What is Scope 3 Emissions? A Complete Guide to Definition, Categories, and Reporting

When companies talk about cutting their carbon footprint, they often focus on emissions from their factories, offices, or energy use. Yet the largest share of climate impact typically comes from somewhere else: Scope 3 emissions. According to CDP, Scope 3 emissions can account for up to 90% of a company’s total footprint, depending on the sector.

So, what is Scope 3 emissions, and why does it matter? In this guide, we’ll break down the Scope 3 definition, outline the 15 categories identified by the GHG Protocol, explore real-world examples, and examine why indirect emissions reporting is now central to corporate sustainability.

By the end, you’ll understand not just what Scope 3 covers, but how organisations can begin measuring and reducing it, turning complexity into climate action.

Why Scope 3 Emissions Matter in 2025

The urgency around Scope 3 definition and reporting isn’t just a compliance exercise. It reflects a broader shift: regulators, investors, and consumers now expect full supply chain transparency.

• The EU’s CSRD explicitly requires Scope 3 disclosures.
• The US SEC’s climate disclosure rules (expected 2025 rollout) will bring Scope 3 into focus for listed firms.
• Major buyers (e.g., Unilever, Apple, Walmart) are already mandating suppliers to report Scope 3 emissions.

This means Scope 3 isn’t a “nice to have” anymore,  it’s becoming a license to operate.

Understanding Scope 1, 2, and 3 Emissions

Before diving into the details of Scope 3, let’s set the stage with the three scopes as defined by the GHG Protocol:

• Scope 1: Direct emissions from owned or controlled sources.
  • Example: Fuel combustion in company vehicles or boilers.
• Scope 2: Indirect emissions from purchased energy.
  • Example: Electricity, heat, or steam consumed by the business.
• Scope 3: All other indirect emissions across the value chain.
  • Example: Emissions from suppliers, product transport, customer use, and disposal.

Of these, Scope 3 is by far the broadest and most complex, as it extends beyond company walls into suppliers, distributors, customers, and even waste handlers.

Scope 3 Definition: The GHG Protocol

So, what is Scope 3 emissions in practical terms?

According to the GHG Protocol Scope 3 Standard, it refers to “all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, both upstream and downstream.”

This spans everything from raw material extraction to product end-of-life, essentially capturing the ripple effects of doing business.

Scope 3 Categories Explained

The GHG Protocol has defined 15 categories of Scope 3 emissions, split between upstream (supply side) and downstream(customer/product side)

For a manufacturer, Category 1 (purchased goods and services) and Category 11 (use of sold products) are often the biggest contributors. For a financial institution, Category 15 (investments) can dominate.

Examples of Scope 3 Emissions in Action

To make it tangible:

• Automotive manufacturer:
  • Steel, aluminum, and plastics in the supply chain (Category 1).
  • Emissions from customers driving cars for 15 years (Category 11).
• Consumer electronics brand:
  • Component suppliers in Asia (Category 1).
  • End-of-life disposal of devices (Category 12).
• Professional services firm:
  • Employee flights (Category 6).
  • Leased office space (Category 8).

This shows how indirect emissions reporting varies dramatically across industries, but is unavoidable for all.

Challenges in Scope 3 Reporting

Despite its importance, Scope 3 categories are notoriously difficult to measure. Key hurdles include:

• Data gathering: Suppliers may lack systems to track emissions or be unwilling to share.
• Consistency: Different reporting standards, emission factors, and assumptions.
• Engagement: Convincing suppliers, distributors, and customers to participate.
• Boundaries: Deciding how far down the supply chain to go.

For many organisations, the first attempt at Scope 3 looks like a rough estimate rather than a perfect calculation. The goal is progress, not perfection.

Solutions: How to Approach Scope 3 Measurement

So how can companies tackle this? A structured, phased approach works best:

1. Map Your Value Chain
   • Identify key suppliers, products, and customer use patterns.
2. Prioritise Hotspots
   • Focus on high-impact categories (e.g., purchased goods, product use).
3. Engage Suppliers Early
   • Provide templates, training, or digital tools to collect data.
4. Leverage Technology
   • Use carbon accounting platforms to automate data gathering and validation.
5. Iterate and Improve
   • Start with estimates, then refine over time with better supplier-specific data.

This isn’t just about compliance done right, it builds resilience, improves efficiency, and enhances brand trust.

Want to simplify Scope 3.1 supplier reporting?

Real-World Results- Volkswagen case study Brief

A clear demonstration of the impact of tackling Scope 3 emissions comes from our work with the Volkswagen Group.

Volkswagen faced the classic challenge: Scope 3 emissions tied to energy use across a complex supply chain, including logistics and component movement. By integrating Mavarick’s AI, the company was able to capture, validate, and act on granular emissions data in real time.

The results speak volumes:

• 38% reduction in Scope 3 emissions linked to logistics and supplier operations.
• €400,000 in cost savings from smarter energy use and reduced operational inefficiencies.
• Improved supplier collaboration, with shared emissions data enabling aligned reduction targets.

This case highlights why indirect emissions reporting is not just about regulatory compliance. For Volkswagen, it unlocked both measurable environmental impact and financial value,  proving that Scope 3 action can be both sustainable and profitable.

Conclusion

Understanding the Scope 3 definition and its 15 categories isn’t just academic, it’s a strategic business necessity. By taking proactive steps toward indirect emissions reporting, organisations not only comply with regulations but also strengthen supply chain resilience, reduce costs, and accelerate progress to net zero.

The path to climate leadership runs through Scope 3. Now is the time to act.

FAQs

What is Scope 3 emissions in simple terms?

Scope 3 covers all indirect emissions across a company’s value chain, from supplier activities to customer product use and disposal.

Which Scope 3 categories usually have the highest impact?

For manufacturers: purchased goods (Category 1) and use of sold products (Category 11). For banks: investments (Category 15).

How accurate does Scope 3 reporting need to be?

Per the GHG Protocol, companies can start with estimates, then refine accuracy over time as supplier data improves

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