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What Are Scope 3 Emissions?

ESG / CSRCarbon accounting

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By Stephanie Safdie, US Copywriter, on 09/29/2022

Updated by Agnès Potier-Murphy, on 07/28/2026

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What Are Scope 3 Emissions?
How Are Scope 3 Emissions Different from Scope 1 and Scope 2 Emissions?
Why Are Scope 3 Emissions More Challenging to Monitor and Calculate than Other Scope Emissions?
How to Calculate Scope 3 Emissions
How to Reduce Scope 3 Emissions
Is Scope 3 Emissions Reporting Required in the US?
What About Greenly?

Scope 3 emissions are the indirect greenhouse gas emissions that happen across a company's value chain: everything from the goods it buys to how customers use and dispose of what it sells, as long as they aren't already counted under scope 1 or scope 2. For most companies, they're also the biggest part of the footprint, and by a significant margin. CDP puts the average at 75% of total emissions, and in sectors like financial services or food and beverage, it can climb past 90%.

So what actually counts as scope 3, and where do you start measuring it? Below is the GHG Protocol's definition, the full 15-category breakdown, and a practical path through calculating, reducing, and reporting on scope 3, including whether US regulation currently requires any of it.

Key Topics You’ll Learn About in This Article

How scope 3 emissions differ from scope 1 and 2 emissions
The GHG Protocol's 15 scope 3 categories, and which ones matter most by sector
Whether scope 3 reporting is currently required in the US

What Are Scope 3 Emissions?

Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain, both upstream and downstream, that aren't already counted under scope 1 or scope 2.

Upstream covers a company's suppliers and purchased goods. Downstream covers what happens after a sale: how customers use a product, and eventually how they dispose of it. Together, they're defined by the GHG Protocol's Corporate Value Chain (Scope 3) Standard, organized into 15 categories that, for most companies, add up to the majority of the total carbon footprint.

Common examples include purchased goods and services, business travel, employee commuting, leased assets, and product use after sale. The full breakdown across all 15 categories is below.

How Are Scope 3 Emissions Different from Scope 1 and Scope 2 Emissions?

The three scopes are organized by where emissions happen and who has direct control over them. Scope 1 covers direct emissions from sources a company owns or controls. Scope 2 covers indirect emissions from purchased electricity, heat, or steam. Scope 3 covers everything else across the value chain, from purchased goods to how customers use and dispose of a product after sale.

Scope	What it covers	Typical example
Scope 1	Direct emissions from sources a company owns or controls	Fuel burned in company vehicles or on-site combustion
Scope 2	Indirect emissions from purchased electricity, heat, or steam	Electricity for owned or controlled offices and facilities
Scope 3	Everything else across the value chain	Purchased goods, business travel, product use and disposal

What Are the 15 Scope 3 Categories?

The GHG Protocol's Corporate Value Chain (Scope 3) Standard splits scope 3 into 15 categories across two groups: upstream, covering everything that happens before a product or service reaches the company, and downstream, covering everything that happens after it leaves.

#	Category	What it includes
1	Purchased goods and services	Emissions from producing raw materials and goods a company buys
2	Capital goods	Emissions from manufacturing equipment, buildings, and machinery
3	Fuel- and energy-related activities	Upstream emissions from fuel and energy not already in scope 1 or 2
4	Upstream transportation and distribution	Freight and logistics for inbound materials
5	Waste generated in operations	Treatment and disposal of operational waste
6	Business travel	Flights, hotels, and other employee travel
7	Employee commuting	Staff traveling to and from work
8	Upstream leased assets	Assets a company leases but doesn't operate
9	Downstream transportation and distribution	Logistics and storage after the point of sale
10	Processing of sold products	Further processing by downstream customers
11	Use of sold products	Emissions generated while customers use the product
12	End-of-life treatment of sold products	Disposal or recycling after use
13	Downstream leased assets	Assets a company leases out to others
14	Franchises	Emissions from franchise operations
15	Investments	Emissions financed through equity, debt, or project investments

Materiality depends entirely on your sector. For Capital Goods manufacturers, Category 11 alone accounts for 91% of total scope 3 emissions, according to CDP's analysis of sector-level scope 3 data. For Financial Services firms, it's Category 15 (Investments) that dominates, making up over 99% of total emissions. Identifying which categories actually matter for your business is the real first step, not treating all 15 as equally urgent.

Scope 1 Emissions

Scope 1 emissions are direct emissions from sources a company owns or controls: fuel burned in company vehicles, on-site fuel combustion, chemical leaks, and any fossil fuels used to run owned facilities.

Scope 2 Emissions

Scope 2 emissions are indirect emissions from purchased electricity, heat, steam, or cooling that a company consumes directly, such as electricity for offices or facilities it operates. Leased vehicles and rented spaces where the company doesn't control energy purchasing fall under scope 3 instead, not scope 2.

What is carbon accounting?

Carbon accounting, also known as greenhouse gas accounting, is the practice of measuring a company's emissions across all three scopes. Scope 3 is typically the largest and hardest part of that picture. For the full picture of how carbon accounting works, see our guide to carbon accounting.

Infographic about carbon accounting : definition and explanation

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Why Are Scope 3 Emissions More Challenging to Monitor and Calculate than Other Scope Emissions?

Scope 3 emissions are hard to control because the activity generating them happens outside the company's own operations. A company can decide to switch its own delivery fleet to electric vehicles, since that's scope 1, entirely within its control. But it can't directly control whether a supplier three tiers up the chain uses renewable energy in manufacturing a purchased component, even though that supplier's emissions count as the company's scope 3.

That's a large part of why scope 3 remains the most under-reported part of corporate carbon accounting. The share of companies reporting emissions for at least one scope 3 category rose from 50% in 2010 to 56% in 2021, according to research hosted by the GHG Protocol, but many companies still stop there rather than covering all 15 categories.

How to Calculate Scope 3 Emissions

Most companies find that scope 3 makes up the majority of their footprint once they measure it. Calculating it follows a clear process, laid out by the GHG Protocol:

1. Map Your Value Chain 🗺️

List upstream and downstream activities across the 15 Scope 3 categories (e.g., purchased goods, transport, use of sold products, end-of-life).

2. Define Boundaries & Year 📚📆

Choose organizational boundary (equity share or control), reporting year, and any exclusions with justification.

3. Screen & Prioritize Hotspots 🔎

Do a quick screening (often spend-based) to identify high-impact categories and suppliers to focus data collection on.

4. Select Calculation Methods 🧮

Pick the best method per category: supplier-specific/activity data where available; otherwise hybrid or spend-based with reliable emission factors.

5. Collect Activity Data & EFs 📥📊

Gather units (kg, kWh, ton-km, $) from ERPs, invoices, and supplier questionnaires; source emission factors from databases or suppliers.

6. Calculate Category Emissions ➗

Emissions = Activity × Emission Factor (apply unit matching). Use allocation rules where needed (e.g., by mass, revenue, or economic share).

7. Aggregate, Deduplicate & Assess Uncertainty 📈

Sum results across suppliers and categories, avoid double counting (e.g., internal transport vs. purchased services), and document assumptions & data quality.

8. Assure, Disclose & Improve 🔁

Optionally seek assurance, report transparently, set supplier engagement targets, and repeat annually to track reductions and improve data coverage.

Measuring scope 3 emissions also reveals which suppliers are genuinely committed to reducing their own emissions and which aren't, turning supplier selection into a lever for reducing a company's footprint rather than something outside its control.

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How to Reduce Scope 3 Emissions

Because scope 3 sources sit outside a company's direct operations, reducing them is less about internal changes and more about working with the value chain.

1. Engage suppliers directly

This is the single highest-leverage action available: companies that engage suppliers on climate issues are almost seven times more likely to have a scope 3 target and a 1.5°C-aligned transition plan, according to CDP and BCG's research on supply chain emissions.

2. Improve data quality over time

Start with spend-based estimates to screen for hotspots, then move to activity-based or supplier-specific data for the categories that matter most, rather than trying to measure everything with the same precision from day one.

3. Set a science-based target if scope 3 is material

Under SBTi's Corporate Net-Zero Standard, companies whose scope 3 emissions exceed 40% of their total footprint are required to set a scope 3-specific target alongside their scope 1 and 2 targets, not just a combined one.

Is Scope 3 Emissions Reporting Required in the US?

There is no active federal mandate for scope 3 reporting in the US. The SEC's 2024 climate disclosure rule never required scope 3 disclosure in the first place, and in May 2026 the SEC proposed rescinding the rule entirely. The public comment period closed August 3, 2026, but the Commission's final vote is still pending.

California's Climate Corporate Data Accountability Act (SB 253) is the more relevant requirement for US companies. It applies to companies with more than $1 billion in global revenue doing business in California, requiring scope 1 and scope 2 reporting starting in 2026 and scope 3 reporting starting in 2027. The California Air Resources Board has proposed pushing the first scope 1 and 2 deadline from August 10 to November 10, 2026, though that change isn't finalized yet.

Outside the US, the EU's Corporate Sustainability Reporting Directive (CSRD) requires scope 3 disclosure for qualifying companies under its ESRS E1 standard, though only for scope 3 categories a company's own materiality assessment identifies as significant, not as a blanket requirement.

This is a moving target. Both the CARB deadline change and the SEC's rescission are proposals, not final rules. Confirm the current status before treating either as settled.

Scope 3 FAQ

What are scope 3 emissions?
Scope 3 emissions are all indirect greenhouse gas emissions in a company's value chain, both upstream and downstream, that aren't already counted under scope 1 or scope 2. The GHG Protocol organizes them into 15 categories.
How are scope 3 emissions different from scope 1 and scope 2?
Scope 1 covers direct emissions a company controls, like fuel burned in owned vehicles. Scope 2 covers indirect emissions from purchased energy. Scope 3 covers everything else across the value chain, from purchased goods to how customers use a product.
How do you calculate scope 3 emissions?
Companies typically screen their value chain to find material categories, then calculate emissions using spend-based, activity-based, or supplier-specific methods depending on data availability, following the GHG Protocol's Scope 3 Calculation Guidance.
How can companies reduce scope 3 emissions?
The most effective approach is engaging suppliers directly on their own emissions and reduction plans. Companies whose scope 3 emissions exceed 40% of their total footprint are also required under SBTi guidance to set a dedicated scope 3 target.
Is scope 3 emissions reporting required in the US?
There's no active federal mandate. California's SB 253 requires large companies to report scope 1 and 2 emissions starting in 2026, with scope 3 following in 2027, though the exact 2026 deadline is still being finalized.

What About Greenly?

Mapping and calculating emissions across 15 scope 3 categories is exactly the kind of work Greenly's carbon accounting platform is built for. It centralizes activity data, applies the right emission factors per category, and flags which categories are material to your sector, so you're not starting from a blank spreadsheet.

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