What does Scope 3 mean for SMEs in the supply chain, and how does it impact their ESG reporting?
Scope 3 emissions represent all indirect greenhouse gas emissions across a company's upstream and downstream value chain. For SMEs operating as suppliers, this means that corporate clients subject to CSRD reporting requirements must incorporate their suppliers' carbon footprint into their own disclosures and will actively request CO₂ data. Preparing a VSME report that covers Scope 1, 2, and 3 emissions meets these standards, ensuring compliant ESG reporting.
What are Scope 3 emissions?
Under the GHG Protocol (Greenhouse Gas Protocol), greenhouse gas emissions are classified into three scopes:
• Scope 1: Direct emissions from owned or controlled sources (e.g. company vehicles, heating)
• Scope 2: Indirect emissions from purchased energy (e.g. electricity, district heating)
• Scope 3: All other upstream and downstream emissions across the value chain (e.g. suppliers, logistics, waste disposal)
Why is Scope 3 data crucial for SMEs as suppliers?
For companies subject to CSRD reporting regulations (>1,000 employees under the Omnibus Package), Scope 3 emissions often account for 70–90% of their total carbon footprint. To meet their sustainability reporting obligations, they must capture this data—which is only possible if their suppliers (primarily SMEs) provide accurate emission metrics.
Which Scope 3 categories affect SMEs as suppliers?
The most relevant Scope 3 categories for SME suppliers include:
• Category 1: Purchased goods and services
• Category 4: Upstream transportation and distribution
• Category 11: Use of sold products
• Category 12: End-of-life treatment of sold products
How should an SME respond to client requests for Scope 3 data?
Utilising the VSME standard, SMEs can systematically collect and share structured carbon footprint data (including Scope 1, 2, and relevant Scope 3 categories). ESG Lift offers a hybrid carbon calculator designed to compute emissions in alignment with the GHG Protocol and export them in a VSME-compliant format. This enables businesses to answer ESG-related client inquiries in hours rather than weeks.
Scope 3 emissions and the supply chain: What SMEs as suppliers need to know, and how a VSME report addresses inquiries from corporate clients subject to CSRD and ESG reporting standards.