounted for 40 percent or more of total emissions.

What Scope 3 Means for Companies

The sheer scale of the problem is the real reason for the effort involved. According to the June 2024 report *Scope 3 Upstream: Big Challenges, Simple Remedies* by BCG and CDP, reported Scope 3 supply chain emissions in 2023 averaged 26 times the emissions from a company’s own operations. At the same time, only 15 percent of reporting companies had set a Scope 3 target at all.

The most common mistake in our CCF projects isn’t in the calculation, but in the order of steps: Companies start by sending out supplier inquiries before their procurement data has been properly structured by product category. The result is a response rate of less than 20 percent and a dataset that cannot be consolidated. The more robust approach is the reverse—first, conduct a screening based on expenditure-related factors to identify the two or three dominant categories, then target the supplier inquiry specifically at those categories. Companies that do this typically cover the vast majority of Category 3.1 with fewer than twenty suppliers.

In our view, this prioritization is also the most effective tool for countering the 95-percent threshold, should it indeed become mandatory in the revised standard. One argument against this is that expenditure-based screenings confuse price effects with differences in emissions—they are suitable for prioritization, but not for measuring success.

We can assist you with categorization, data collection, and the preparation of your carbon footprint report in accordance with the GHG Protocol —including determining which Scope 3 categories are relevant to your business model.

Frequently Asked Questions About Scope 3 Emissions

What are Scope 3 emissions, explained simply?

Scope 3 emissions are greenhouse gas emissions that a company does not generate itself but that result from its business activities—including those of suppliers, transportation, business travel, and the use of the products it sells. They are categorized into 15 categories.

What percentage of total emissions do Scope 3 emissions account for?

According to BCG and CDP, reported Scope 3 supply chain emissions in 2023 averaged 26 times the emissions from Scope 1 and Scope 2. The actual proportion depends heavily on the industry: Scope 3 dominates in the retail and manufacturing sectors, while Scope 1 may predominate among energy-intensive producers.

Are Scope 3 emissions subject to reporting requirements?

For companies subject to European sustainability reporting requirements, yes. Disclosure requirement E1-6 of Delegated Regulation (EU) 2023/2772 requires the disclosure of gross Scope 3 emissions in metric tons of CO₂ equivalent.

When does the SBTi require a Scope 3 target?

The Corporate Net-Zero Standard V2 requires a reduction target for each Scope 3 category that, on its own, accounts for 5 percent or more of total Scope 3 emissions, as assessed across categories 1 through 14. The previous 40-percent rule from Version 1 no longer applies.

What level of data quality is required for Scope 3?

To get started, average secondary factors are sufficient for identifying the dominant categories. However, they are not sufficient for reduction verification because expenditure-based factors treat price changes as changes in emissions. In such cases, primary data from suppliers is required.

Sources

1. Greenhouse Gas Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) — https://ghgprotocol.org/corporate-value-chain-scope-3-standard
2. Greenhouse Gas Protocol: Scope 3 Standard Revisions — Phase 1 Progress Update (March 2026, Draft) — https://ghgprotocol.org/sites/default/files/2026-03/S3-Phase1ProgressUpdate-20260331.pdf
3. European Commission: Delegated Regulation (EU) 2023/2772, ESRS E1-6 (2023) — https://eur-lex.europa.eu/eli/reg/2023/2772/oj?locale=de
4. Boston Consulting Group and CDP: Scope 3 Upstream — Big Challenges, Simple Remedies (June 25, 2024) — https://www.cdp.net/en/press-releases/corporates-supply-chain-scope-3-emissions-are-26-times-higher-than-their-operational-emissions