Understanding Scope 3 Emissions: The 15 Categories

Scope 3 emissions are the indirect greenhouse gas emissions associated with activities across a business’s value chain, excluding emissions already accounted for in Scope 1 and Scope 2.

If you’re new to carbon reporting, our Guide to Scope 1, 2 and 3 emissions explains how the three scopes fit together.

They can arise from the goods and services a business purchases, employee travel, waste, transportation and the use or disposal of products it sells.

For many organisations, Scope 3 emissions represent an important part of their overall carbon footprint. However, the sources of emissions will vary depending on how a business operates, what it purchases and what it sells.

Understanding Scope 3 emissions starts with identifying the activities that contribute to your organisation’s carbon footprint. The Greenhouse Gas Protocol (GHG Protocol) divides these emissions into 15 categories, covering both upstream and downstream activities.

This guide explains each category and how it may apply to different types of UK businesses.

What are Scope 3 emissions?

Businesses generally measure greenhouse gas emissions across three scopes.

Scope 1 covers direct emissions from sources a business owns or controls, such as fuel burned in company-owned vehicles or boilers.

Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the business.

Scope 3 covers other indirect emissions that occur across the company’s value chain, both upstream and downstream.

For example, a manufacturer may produce direct emissions from its factory machinery, account for purchased electricity under Scope 2, and have Scope 3 emissions associated with the materials it buys and the transportation of its products.

These activities take place at different points in the value chain, but they can all contribute to the manufacturer’s overall carbon footprint.

For a broader explanation of how the three scopes work together, read our guide to Scope 1, 2 and 3 emissions.

The 15 Scope 3 emissions categories explained

The GHG Protocol divides Scope 3 emissions into 15 categories. These are grouped into upstream and downstream activities.

Upstream emissions generally relate to goods and services a business purchases and activities involved in supplying them. Downstream emissions relate to activities associated with products and services after they leave the reporting company’s operations.

Not every category will apply to every business. The relevant categories depend on the organisation’s activities and value chain.

Upstream Scope 3 emissions

Upstream emissions arise from activities associated with goods and services purchased by a business and other activities that take place before or alongside its own operations.

Category 1: Purchased goods and services

This covers emissions associated with the production of goods and services a business purchases, excluding items accounted for in other categories.

Examples include raw materials, components, office supplies, IT services and professional services.

Category 2: Capital goods

This covers emissions associated with producing capital goods purchased by the business.

Examples include machinery, manufacturing equipment, buildings and other major assets used to operate the business.

Category 3: Fuel- and energy-related activities

This covers certain emissions associated with fuels and energy purchased by the business that are not already included in Scope 1 or Scope 2.

These can include emissions associated with extracting, producing and transporting fuels, as well as certain upstream emissions associated with purchased electricity.

Category 4: Upstream transportation and distribution

This covers transportation and distribution of purchased products between suppliers and the reporting company, along with other qualifying upstream logistics activities.

For example, a business may have emissions associated with transporting purchased materials from a supplier to its premises.

Category 5: Waste generated in operations

This covers emissions from the treatment and disposal of waste generated by the business in operations that it owns or controls.

Relevant waste streams might include packaging, production waste and general commercial waste sent for recycling, landfill or other treatment.

Category 6: Business travel

This covers emissions associated with employee travel for business purposes in vehicles or transport services not owned or operated by the reporting company.

Examples include business flights, rail journeys, taxis and hotel stays associated with work trips.

Category 7: Employee commuting

This covers emissions associated with employees travelling between their homes and workplaces in vehicles or transport modes not owned or operated by the reporting company.

The relevant activities may include commuting by car, bus, train or other forms of transport.

Category 8: Upstream leased assets

This covers emissions from the operation of assets leased by the reporting company that are not already included in its Scope 1 or Scope 2 inventory.

The treatment depends on the company’s organisational and reporting boundaries, as well as the relevant leasing arrangements.

Downstream Scope 3 emissions

Downstream emissions arise from activities associated with products and services after they leave the reporting company’s operations.

Category 9: Downstream transportation and distribution

This covers transportation and distribution of products sold by the reporting company between its operations and the end customer, where the reporting company does not pay for these activities and are not otherwise included in its inventory.

For example, a manufacturer may need to consider emissions associated with the onward transportation of products to customers.

Category 10: Processing of sold products

This covers emissions from the processing of intermediate products sold by the reporting company by other companies.

For example, a supplier selling unfinished metal components may need to consider emissions from further processing carried out by its customers.

Category 11: Use of sold products

This covers emissions from the use of goods and services sold by the reporting company over their expected lifetime, where the category’s requirements apply.

For example, a business selling electrical equipment may need to consider the electricity consumed when customers use that equipment.

Category 12: End-of-life treatment of sold products

This covers emissions associated with disposing of and treating products sold by the reporting company at the end of their useful lives.

Relevant activities can include landfill, incineration, recycling and other end-of-life treatment processes.

Category 13: Downstream leased assets

This covers emissions from the operation of assets owned by the reporting company and leased to other entities, where those emissions are not already included in the reporting company’s Scope 1 or Scope 2 inventory.

For example, a company leasing out buildings may need to assess emissions associated with their operation.

Category 14: Franchises

This covers emissions from the operation of franchises that are not included in the reporting company’s Scope 1 or Scope 2 inventory.

This category may be relevant to businesses operating a franchise model, such as certain retail or hospitality chains.

Category 15: Investments

This covers emissions associated with investments made by the reporting company, where they fall within the category’s reporting requirements.

It may be relevant to financial institutions and other businesses with investments that need to be included in their Scope 3 inventory.

The applicability and treatment of individual categories should be assessed against the GHG Protocol’s requirements and the business’s reporting boundaries.

Which Scope 3 categories are relevant to your business?

The 15 categories provide a framework for assessing emissions across a business’s value chain, but not every category will be relevant to every organisation.

A manufacturer, for example, may need to investigate purchased materials, capital equipment and transportation. A professional services business may have a different emissions profile, with purchased services, business travel and employee commuting among the areas to consider.

The first step is to understand how your business operates, what it buys, what it sells and which activities take place across its value chain.

Businesses should assess the relevant categories rather than assume that every category is significant or exclude categories without investigation. Any exclusions should be justified and documented in line with the applicable reporting standard.

The GHG Protocol’s Corporate Value Chain (Scope 3) Standard provides the framework for assessing and reporting these indirect emissions.

Once you’ve identified the relevant emissions sources, the next step is to understand how they can be measured. Read our guide to emission calculation methods to learn more.

Why is measuring Scope 3 emissions important?

Understanding Scope 3 emissions can help businesses identify environmental impacts beyond their own premises and operations.

For some organisations, purchased goods and services may be a significant source of emissions. For others, transportation, business travel, the use of sold products or other value-chain activities may be more relevant.

Measuring these emissions can help businesses:

• Identify important sources of emissions across their value chains.

• Understand where better data is needed.

• Identify potential opportunities to reduce their carbon footprint.

• Respond more confidently to relevant customer and procurement requests.

• Make more informed decisions about purchasing, suppliers and business operations.

The value of measuring Scope 3 emissions is not simply to produce a figure. It is to understand where emissions arise and use that information to support better decisions.

Getting started with Scope 3 emissions

Understanding the 15 categories is an important first step, but the next stage is to establish which categories apply to your business and what information is available to assess them.

The data required will depend on your activities and the emissions sources being measured. Some information may already be available through purchasing records, fuel data, business travel records or waste documentation. Other information may require further investigation.

A structured assessment can help establish the boundaries of your carbon footprint, identify relevant emissions sources and determine where data gaps need to be addressed.

Carbon Footprint Assessment service

If your business needs to understand its overall carbon footprint, Attain Zero can help you assess your Scope 1, Scope 2 and relevant Scope 3 emissions through a Carbon Footprint Assessment.

Our approach is designed to help businesses make sense of their emissions data and understand the practical steps they can take next.