13 June 2024
Topics in this article
  • Net Zero | Scope 3
  • Sustainability

The Greenhouse Gas Protocol (GHG Protocol) has developed a comprehensive and standardized framework that organizations can apply when measuring and managing emissions. Briefly, Scope 1 and 2 emissions are usually easier to track as they directly come from operations or are the energy used by an organization.

Scope 3 is much more complex as it involves all indirect emissions that occur in the value chain. To illustrate it, we’ve taken the example of a laptop to show some of the components that drive Scope 3 emissions and, thus, how you might think beyond face value when tackling Scope 3 emissions.

The 15 Categories of Scope 3 Emissions Explained

Upstream Emissions

1. Purchased Goods and Services 

Emissions from the production of goods and services that the company purchases. This includes all upstream activities related to the production of raw materials, intermediate products, and services. Managing these indirect greenhouse gas emissions is crucial for reducing overall environmental impact. 

2. Capital Goods

Emissions from the production of capital goods purchased by the company. Capital goods are long-term items such as buildings, machinery, and equipment. These supply chain emissions can be significant, requiring careful tracking and management. 

3. Fuel- and Energy-Related Activities (Not Included in Scope 1 or Scope 2) 

Emissions from the extraction, production, and transportation of fuels and energy purchased or consumed by the reporting company, excluding those already accounted for in Scope 1 or 2. The indirect emissions from these activities are vital to include in carbon accounting. 

4. Upstream Transportation and Distribution

Emissions from the transportation and distribution of goods purchased by the company, including inbound logistics and transportation between a company’s own facilities (if contracted externally). This category is part of the entire value chain emissions that companies need to manage. 

5. Waste Generated in Operations 

Emissions from the treatment and disposal of waste generated in the company’s operations. This includes emissions from waste disposal and treatment facilities. Reducing waste can significantly lower a company’s GHG emissions. 

6. Business Travel 

Emissions from employee business travel, such as flights, trains, and car rentals. Managing emissions from business travel is a key part of an organization’s sustainability journey. 

7. Employee Commuting 

Emissions from the transportation of employees between their homes and their workplaces. Addressing emissions from staff commuting can contribute to overall emissions reductions.

8. Upstream Leased Assets 

Emissions from the operation of assets leased by the company (lessee) in the upstream value chain are not included in Scope 1 and Scope 2. These emissions are an important part of the carbon accounting process. 

DOWNSTREAM Emissions

9. Downstream Transportation and Distribution 

Emissions from the company’s transportation and distribution of products, including outbound logistics, warehousing, and retail operations. These downstream activities can have a significant environmental impact. 

10. Processing of Sold Products 

Emissions from the processing of intermediate products sold by the company to downstream companies (e.g., manufacturers). These emissions are part of the supply chain and need careful monitoring. 

11. Use of Sold Products 

Emissions from the end-use of goods and services sold by the company. This includes emissions from the use of consumer goods, such as fuels or electrical appliances. Managing these emissions is crucial for comprehensive carbon accounting. 

12. End-of-Life Treatment of Sold Products

Emissions from the disposal and treatment of products sold by the company at the end of their life cycle. This includes emissions from waste treatment and recycling facilities. 

13. Downstream Leased Assets 

Emissions from the operation of assets owned by the company (lessor) and leased to other entities in the downstream value chain, not included in Scope 1 and Scope 2. Properly managing these assets is part of a robust decarbonization strategy. 

14. Franchises 

Emissions from the operation of franchises, which are a form of business arrangement where the company (franchisor) grants another party (franchisee) the right to operate a business using the company’s brand and business model. This can include both direct and indirect emissions. 

15. Investments 

Emissions from the operations of investments the company has financial control or influence over, such as equity and debt investments. Accounting for these emissions helps make informed investment decisions and understand investments’ functioning in the decarbonization field. 

CARBON LITERACY IS KEY TO TACKLING SCOPE 3

If you are interested in reading more about understanding your Scope 1, 2 and 3 emissions take a look at this further article.

If you have a particular challenge you are looking to address, please take a look at Sustainable Procurement Services or contact us directly.

Scope 3 Maturity Benchmark Report 2024

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