The 15 Scope 3 Categories Explained
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Scope 3 emissions cover everything that happens in your value chain: upstream suppliers and downstream customers. For most companies, Scope 3 represents the vast majority of their total carbon footprint. Here is what each category covers and why it matters.
All 15 categories at a glance
The GHG Protocol Corporate Value Chain Standard divides Scope 3 into 8 upstream and 7 downstream categories. Upstream covers your supply chain. Downstream covers what happens after your product leaves the door.
Upstream (categories 1-8)
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All upstream emissions from producing goods and services purchased by the reporting company. Covers everything from raw materials and office supplies to IT equipment and consulting fees. Typically the largest Scope 3 category, often 50-70% of total Scope 3 for services-oriented firms.
Emissions from the cradle-to-gate production of capital goods purchased or acquired by the company: machinery, buildings, equipment, vehicles, and IT infrastructure. Same calculation methodology as Category 1, but separated because capital goods are long-lived assets amortized over multiple reporting periods.
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Upstream emissions from producing fuels and energy consumed by the reporting company that are not already captured in Scope 1 or 2. Includes well-to-tank emissions from fuel extraction and refining, transmission and distribution losses in electricity grids, and generation of purchased electricity sold by the utility.
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Emissions from transporting and distributing products purchased by the reporting company between tier 1 suppliers and the company’s operations, in vehicles not owned or controlled by the company. Also covers inbound logistics, outbound logistics, and transport between own facilities when using third-party carriers.
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Emissions from third-party disposal and treatment of waste generated in the reporting company’s owned or controlled operations. Covers landfill (including methane from decomposition), incineration, recycling, composting, and wastewater treatment at facilities not owned by the company.
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Emissions from employee travel for business-related activities in vehicles not owned or operated by the reporting company. Covers commercial flights, hotel stays, rental cars, rail, and taxis. Includes both direct transport emissions and emissions from accommodation during travel.
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Emissions from employees traveling between their homes and worksites. Covers personal vehicles, public transit, ride-sharing, and other modes of daily commute. Also includes emissions from teleworking (energy use at home offices) when the company allows or encourages remote work.
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Emissions from operating assets leased by the reporting company that are not already included in Scope 1 or 2. Applies when the leased asset’s emissions fall outside the company’s chosen consolidation approach (operational or financial control). Common examples include leased office space, warehouses, and vehicle fleets.
Downstream (categories 9-15)
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Emissions from transporting and distributing sold products from the reporting company to end customers, through vehicles and facilities not owned or controlled by the company. Only applies to transport not paid for by the reporting company (otherwise it falls under Category 4).
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Emissions from further processing of intermediate products sold by the reporting company to downstream manufacturers or assemblers. Applies when you sell components, raw materials, or semi-finished goods that require additional manufacturing steps before reaching the end consumer. Emissions are calculated based on the energy and processes the downstream company uses to transform your product.
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Emissions from end-user consumption of goods and services sold by the reporting company. For energy-using products like vehicles, appliances, and electronics, this can be the single largest Scope 3 category. Covers direct use-phase emissions (e.g., fuel combustion in a sold vehicle) and indirect use-phase emissions (e.g., electricity consumed by a sold appliance).
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Emissions from disposal and treatment of products sold by the reporting company at the end of their useful life. Covers third-party waste processing including landfill, incineration, recycling, and composting. Companies must estimate the expected end-of-life treatment based on product composition and regional waste infrastructure.
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Emissions from operating assets owned by the reporting company but leased to other entities, not already included in Scope 1 or 2. The mirror image of Category 8. Only relevant for companies acting as lessors. Includes emissions from energy use and operations of the leased buildings, equipment, or vehicles.
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Emissions from the operation of franchises not included in the franchisor’s Scope 1 or 2. Relevant for franchisors who license their brand and business model to independent operators. Covers the Scope 1 and 2 emissions of all franchisees. Franchisees would report these same emissions in their own Scope 1 and 2.
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Emissions associated with the reporting company’s equity and debt investments, project finance, and managed assets or client services, not already included in Scope 1 or 2. Emissions are allocated proportionally to the company’s share of investment. Particularly relevant for financial institutions, PE firms, banks, and asset managers where financed emissions often dwarf operational ones.
Where most of your footprint lives
For services-oriented companies, investment firms, and multi-entity groups, Category 1 (Purchased Goods & Services) is where the bulk of emissions concentrate. Most of what your company buys gets counted here: from office supplies and IT equipment to consulting fees and raw materials.
This is also the category where measurement method matters most. A spend-based approach assigns the same emission factor to every dollar spent in a category. An activity-based approach identifies the actual product and matches it to specific lifecycle data.
Spend-based vs activity-based: why the method matters
The GHG Protocol allows multiple calculation approaches for Scope 3. The choice of method directly affects the quality and usefulness of your data.
Spend-based vs activity-based: why the method matters
The GHG Protocol allows multiple calculation approaches for Scope 3. The choice of method directly affects the quality and usefulness of your data.
Spend-based
Activity-based
What CSRD expects from your Scope 3 data
Under CSRD and ESRS E1, companies must report Scope 3 emissions that can withstand external assurance. The current requirement is limited assurance, but even that demands traceable, documented calculations, something spend-based estimates struggle to survive.
In practice, this means:
- A traceable path from invoice → what was bought → reported emission
- Documented emission factors with source, method, and quality rating
- Consistent scope boundaries and category definitions year over year
Spend-based estimates end at a category-level average with no connection to actual purchases. Under these requirements, that is increasingly difficult to defend. The direction of regulation is clear: more granularity, more traceability, more accountability.
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