TL;DR
Scope 3 emissions are indirect Greenhouse gas emissions that occur throughout a company’s value chain, including suppliers, product use, and waste disposal. They often account for the majority of a company’s total emissions. Reducing Scope 3 requires collaboration across the supply chain, especially with suppliers who significantly influence emissions through materials, manufacturing, and logistics. Effective supplier engagement can drive sustainability, meet regulatory expectations, and build long-term business resilience.
Introduction: Understanding Scope emissions
The Greenhouse Gas Protocol categorizes emissions into three “scopes”:
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Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, on-site fuel combustion).
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Scope 2: Indirect emissions from purchased electricity, heat, or steam.
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Scope 3: All other indirect emissions in a company’s value chain, including business travel, transportation, product use, and supplier operations.
While Scope 1 and 2 are relatively easier to measure and manage, Scope 3 often represents the majority of a company’s carbon footprint, especially in sectors like manufacturing, retail, and technology.
What exactly are Scope 3 emissions?
Scope 3 emissions are divided into 15 categories, covering upstream and downstream activities. Some key examples include:
| Scope 3 Category | Description |
|---|---|
| Purchased goods and services | Emissions from the production of goods/services bought by the company |
| Capital goods | Emissions from the manufacturing of long-term assets |
| Fuel and energy-related activities | Emissions from production and transport of purchased fuels |
| Upstream transportation | Emissions from transporting purchased goods and services |
| Business travel | Emissions from employee travel (e.g., flights, cars) |
| Use of sold products | Emissions generated when customers use the product |
| End-of-life treatment of sold products | Emissions from product disposal or recycling |
Purchased goods and services often contribute the largest share, especially for companies with complex global supply chains.
Why Scope 3 matters
1. It’s the largest emission source
Scope 3 accounts for the majority of a company's emissions. Ignoring it means missing the largest decarbonization opportunity.
2. It’s essential for Net-Zero goals
Science-based targets require companies to include Scope 3 in net-zero plans if it makes up more than 40% of total emissions.
3. Regulators and investors expect transparency
Regulations like the EU Corporate Sustainability Reporting Directive (CSRD) demand Scope 3 reporting. Investors are also pressuring firms to address climate risks across the value chain.
4. It reveals supply chain risk
Climate-related disruptions in the supply chain (e.g., water scarcity, raw material shortages) become more visible when Scope 3 is analyzed. This supports better resilience planning and knowing your scope 3 emissions is essential for managing supply chain risk.
Ready to take control of your Scope 3 emissions? Carbon accounting helps you collect, calculate, and report accurate emissions data across your value chain. Automate complex reporting and align with global standards effortlessly.
The supplier link: Why collaborating with suppliers is key
Suppliers-especially Tier 1 and Tier 2-are responsible for much of the upstream Scope 3 emissions. Here’s why partnering with them is critical:
- They hold the data
Accurate Scope 3 data often lies with suppliers. Estimations using industry averages are common but limit precision. Engaging suppliers enables collection of primary, activity-based emissions data.
- They control key emissions levers
Suppliers make decisions about materials, production methods, energy sources, and waste practices. Influencing these choices can drastically reduce emissions.
- They can co-innovate on sustainability
Early engagement fosters innovation in sustainable product design, low-carbon materials, and renewable energy procurement.
- It enhances supply chain transparency
Regular communication builds trust and helps spot hidden risks, such as suppliers using coal-based electricity or environmentally harmful chemicals.
How to work with suppliers to reduce Scope 3
| Strategy | Description | Benefits |
|---|---|---|
| Supplier sustainability codes | Formalize expectations on emissions, waste, and energy | Sets clear standards |
| Emissions data collection | Request primary emissions data (e.g., through CDP, EcoVadis) | Improves reporting quality |
| Joint reduction targets | Co-develop emissions reduction goals aligned with SBTi | Aligns incentives |
| Capacity building | Offer training, tools, and funding to improve supplier capabilities | Fosters long-term collaboration |
| Prefer low-carbon suppliers | Integrate climate performance into procurement decisions | Drives accountability and change |
Common challenges
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Data availability: Many suppliers lack the tools or knowledge to calculate emissions.
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Capacity constraints: SMEs may struggle to invest in low-carbon technologies.
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Misalignment of priorities: Suppliers may prioritize cost over sustainability without incentives.
Solutions to overcome challenges
- Use standardized tools like the GHG Protocol or TCFD guidelines.
- Start with high-impact suppliers and expand gradually.
- Offer incentives such as long-term contracts or co-investments in sustainability improvements.
Read our article about how to involve suppliers in climate action.
Frequently asked questions (FAQ): Scope 3 and supplier engagement
Common questions
Conclusion
Scope 3 emissions are a massive, often overlooked contributor to corporate carbon footprints. Addressing them is not just a compliance exercise-it’s a strategic move to build sustainable, transparent, and resilient supply chains. The only effective way to tackle Scope 3 is by working hand-in-hand with suppliers, sharing data, setting joint targets, and co-innovating for a low-carbon future.
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