Scope 3 emissions under the GHG Protocol explained

Scope 1 includes all direct emissions, that is, those arising within the company's boundaries. Scope 2 covers indirect emissions from purchased energy such as electricity, heating, cooling or steam whose generation releases greenhouse gases outside the company's boundaries. Scope 3 covers all other indirect emissions along the upstream and downstream value chain.

The relevant standard is the Corporate Value Chain (Scope 3) Accounting and Reporting Standard, Scope 3 Standard for short. It divides Scope 3 emissions into 15 categories, which include, for example, purchased services and transport.

The Scope 3 Standard provides specific requirements and guidance for companies and organisations that want to account for and report their GHG emissions. Its step-by-step approach helps to understand the emission impacts along the value chain and to derive and implement targets and measures for reducing indirectly generated emissions.

The Scope 3 Standard is based on the GHG Protocol Corporate Accounting and Reporting Standard in its revised 2004 edition. The two should be used together when Scope 3 reporting is the goal.

In total there are seven GHG standards for different target groups. The Corporate Standard, the Corporate Value Chain (Scope 3) Standard and the Product Standard are aimed at companies and organisations. The GHG Protocol for Cities is intended for cities and municipalities, the Mitigation Goal Standard for governments and government bodies, the Policy and Action Standard for analysts and policymakers, and the Project Protocol for developers, managers and auditors of GHG-related projects.

The standards describe the process from calculating greenhouse gas emissions to reporting. They support the preparation of GHG inventories, the derivation of reduction measures and the monitoring of their effectiveness across reporting periods. The Scope 3 Standard is aimed at companies of all sizes and sectors but can also be applied to other organisations, such as government agencies, non-profit organisations, auditors or universities.

The GHG Protocol is a framework developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It is intended to help companies and organisations measure, manage and report their greenhouse gas emissions. As an internationally recognised standard, it is relevant to three dimensions of climate policy.

First, measurement and transparency: the standardised approach enables a company or organisation to compare its own emission results over time. This creates transparency about emission sources and progress in reduction.

Second, international commitments and policy instruments: the GHG Protocol is used in international climate negotiations and agreements. Many governments use it when setting reduction targets and implementing climate policy programmes.

Third, corporate reporting: companies are increasingly asked to disclose their greenhouse gas emissions and take measures to reduce them. The GHG Protocol offers an internationally established method for quantifying emissions and presenting them in sustainability reports. The EU adjusted the scope and timetable of sustainability reporting in 2025, so the current status of reporting obligations should be checked.

Scope 3 emissions can be a company's largest source of emissions and therefore a major lever for reducing GHG emissions. An inventory that takes Scope 1, 2 and 3 into account shows the impacts across the entire value chain. Companies can thus concentrate their efforts on the areas where the greatest effect can be achieved.

The Scope 3 Standard takes into account the emissions arising from activities in the value chain during the reporting period, usually one year. It names six greenhouse gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (laughing gas, N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF₆). In the GHG inventory under the Kyoto Protocol, nitrogen trifluoride (NF₃) is added as a seventh gas.

A significant extension compared with the Corporate Standard: anyone reporting under the Scope 3 Standard must report Scope 1, 2 and 3. The option of choosing whether to report Scope 3 emissions no longer applies.

Category 1, purchased goods and services, covers the extraction, production and transport of goods and services acquired in the reporting year, insofar as they are not included in categories 2 to 8. Category 2, capital goods, covers the same for acquired capital goods. Category 3 concerns fuel- and energy-related activities not included in Scope 1 or 2: the upstream chain of purchased fuels and purchased electricity, transmission and distribution losses, and the generation of purchased electricity that is sold to end users.

Category 4, upstream transportation and distribution, covers the transport of purchased products between tier 1 suppliers and the company's own operations as well as purchased transport and distribution services, including inbound and outbound logistics and transport between the company's own facilities. In each case, this refers to vehicles and facilities that are neither owned nor controlled by the reporting company.

Category 5 covers the disposal and treatment of waste from the company's own operations in third-party facilities. Category 6, business travel, concerns the transport of employees for business activities, and category 7 commuting between home and workplace, in each case in vehicles that the company neither owns nor operates. Category 8 covers the operation of leased assets, insofar as it is not reported in Scope 1 and 2.

Category 9, downstream transportation and distribution, covers the transport and distribution of sold products, provided the reporting company does not pay for them, including retail and storage in third-party vehicles and facilities. Category 10 concerns the processing of sold intermediate products by downstream companies, such as manufacturers.

Category 11, use of sold products, covers the end use of goods and services sold in the reporting year. Category 12 concerns the disposal and treatment of sold products at the end of their life.

Category 13 covers the operation of assets owned by the reporting company that have been leased to other companies and are not included in Scope 1 and 2. Category 14 covers emissions from the operation of franchises, reported by the franchisor.

Category 15, investments, concerns equity and debt investments as well as project finance. It is aimed at investors and financial service providers, primarily private financial institutions such as commercial banks, but is also relevant to public financial institutions such as multilateral development banks or export credit agencies.

For each category, the Scope 3 Standard specifies a minimum boundary. For purchased goods, services and capital goods, all upstream emissions must be captured (cradle-to-gate). For fuels, the upstream chain extends from the extraction of raw materials to the point of combustion, excluding the combustion itself.

In most other categories, the Scope 1 and Scope 2 emissions of the respective partners form the minimum boundary: of transport and distribution companies, waste management companies, lessors and lessees, downstream processors and franchisees. Optionally, life-cycle emissions from the manufacture of vehicles, facilities or infrastructure can be included, and for commuting also the emissions of employees working remotely.

For the use of sold products, at least the direct use-phase emissions over the expected lifetime must be captured. This concerns products that directly consume energy during use, fuels and feedstocks, and products that contain greenhouse gases or emit them during use. Indirect use-phase emissions are optional. Depending on how the inventory boundaries are defined, investments may also appear in the Scope 1 or Scope 2 inventory.

An inventory across all three scopes that shows which of the 15 categories cause the largest emissions makes sense. Targets and measures are directed at these areas first.

The Scope 3 Standard provides a step-by-step approach for this and should be applied together with the Corporate Standard. Across reporting periods, it can then be checked whether the reduction measures derived are working.