Navigating the Complexities of Scope 3 Emissions in the European Union

Jump to section

Scope 3 emissions encompass all indirect emissions that fall outside the categories of Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from the generation of purchased electricity). Scope 3 emissions form an integral part of a company's value chain, which includes both upstream and downstream activities—often accounting for the bulk of a company's corporate carbon footprint.

Scope 1, Scope 2, and Scope 3 Emission sources

Upstream activities are made up of the goods and services purchased by a company, including the sourcing of raw materials, manufacturing by suppliers, and logistics for material transport. Downstream activities include the impacts post-sale, such as product distribution, retail operations, consumer use, and the eventual disposal or recycling of products.

The broad number of elements that can form a part of a company’s Scope 3 Emissions makes them incredibly difficult to calculate and report on, so Senken has decided to demystify the complexities of Scope 3 Emissions to make it easier for your company to remain compliant and sustainable.

How to calculate your company’s Scope 3 Emissions?

Calculating Scope 3 emissions involves identifying and quantifying GHG emissions from all indirect activities associated with a company's operations. The GHG Protocol provides a structured approach to calculating Scope 3 Emissions.

  1. Categorisation of Emissions: Scope 3 emissions are split into 15 categories that cover various indirect activities. These categories include upstream emissions like purchased goods and services, capital goods, and transportation, as well as downstream emissions such as use of sold products, and end-of-life treatment of sold products.
  2. Data Collection: Collect activity data related to each category. This might include quantities of purchased goods, distances traveled by outsourced transportation, or energy consumed by sold products.
  3. Emission Factors Application: Apply relevant emission factors to the activity data. These factors convert activity data (e.g., kilowatt-hours of electricity, kilometres traveled) into CO2 equivalent emissions, reflecting the environmental impact of each activity.
  4. Calculations: Use the collected data and emission factors to calculate total emissions for each category. The sum of all categories represents the total Scope 3 emissions.

The full report can be found here:

The Science Based Targets Initiative (SBTi) builds on this framework by emphasising the need for robust methodologies to calculate Scope 3 emissions comprehensively. The SBTi particularly emphasises the importance of having clear, science-based criteria for setting targets that cover all greenhouse gas emissions, thereby ensuring the targets are both ambitious and achievable. This involves gathering extensive data across the value chain, utilising specific emission factors, and incorporating both direct supplier data and industry averages where necessary.

The SBTi emphasises the importance of a comprehensive assessment of Scope 3 emissions, which should include all relevant indirect emissions not owned or directly controlled by the company but that occur in the value chain. The criteria for calculating Scope 3 emissions include:

  • Scope 3 Inventory: Companies are required to complete a Scope 3 inventory that covers all relevant Scope 3 emission sources as per the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
  • Inclusion Criteria: If a company's Scope 3 emissions make up 40% or more of their total Scope 1, 2, and 3 emissions, their Scope 3 Emissions must be included in the target-setting process. Furthermore, the Science-Based Targets initiative (SBTi) requires that companies set targets and/or engagement strategies that cover at least 67% of their total Scope 3 emissions.
  • Comprehensive Coverage: The guidance insists on using robust data collection methods and applying accurate emission factors to ensure that all significant Scope 3 categories are quantified appropriately.

How to report on your company’s Scope 3 Emissions?

Reporting on Scope 3 emissions is guided by standards such as the GHG Protocol and regulatory frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD) as well as the European Sustainability Reporting Standards (ESRS) that fall under the CSRD. These frameworks require companies to provide a clear, comprehensive account of their Scope 3 emissions, detailing the methodologies used for calculation and the sources of data. Effective reporting should also include the context of these emissions, linking them to specific activities within the company's value chain.

GHG Protocol

GHG Protocol: The GHG Protocol offers a comprehensive framework for reporting on Scope 3 emissions, detailed in the Corporate Value Chain (Scope 3) Standard. Companies are encouraged to report on all relevant Scope 3 emission categories to promote transparency and consistency in quantifying and reporting emissions data. Additionally, the protocol suggests providing a thorough summary of the methodology, reporting scope, and data collection and calculation approach. Here’s how the GHG Protocol guides comprehensive and actionable reporting:

1. Transparency in Reporting: The GHG Protocol’s Corporate Value Chain (Scope 3) Standard emphasises the need for detailed reporting. Organisations are encouraged to disclose the methodologies used for calculating emissions, the scope of emissions reported, and any assumptions or exclusions. This ensures clarity and helps stakeholders understand the emissions landscape and the company's efforts to manage these emissions.

2. Allocation of Emissions: For emissions shared with or partially controlled by other entities, the GHG Protocol provides methods for fair and consistent allocation. Accurate reporting in such cases is crucial for transparency and for setting realistic reduction targets.

3. Continuous Improvement: The Protocol advocates for continuous enhancement of reporting practices. As more accurate data and improved calculation methods become available, companies are encouraged to update their emissions data and reporting practices accordingly. This ensures that the data remains relevant and reliable over time.

4. Setting Reduction Targets: Building on robust reporting, the GHG Protocol also supports companies in setting science-based reduction targets for Scope 3 emissions. It provides guidance on how to align these targets with global climate goals, ensuring they are both realistic and impactful.

5. Public Disclosure: Companies should publicly report their Scope 3 emissions annually through recognised platforms like CDP, as well as in sustainability reports and on corporate websites. This not only enhances transparency but also holds the company accountable to its stakeholders and the wider public.


The SBTi provides clear guidelines for reporting Scope 3 emissions to ensure transparency and accountability:

  • Annual Reporting: Companies are required to report their Scope 3 emissions annually, documenting progress against their set targets. This should include detailed information on the methodologies used and any significant changes in emission factors or data sources.
  • Public Disclosure: The SBTi recommends that companies disclose their Scope 3 emissions through standardised platforms like CDP, as well as in annual reports and sustainability reports. This ensures that the data is accessible and comparable across different reporting periods and among peers.
  • Target Validity and Recalculation: Companies must review and if necessary, recalibrate their Scope 3 targets at least every five years to align with the latest scientific data and SBTi criteria. This includes adjusting targets to reflect any significant changes in the business or its operations that would impact the scope or scale of Scope 3 emissions.


Reporting on Scope 3 emissions under the CSRD involves several critical considerations that ensure comprehensive and actionable insights for sustainability managers. Here are some enhanced guidelines based on the latest resources and regulations:

  1. Mandatory Reporting and Double Materiality: The CSRD requires detailed reporting not only on environmental impacts, such as Scope 3 emissions, but also on how these impacts affect financial performance and vice versa. This "double materiality" perspective ensures that companies assess both the risks posed by climate change to their operations and their own impact on the environment.
  2. Detailed Scope 3 Emissions Reporting: Companies must report all indirect emissions not included in Scope 1 and 2. This includes both upstream emissions (like those from purchased goods and services) and downstream emissions (from the use and disposal of a company’s products). Reporting must cover all 15 categories outlined by the GHG Protocol, encompassing a broad spectrum of value chain emissions.
  3. Digital Reporting and Third-party Assurance: The CSRD mandates that reports be submitted in a standardised digital format to enhance transparency and comparability. These reports require third-party assurance to verify the accuracy and reliability of the data, transitioning from limited to reasonable assurance over time. This shift aims to raise the quality of ESG disclosures to a decision-useful standard.
  4. Alignment with Global Standards: The CSRD is designed to align closely with international frameworks like the TCFD and the GHG Protocol. This alignment ensures that the reporting practices are consistent with global standards, making the data more useful for international stakeholders and investors.
  5. Preparation for Compliance: Companies need to prepare for the upcoming reporting deadlines by enhancing their data collection and reporting processes. This includes conducting dry runs of their carbon accounting processes to identify and mitigate any gaps before the official reporting periods begin.

By addressing these aspects, sustainability managers can better navigate the complexities of Scope 3 emissions reporting under the CSRD, leading to more informed and effective sustainability strategies. For further guidance, refer to the detailed CSRD reporting frameworks and standards as outlined by the

How to reduce Scope 3 Emissions and incorporate them into your decarbonisation Strategy

Reducing Scope 3 emissions involves several strategies:

  • Engaging with suppliers and customers to encourage them to adopt sustainable practices and reduce their own emissions.
  • Improving product design and delivery processes to reduce emissions associated with the use and end-of-life stages of sold products by conducting a Product Lifecycle Assessment.
  • Implementing efficiency improvements across the supply chain, such as optimising logistics to reduce transportation emissions or switching to greener packaging options.

It is important to note that even after successfully implementing all of the above, unavoidable emissions are still highly likely to be present in the vast majority of cases.

Historically, the SBTi has only allowed carbon credits to count towards Scope 1 and Scope 2 reduction targets. However, the SBTi has announced that it is working on expanding this scope to allow carbon credits and other environmental attribute certificates to be counted towards Scope 3 reduction targets. A discussion paper with a draft proposal from SBTi about potential changes to Scope 3 is set to be published in July 2024.

The SBTi also encourages companies to go beyond their value chain in order to maximise their impact in the fight against climate change in its Beyond Value Chain Mitigation (BVCM) framework.

  1. BVCM and Scope 3 Emissions: BVCM encourages companies to engage in climate mitigation activities outside their own value chains. This includes investments that support wider environmental benefits and carbon reduction efforts, complementing internal reductions in Scope 3 emissions.
  2. Mitigation Strategies: The document highlights various strategies for companies to invest in climate action beyond their immediate operations, such as funding renewable energy projects or forest conservation efforts. These activities can help companies address their Scope 3 emissions by contributing to broader environmental goals.
  3. Reporting and Accountability: The guidance also emphasises the importance of transparent reporting and accountability in BVCM activities. Companies are advised to clearly report their investments and the outcomes of their BVCM efforts, which complements the reporting of Scope 3 emissions by providing a fuller picture of a company's environmental impact and mitigation efforts.

How can sustainability managers stay on top of their Scope 3 emissions?

  1. Adopt established frameworks such as the GHG Protocol's comprehensive methods for categorising and quantifying Scope 3 emissions. This ensures accuracy and consistency in your emissions reporting.
  2. Work closely with suppliers and customers to reduce emissions across your value chain. Encourage them to adopt sustainable practices and set their own science-based targets.
  3. Adhere to global standards such as the GHG Protocol and CSRD requirements to maintain transparency. Regularly report and update stakeholders on your progress through recognised platforms like CDP.
  4. Leverage technological innovations and process optimisations to reduce emissions from both upstream and downstream activities. Consider redesigning products and optimising transportation methods to reduce your corporate carbon footprint.
  5. Stay informed about regulatory updates and adjust your strategies accordingly. Anticipate changes like the potential inclusion of carbon credits for Scope 3 mitigation to stay ahead in compliance and strategy.
  6. Establish a culture of continuous improvement within your organisation. Use insights from your emissions data to inform business decisions and sustainability strategies, enhancing resilience and efficiency.

Sign up for a 5-day net zero crash course

Receive information about the climate market as well as actionable steps for your company's sustainable journey, directly to your inbox.

Thanks for signing up!
Oops! Something went wrong while submitting the form.