Scope 3 has 15 categories, and few companies have good data for all of them. If you try to calculate each category with the same care, the work can take months. Most of your Scope 3 emissions usually sit in a few categories. A screening shows you which ones, before you send the first request to your suppliers.
- Scope 3 screening: a first estimate of all 15 categories that shows which ones matter for your company.
- Relevance: the size of emissions first, then risk, your influence, stakeholder interest and data quality.
- Exclusions: categories that do not apply to you, such as franchises, can be left out with a reason.
- Methods: supplier-specific data is the most reliable; hybrid, average-data and spend-based methods fill the gaps.
How does the GHG Protocol divide emissions?
A carbon footprint is the greenhouse gas emissions caused by a company, a product, a project or a person, directly or indirectly. The result is usually shown in tonnes of carbon dioxide equivalent (CO₂e). This unit puts different greenhouse gases on one scale.
The Greenhouse Gas Protocol (GHG Protocol) divides the calculation into three scopes:
Scope 1 covers direct emissions from sources that your company owns or controls. Examples are burning fuels, company vehicles and leaks of refrigerants.
Scope 2 covers indirect emissions from the electricity, heat, steam or cooling that your company buys. They are produced outside your company, but your company uses the energy.
Scope 3 covers all other indirect emissions. They result from your business, but happen outside your direct control.
Scope 3 covers many activities. So it is often the largest part of a company's emissions. To reach your climate goals, you need to measure and manage it. This is where your actions have the largest effect.
But Scope 3 is hard to report. You need to collect data with care and look at many processes. Good tracking of emissions is the basis for any plan to cut them.
How to choose Scope 3 categories?
Analyse your business
Start by understanding your business. Find all the steps in your supply chain that can cause emissions. Look at everything from buying raw materials to their transport, use and disposal.
Think about the typical emission sources in your industry. In manufacturing, category 1 (purchased goods and services) and category 3 (fuel- and energy-related activities) often matter most. In services, category 6 (business travel) and category 9 (downstream transportation and distribution) may matter more.
Also look at the life cycle of your products. It shows at which stage most emissions may occur.
Identify the possible Scope 3 categories
The first step of the screening is to list the categories. Read the full list in the GHG Protocol. Some categories will be a large part of your emissions, and some will be very small.
Scope 3 covers emissions in the whole value chain and has 15 categories:
- Category 1: purchased goods and services
- Category 2: capital goods
- Category 3: fuel- and energy-related activities
- Category 4: upstream transportation and distribution
- Category 5: waste generated in operations
- Category 6: business travel
- Category 7: employee commuting
- Category 8: upstream leased assets
- Category 9: downstream transportation and distribution
- Category 10: processing of sold products
- Category 11: use of sold products
- Category 12: end-of-life treatment of sold products
- Category 13: downstream leased assets
- Category 14: franchises
- Category 15: investments
Then decide which categories apply to your company and which you can leave out. For example, if your company has no franchises, you can leave out category 14.
Assess relevance
Next, assess relevance. This step is also called a materiality assessment. It shows which categories have the largest effect on your total footprint.
Check which categories cause the most emissions. They are usually the most relevant. Also think about which categories bring the largest legal or financial risk. And look for places where you can cut Scope 3 emissions and save money at the same time.
Also check your data. How good and reliable is it? This can change which categories you treat as more relevant. The supplier-specific method gives the best data. It uses the emissions that your suppliers calculated for the goods and services you buy. This data covers cradle to gate: from raw materials until the product leaves the supplier's site.
If you do not have supplier data, you can estimate the emissions with these methods:
- Hybrid method: it mixes supplier data on Scope 1, 2 and waste with emission factors for the materials. These factors usually come from paid LCA databases. The method suits more experienced ESG teams.
- Average-data method: you collect data on the goods and services you bought, for example their mass. Then you multiply it by emission factors from free or paid LCA databases.
- Spend-based method: you collect data on how much you spent on goods or services. Then you multiply these amounts by emission factors per unit of money.
Before you assess your data, it helps to know what exactly to ask your suppliers. The quality of their answers decides which categories you can calculate accurately.
Prioritise the categories
Now focus on the categories with the largest share of your footprint. Also include smaller categories that matter to your customers and investors or could harm your name. Estimate the emissions of each category with the data you have, using the method for calculating a company's carbon footprint. The more emissions a category causes, the higher its priority.
With clear priorities, you put your time and money where they have the largest effect. Some categories are harder to measure, and this can change your priorities. Where good data is hard to get, you may need a deeper analysis or new tools.
Monitoring and review
Finally, review your categories and their relevance regularly. Markets and rules change, so you may need to change your priorities.
Regular reviews keep your Scope 3 work up to date and in line with your goals. Track your progress, check your priorities and change your plan when needed. This helps you cut emissions, lower risks and prepare for new requirements.
Summary
Good work on Scope 3 is a big step towards climate neutrality.
Finding and assessing Scope 3 emissions can be hard. But it brings clear benefits for the environment and for your business. Companies that focus on their main Scope 3 categories and cut them lower their risks. They also show others how to do it.
How can EXERGY help with your carbon footprint?
- We have calculated company carbon footprints since 2017. We work with many industries. Our reports meet the needs of our clients' customers.
- We work under the GHG Protocol and ISO 14064. These standards make results reliable and easy to compare.
- We calculate emissions in Scopes 1, 2 and 3. We cover the whole value chain, from your own sources to your suppliers and customers.
- We turn data into action. We help you build real plans to cut emissions.
- We use the four-eyes principle. One person prepares the report, and a second person checks it independently.