In production and trading companies, purchased goods and services are often the largest item in Scope 3. They are also the category where the result depends most on your suppliers. Average factors give you a quick estimate, but they fall only when you buy less. Supplier data shows the effect of your choices.
- Scope 3 category 1, purchased goods and services: emissions from making everything you bought in the reporting year that no other category covers.
- Who it matters for: most companies, and production and trading companies above all.
- Methods: supplier-specific, hybrid, average-data and spend-based.
- Reduction: find the largest sources, work with suppliers and choose products with a lower footprint.
What does category 1 include?
Category 1 covers emissions from the production of goods and services that your company bought or acquired in the reporting year. It includes them only if no other category does. Goods are physical products. Services are non-physical products.
Examples of goods and services in this category:
- products for production, such as materials, components and parts;
- other products, such as office supplies and personal protective equipment;
- services, such as subcontracting, accounting, cloud data storage, IT support, marketing and legal services.
For which companies does category 1 matter?
Category 1 matters for most companies. Its share of total Scope 3 emissions depends on what the company does and which emissions it reports.
It usually matters most in production and trading companies.
Calculation methods
You can calculate category 1 emissions with four methods. The first two need data from suppliers. The average-data and spend-based methods use average industry data.
- Supplier-specific method: you use the supplier's greenhouse gas inventory data for the goods and services you buy, collected on a cradle-to-gate basis. Cradle to gate means from the extraction of raw materials until the product leaves the supplier's gate.
- Hybrid method: you combine the supplier's Scope 1 and 2 data and waste data with emission factors for the materials used. These factors usually come from commercial LCA databases. This method suits more experienced ESG specialists.
- Average-data method: you collect data on the goods and services you buy, for example their mass or number of units. Then you multiply it by emission factors from public or commercial LCA databases.
- Spend-based method: you collect data on the economic value of the goods and services you buy. Then you multiply it by emission factors per unit of money.
Where do you find the data for this category?
First, collect data on what your company buys. Then choose an emission factor. The data for category 1 comes from suppliers or from LCA databases. You need two types of data.
Primary, supplier-specific data:
- product carbon footprint data on a cradle-to-gate basis;
- Environmental Product Declarations (EPDs) of products for modules A1 to A3.
You find the full list of this data, with an email template for suppliers, in our supplier carbon footprint data checklist.
Secondary, estimated data:
- industry-average emission factors per amount of material, from life cycle inventory databases;
- industry-average emission factors per unit of money spent, from emission factor databases.
What are the main challenges in category 1?
A large or complex company may buy goods and services from a long list of suppliers. So it is hard to decide which information matters and what to include.
The second challenge is to collect data well inside your own organisation. You may need to change how your company gathers information.
The third challenge is to choose the right emission factors. At this stage of carbon footprint reporting, good emission factors are still hard to find.
Before you send your first request, check what data to ask suppliers for. We collected it in a checklist with an email template.
How to reduce emissions in Scope 3 category 1?
These steps help you cut emissions from what you buy:
- Find the largest sources of emissions. They often give you the biggest chance to reduce.
- Talk to your suppliers about how they can cut emissions in their production and supply chains.
- Use ecodesign in your processes.
- Analyse the products you buy. For those with the most emissions, look for options with a lower carbon footprint.
