What are Scope 3 emissions in ESG reporting?
Scope 3 emissions comprise all indirect greenhouse gas emissions generated along a company's upstream and downstream value chain – including suppliers, logistics, product use, and end-of-life disposal. For many enterprises, Scope 3 emissions account for 70–90% of their total carbon footprint. The VSME standard provides SMEs with a framework to record and report these critical Scope 3 categories, enhancing their ESG reporting and sustainability performance.
What Categories Exist in 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 All 15 Scope 3 Categories?
No – the VSME standard only requires reporting on material Scope 3 categories. Materiality is industry-dependent: a logistics provider will have different relevant categories compared to an IT service provider. ESG Lift helps streamline the process of identifying your material ESG categories.
How Are Scope 3 Emissions Calculated?
Scope 3 carbon footprinting is calculated using either the spend-based method (expenditure × emission intensity) or the activity-based method (quantity × emission factor). The hybrid carbon calculator in ESG Lift supports both methodologies to ensure robust ESG reporting.
Scope 3 emissions explained simply: What value chain emissions are, the 15 categories involved, and how SMEs can collect relevant Scope 3 data for their VSME reporting.