What Are Scope 3 Emissions? All 15 Categories Explained
You are starting your emissions accounting work and keep encountering the term Scope 3. Category lists are available in English, but a clear, structured overview is often hard to find. In this article, we go through all 15 Scope 3 categories one by one, with examples, following the logic of the GHG Protocol.
What Scope 3 Is
Scope 3 covers all indirect greenhouse gas emissions that arise in a company’s value chain but not in its own operations (Scope 1) or in purchased energy (Scope 2). It is defined in the GHG Protocol Corporate Value Chain (Scope 3) Standard. In practice, this means dozens of emission sources, from suppliers’ production all the way to the use of sold products.
Upstream vs Downstream: Where the Distinction Comes From
The GHG Protocol divides Scope 3 into 15 categories, split into two groups. Upstream categories (1–8) relate to a company’s purchases and activities before the point of sale, the upper end of the value chain. Downstream categories (9–15) relate to the impacts of sold products and services after the point of sale.
The distinction helps identify where a company has the most influence. Upstream emissions can be reduced through supplier selection, procurement policy, and material efficiency. Downstream emissions are influenced through product design, energy efficiency during use, and recyclability.
Upstream Categories 1–8
1. Purchased goods and services. All products and services purchased by the company: raw materials, components, outsourced services, software licences, marketing. This is often the single largest Scope 3 category. Example: a Finnish jewellery or fashion brand whose suppliers manufacture products abroad.
2. Capital goods. Long-term investments: machinery, equipment, buildings, vehicles. Unlike category 1, capital goods are recorded on the balance sheet and their emissions are accounted for in full in the year of purchase. Example: a machine shop investing in a new CNC machine.
3. Fuel- and energy-related activities not included in Scope 1 or 2. Emissions from the production of purchased energy and fuels, such as electricity transmission losses and well-to-tank emissions from fuels. Example: Scope 1 emissions from natural gas cover combustion, while category 3 covers gas production and transportation.
4. Upstream transportation and distribution. Transportation of goods purchased by the company from the supplier to the company’s own warehouse or store, when the company pays for the freight. Example: an importer bringing products from Asia and paying the shipping costs.
5. Waste generated in operations. Waste generated by the company’s own operations and its treatment (landfill, incineration, recycling). Example: a restaurant chain generating food waste and packaging waste.
6. Business travel. Staff business trips: flights, trains, car rentals, hotels. Example: a consultancy whose experts travel for client projects.
7. Employee commuting. Staff daily travel between home and the workplace. Remote working reduces this category. Example: an office-heavy company where employees commute by private car.
8. Upstream leased assets. Assets leased by the company (premises, vehicles, equipment) whose energy use is not already captured in Scope 1/2. Example: a sales organisation using leased vehicles.
Downstream Categories 9–15
9. Downstream transportation and distribution. Transportation of sold products to the customer, when the customer pays for the freight. Example: a manufacturer that sells products ex-works and a distribution company handles delivery to the end customer.
10. Processing of sold products. Further processing of intermediate products sold by the company into the final product delivered to the end user. Example: a steel mill whose sheets are used by the automotive industry to manufacture vehicles.
11. Use of sold products. Emissions arising when customers use the sold product. A particularly large category for energy-consuming products. Example: a heat pump manufacturer whose products consume electricity throughout their lifetime.
12. End-of-life treatment of sold products. Disposal, recycling, or reuse of a product at the end of its useful life. Example: a furniture manufacturer whose products end up being incinerated or sent to landfill.
13. Downstream leased assets. Assets owned by the company that are leased to another company. Example: a real estate investor whose leased offices consume electricity and heat.
14. Franchises. The franchisor’s responsibility for the Scope 1+2 emissions of franchisees. Example: a restaurant chain operating under a franchise model.
15. Investments. Emissions attributable to invested capital, primarily relevant for financial institutions (financed emissions). Example: a bank financing industrial companies.
Which Categories Are Relevant for You
Full calculation of all 15 categories is rarely necessary or practical. The GHG Protocol requires that material categories are identified and materiality is justified. Typically, 3–6 categories account for more than 90% of Scope 3 emissions.
Retail and import. Key categories: category 1 (products for sale), category 4 (logistics), and category 12 (end-of-life treatment of products).
Service companies. Key categories: category 1 (purchased services, software, office leases), category 6 (business travel), and category 7 (employee commuting).
Manufacturing. Key categories: category 1 (raw materials), category 4 (raw material transport), and category 11 (use of sold products, if energy-consuming).
Building product manufacturers. Key categories: category 1 (raw materials), category 2 (capital goods), and category 12 (end-of-life of the building, when the product is incorporated into the building).
Financial and investment activities. Key category: category 15 (financed emissions). This typically accounts for more than 95% of a financial institution’s emissions.
Frequently Asked Questions
What is Scope 3?
Scope 3 is a GHG Protocol classification that covers all of a company’s indirect emissions in the value chain, excluding purchased energy (which is Scope 2). In practice, this means supplier emissions, the use of sold products, and everything in between.
Do all 15 categories need to be calculated?
No. The GHG Protocol requires reporting on material categories and justification of materiality. For most companies, 3–6 categories account for more than 90% of emissions. Exclusions must be documented transparently.
Which category is typically the largest?
Most often, category 1 (purchased goods and services) is the largest. Exceptions: for manufacturers of energy-consuming products, category 11 (use of sold products) may be larger, and for financial institutions, category 15 (investments) dominates.
Is category 15 (investments) relevant to all companies?
No. Category 15 is primarily relevant to financial institutions, investment companies, and companies with significant financial investments. For a typical manufacturing SME, it is rarely material.
Where can I find sector-specific emission factors?
The most common sources are EXIOBASE and US EEIO (spend-based), Ecoinvent and DEFRA (product-specific factors), and the GHG Protocol Scope 3 Calculation Guidance. Finnish-specific sources are limited, so international databases are widely used.
Which Scope 3 categories are relevant to you?
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