Scope 3 emissions

Scope 3 has 15 categories under the GHG Protocol, from purchased goods and services to the use of sold products and investments. For many companies it is most of the footprint: use of sold products dominates for car makers and oil companies, purchased goods for consumer companies, and investments (financed emissions) for banks. It is the hardest scope to measure and often relies on estimates.

Upstream and downstream

Categories 1 to 8 are upstream: what suppliers emit to make and deliver what the company buys, plus business travel and employee commuting. Categories 9 to 15 are downstream: what happens after the company sells, from transport and processing to the use and disposal of its products, and its investments.

Where it is largest

The dominant category depends on the sector. Use of sold products dominates for car makers, oil and gas companies and appliance makers. Purchased goods and services dominate for consumer goods, retail, IT services and pharma. For banks, insurers and asset managers, investments (financed emissions) are the main exposure. Restaurant and hotel chains have franchises, and real estate owners have capital goods and buildings they lease out.

How it is estimated

• Supplier-specific: emissions reported by suppliers for the goods actually bought. The most accurate, and the hardest to get.
• Average-data: quantities bought, such as tonnes of steel or kilometres shipped, multiplied by average emission factors.
• Spend-based: money spent in each category multiplied by an emission factor per rupee. Quick but rough, and it rises with prices even if nothing physical changes.
• Hybrid: supplier data where available and averages elsewhere.

The GHG Protocol asks companies to screen all 15 categories, then measure the ones that are large, risky or important to stakeholders, and explain why any are left out.

Reading a Scope 3 figure

Double counting is built in: a steelmaker's Scope 1 is a car maker's Scope 3. So Scope 3 figures cannot be added up across companies. Check which method each category uses and how much rests on supplier data, because a sudden fall may be a change of method rather than a real cut. The standards are also changing: the GHG Protocol is working with ISO on a joint corporate standard planned for late 2028.

Common mistakes

• Ignoring Scope 3 because it is outside the company. For many sectors, it is where the climate risk and the customer pressure sit.
• Adding Scope 3 across companies.
• Trusting spend-based figures too far, since they move with prices and currency.
• Missing the dominant category. Find the one or two categories that make up most of the total and focus there.