What are Scope 3 emissions in ESG reporting?
Scope 3 emissions comprise all indirect greenhouse gas emissions that occur along a company's upstream and downstream value chain – including suppliers, logistics, product-in-use phases, and end-of-life disposal. For many organizations, Scope 3 emissions account for 70–90% of their total carbon footprint. The VS standard enables SMEs to effectively measure and report on relevant Scope 3 categories as part of their ESG reporting and sustainability strategy.
What Categories Exist within Scope 3 Emissions?
The GHG Protocol defines 15 Scope 3 categories, divided into upstream and downstream emissions:
Upstream:
• Cat. 1: Purchased goods and services
• Cat. 2: Capital goods
• Cat. 3: Fuel- and energy-related activities
• Cat. 4: Upstream transportation and distribution
• Cat. 5: Waste generated in operations
• Cat. 6: Business travel
• Cat. 7: Employee commuting
Downstream:
• Cat. 9: Downstream transportation and distribution
• Cat. 11: Use of sold products
• Cat. 12: End-of-life treatment of sold products
Do SMEs Need to Report on All 15 Scope 3 Categories?
No – VS standards only require ESG reporting on material Scope 3 categories. Materiality depends on the sector: a logistics provider will have different relevant categories compared to an IT service provider. ESG Lift helps companies identify their material categories for accurate sustainability reporting.
How Are Scope 3 Emissions Calculated?
Scope 3 emissions are calculated using the spend-based method (financial spend × emission intensity) or the activity-based method (activity data × emission factor). The hybrid carbon footprint calculator in ESG Lift supports both methodologies to streamline your ESG and sustainability reporting.
Scope 3 emissions explained: What supply chain emissions are, the 15 categories involved, and how SMEs can collect relevant Scope 3 ESG data for VS reporting.