FAQs- Scope 3 Overview and Definitions

Scope 3 emissions are indirect greenhouse gas emissions that occur across a company’s value chain, including upstream (e.g., suppliers) and downstream (e.g., customers). They are normally the largest source of a company's total emissions and a crucial consideration for a comprehensive sustainability strategy.

Scope 1 covers direct emissions from owned or controlled sources, Scope 2 covers indirect emissions from purchased electricity, steam, heating, and cooling, while Scope 3 includes all other indirect emissions that occur throughout the value chain.

Scope 1 and 2 are defined to prevent double counting between companies, while scope 3 covers emissions from sources controlled by other entities in the value chain (e.g., suppliers, logistics providers, employees, and customers). Scope 3 emissions are the scope 1 and 2 emissions of other companies so are inherently counted multiple times by different organisations throughout the supply chain. 

The GHG Protocol defines 15 categories to help companies organize, understand, and report their scope 3 emissions across the value chain. These categories are mutually exclusive to avoid double counting within a company’s scope 3 inventory. Each category includes multiple activities that result in emissions. The categories are split into upstream emissions (related to purchased goods and services and other company activities) and downstream emissions (related to sold goods and services, leased out assets and investments). More information can be found in Introduction to Scope 3 accounting.

Scope 3 accounting helps identify emission hotspots within a company’s value chain, enabling informed decisions for emissions reduction. It also enhances transparency, fulfils regulatory requirements, and aligns with consumer and investor expectations.