Scope 3 Emissions Explained: What They Are, Why They Matter, and How Businesses Measure Them

Scope 3 emissions are the most significant component of most organisations’ carbon footprints. As climate reporting requirements expand and investor scrutiny increases, businesses are under growing pressure to understand, measure and disclose Scope 3 emissions across their value chains.

While many organisations have established processes for measuring Scope 1 and Scope 2 emissions, Scope 3 emissions often remain poorly understood. They sit outside direct operational control, rely on external data sources, and span multiple suppliers, are often embedded in global, highly complex supply chains, and for many customers and partners yet they can account for the majority of total emissions.

This guide explains Scope 3 emissions in clear, practical terms. It outlines what Scope 3 emissions are, why they matter for businesses now, the key Scope 3 emissions categories, and how organisations can take a structured, audit-ready approach to measurement and reporting.

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What Are Scope 3 Emissions?

In simple terms, Scope 3 emissions refer to indirect greenhouse gas emissions that occur across a company’s value chain, outside of assets the organisation owns or directly controls.

These emissions arise as a consequence of business activities but are generated by third parties, such as suppliers, logistics providers, customers or end users. As a result, Scope 3 emissions extend both upstream (e.g. suppliers and procurement) and downstream (e.g. product use and disposal).

Common Scope 3 emissions examples include:

• Emissions from producing purchased goods and services
• Transportation and distribution emissions
• Emissions generated when customers use sold products
• Waste treatment and disposal
• Employee commuting and business travel

For some organisations, Scope 3 emissions represent the most material source of climate impact.

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Scope 1, Scope 2 and Scope 3 Emissions — What’s the Difference?

Understanding the difference between Scope 1, Scope 2 and Scope 3 emissions is foundational to accurate carbon reporting.

Scope 1 — Direct emissions
Emissions from sources owned or controlled by the organisation, such as fuel combustion in company vehicles or onsite generators.

Scope 2 — Indirect energy emissions
Emissions associated with the generation of purchased energy, including electricity, steam, heating and cooling.

Scope 3 — Other indirect emissions
All remaining emissions that occur across the value chain, both upstream and downstream.

While Scope 1 and Scope 2 emissions are generally easier to measure, they often represent only a small proportion of total emissions. Scope 3 emissions capture the broader environmental impact of business decisions across procurement, logistics, product design and customer use.

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Scope 3 Emissions Categories (15 Categories Explained with Examples)

The Greenhouse Gas Protocol defines 15 Scope 3 emissions categories, covering upstream and downstream activities. Not all categories apply to every organisation, but most businesses will have material exposure to several.

1. Purchased goods and services
   Emissions from producing the goods and services a company buys, such as raw materials, components or professional services.
2. Capital goods
   Emissions from manufacturing long-term assets including machinery, buildings and IT equipment.
3. Fuel and energy-related activities
   Emissions from producing fuels and electricity not included in Scope 1 or 2.
4. Upstream transportation and distribution
   Emissions from transporting goods from suppliers to the organisation.
5. Waste generated in operations
   Emissions from treating and disposing of operational waste.
6. Business travel
   Emissions from flights, accommodation, rail and rental vehicles.
7. Employee commuting
   Emissions from employees travelling between home and work.
8. Upstream leased assets
   Emissions from leased assets not included in Scope 1 or 2.

For downstream value chains:

9. Downstream transportation and distribution
   Emissions from delivering products to customers.
10. Processing of sold products
    Emissions from further processing of intermediate products sold.
11. Use of sold products
    Emissions generated when customers use the product (e.g. fuel burned by vehicles).
12. End-of-life treatment of sold products
    Emissions from disposal, recycling or treatment of products at end of life.
13. Downstream leased assets
    Emissions from assets owned by the organisation and leased to others.
14. Franchises
    Emissions from franchise operations.
15. Investments
    Emissions associated with investments, lending and financed activities.

For many organisations, purchased goods and services, use of sold products, and investments are the most significant Scope 3 emissions categories.

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Why Scope 3 Emissions Matter for Businesses

Scope 3 emissions are increasingly central to corporate strategy, risk management and reporting.

• They typically account for 70–90% of total emissions
• Investors and lenders expect disclosure of value chain emissions, and they need to disclose these are part of their own scope 3 disclosure
• Customers and procurement partners increasingly require transparency
• Regulatory frameworks are expanding mandatory climate reporting obligations
• Scope 3 reductions drive real world decarbonisation beyond operational boundaries

For example, a retailer that engages suppliers to reduce manufacturing emissions can materially lower its overall footprint while strengthening supply-chain resilience and commercial relationships.

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How Scope 3 Emissions Affect Your Carbon Footprint

Without Scope 3 emissions reporting, organisations risk materially understating their climate impact.

Consider the following example:

• Scope 1 and 2 emissions: 500 tCO₂e
• Scope 3 emissions: 4,500 tCO₂e

In this scenario, more than 90% of emissions sit outside Scope 1 and 2. Focusing only on operational emissions provides an incomplete and potentially misleading  picture for boards, investors and regulators.

A credible carbon strategy requires visibility across the full value chain.

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Common Scope 3 Emissions Challenges

Businesses commonly face several challenges when managing Scope 3 emissions:

• Limited availability of supplier data
• Low supplier engagement or inconsistent reporting
• Complex, multi-tier global supply chains
• Reliance on estimates rather than primary data
• Challenges attributing emissions accurately

These are structural challenges shared across industries. Addressing them requires systems, governance and continuous improvement rather than one-off reporting exercises.

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How to Measure Scope 3 Emissions: A Practical Step-by-Step Approach

A defensible approach to measuring Scope 3 emissions typically involves:

1. Map the value chain
   Identify upstream and downstream activities, suppliers and customers.
2. Prioritise material categories
   Focus on categories with the highest emissions and business risk.
3. Engage suppliers
   Begin collecting data from high-impact suppliers first.
   
4. Apply recognised frameworks
   Use the GHG Protocol to ensure consistency and credibility.
5. Establish internal reporting processes
   Align finance, procurement and sustainability teams.
6. Improve year on year
   Progressively move from estimates to actual supplier data.

This staged approach aligns with audit expectations and emerging regulatory standards.

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Tools and Platforms for Scope 3 Emissions Reporting

Effective Scope 3 emissions measurement is typically supported by a combination of:

• Fair Supply’s Scope 3 emissions platforms
• Supplier data collection and engagement tools
• Emissions factor databases
• Automated reporting and validation workflows
• Specialist advisory support

The objective is to reduce manual effort while improving data quality, consistency and auditability.

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How Fair Supply Helps with Scope 3 Emissions

Fair Supply supports organisations to measure, manage and report Scope 3 emissions with confidence by combining technology, data and expert support.

Fair Supply provides:

• Specialist consultants with regulatory and supply chain expertise
• A scalable Scope 3 data and analytics platform for carbon accounting
• Supplier engagement and workflow tools
• End-to-end emissions measurement and reporting
• Audit-ready documentation and controls

Fair Supply brings humans and technology together — not just a portal, but a team that understands the commercial, operational and regulatory realities of Scope 3 emissions.

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Critical for credible climate reporting

Scope 3 emissions are complex, but they are critical to credible climate reporting and long term business resilience. For most organisations, they represent the majority of total emissions and the greatest opportunity for meaningful reduction.

By taking a structured, defensible approach supported by the right tools and expertise organisations can move beyond compliance to informed, value-chain-wide decision-making.

Fair Supply supports organisations at every stage of their Scope 3 journey, from initial measurement through to audit-ready reporting and ongoing improvement.

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