Scope 3 Emissions: Definition, 15 Categories and Measurement Methods (2026)

For most companies, direct emissions account for only 20 to 30 % of their actual carbon footprint. The rest : between 70 and 80 % : is embedded in the value chain: purchased goods, transportation, product use, end-of-life disposal. This is Scope 3, and this is where real decarbonization decisions happen.

This article covers all 15 Scope 3 categories as defined by the GHG Protocol, measurement methods, CSRD/ESRS E1 requirements, and how to prioritize high-impact categories for your organization.

> Kabaun automatically calculates all 15 Scope 3 categories using its GHG Protocol engine (CBC-001/CBC-002) and generates CSRD/ESRS E1 compliant reports (REG-002).

Table of Contents

• [What is Scope 3?](#definition)
• [Upstream vs downstream Scope 3: the key distinction](#upstream-downstream)
• [All 15 Scope 3 categories explained](#15-categories)
• [Summary table: category, type, example, typical weight](#table)
• [Measurement methods by category](#methods)
• [Scope 3 and CSRD / ESRS E1: what are the obligations?](#csrd)
• [Scope 3 hotspots by sector](#hotspots)
• [How to prioritize your Scope 3 categories](#prioritize)
• [FAQ](#faq)
• [Conclusion](#conclusion)

What is Scope 3? {#definition}

The GHG Protocol defines Scope 3 as "all other indirect emissions not included in Scope 2" that occur across a company's value chain : both upstream and downstream.

As a reminder, the three scopes structure carbon accounting according to how directly emissions are linked to the company:

• Scope 1 : direct emissions: on-site combustion, owned vehicle fleet, industrial processes, refrigerant leaks.
• Scope 2 : indirect energy emissions: purchased electricity, heat and cooling.
• Scope 3 : all other indirect emissions: suppliers, transportation, product use, end-of-life disposal, investments.

According to the GHG Protocol Corporate Value Chain Standard, Scope 3 represents on average 70 to 80% of a company's total emissions. In sectors like finance or retail, this figure exceeds 95%.

Measuring Scope 3 is therefore essential to obtain an accurate picture of the carbon footprint and identify the most impactful levers for action.

Upstream vs downstream Scope 3: the key distinction {#upstream-downstream}

The GHG Protocol divides the 15 Scope 3 categories into two groups based on their position in the value chain.

Upstream Scope 3 (categories 1-8)

Upstream emissions correspond to activities of suppliers and service providers before the product or service reaches the company.

Typical examples:

• Steel purchased to manufacture machinery (category 1 : purchased goods and services)
• Transportation of raw materials from supplier to factory (category 4 : upstream transportation)
• Business flights taken by sales teams (category 6 : business travel)

Downstream Scope 3 (categories 9-15)

Downstream emissions occur after the company has sold its product or service. They depend on customer behavior and end-of-life treatment.

Typical examples:

• Electricity consumed by a sold appliance over 10 years (category 11 : use of sold products)
• Disposal of packaging after use (category 12 : end-of-life treatment of sold products)
• Emissions from companies financed by an investment fund (category 15 : investments)

The upstream/downstream distinction drives the action strategy: upstream requires working with suppliers (audits, procurement specifications, carbon contracts), while downstream requires product redesign and customer engagement.

All 15 Scope 3 categories explained {#15-categories}

Upstream categories

Category 1 : Purchased goods and services

Category 1 covers the extraction, production and transportation of all goods and services purchased by the company. This is typically the largest category for manufacturers and retailers.

*Sector example:* An automotive manufacturer purchasing steel, plastics and aluminum. The carbon footprint of these materials often represents 60 to 70% of total company emissions.

*Measurement method:* spend-based (expenditure × sector emission factor) or activity-based (volume × material emission factor).

Category 2 : Capital goods

This category covers emissions associated with producing purchased capital goods: machinery, IT equipment, buildings, infrastructure. It is often underestimated because capital purchases are less frequent.

*Sector example:* A bank renovating its offices or purchasing server infrastructure generates significant category 2 emissions.

*Measurement method:* spend-based or activity-based using asset values.

Category 3 : Fuel and energy-related activities (not in Scopes 1 or 2)

This category captures upstream emissions from energy production: natural gas extraction, electricity transmission and distribution losses, fuel production. It avoids double-counting with Scopes 1 and 2.

*Example:* Line losses during electricity transmission from the power plant to the company's facilities.

*Measurement method:* calculated from Scope 1 and 2 consumption data using upstream emission factors published by grid operators.

Category 4 : Upstream transportation and distribution

Covers transportation of purchased goods from suppliers to the company, across all modes: road, rail, sea, air.

*Sector example:* A retailer importing clothing from Southeast Asia by container ship. Maritime freight alone accounts for a significant portion of Scope 3 for fashion brands.

*Measurement method:* activity (tonne.km) × emission factor by transport mode.

Category 5 : Waste generated in operations

Emissions from the treatment of waste generated by the company: landfill, incineration, recycling, composting. The treatment method and location significantly affect the result.

*Example:* A food processing plant producing process water treated at a wastewater treatment facility. Methane emissions from landfill also count here.

*Measurement method:* waste mass × emission factor by waste type and treatment method.

Category 6 : Business travel

Business flights, trains, taxis, car rentals for employee travel. This is often a significant category in service companies with large commercial or consulting teams.

*Example:* A consulting firm whose consultants fly weekly. According to ADEME, a Paris-New York round trip in economy class emits approximately 1.8 tonnes CO2e per passenger.

*Measurement method:* hotel nights + distances traveled × emission factors by mode, from expense reports or travel management tools.

Category 7 : Employee commuting

Emissions from daily employee commutes between home and workplace, across all transport modes.

*Example:* A company with 500 employees in the Paris region where 60% drive to work. Implementing a sustainable mobility plan can reduce this category by 30 to 50%.

*Measurement method:* employee survey (mode, distance, frequency) × emission factors.

Category 8 : Upstream leased assets

Emissions from the operation of assets leased by the company (as lessee): buildings, vehicles, equipment. This category applies when emissions are not already covered under Scopes 1 and 2.

*Example:* A company leasing offices not already included in its direct Scope 2 perimeter.

Downstream categories

Category 9 : Downstream transportation and distribution

Transportation of sold products from the company to customers or distributors, including warehouse storage.

*Sector example:* An e-commerce company where last-mile delivery represents a growing share of emissions, especially with the growth of same-day and express delivery.

*Measurement method:* volume shipped × distance × emission factor by mode.

Category 10 : Processing of sold products

Emissions from the processing of intermediate products sold by the company when buyers process them before final use.

*Example:* A flour producer selling to industrial bakeries. The emissions from baking at the customer site are counted here.

*Measurement method:* estimates of typical processing operations at customers × emission factors.

Category 11 : Use of sold products

Often the largest category for manufacturers of consumer goods, appliances, vehicles or software. It covers emissions generated over the entire lifetime of the product.

*Sector example:* A laptop manufacturer. Energy consumed by its devices over 5 years of use far exceeds the manufacturing footprint. For the automotive industry, it is the fuel consumed over the vehicle lifetime.

*Measurement method:* units sold × unit consumption × product lifetime × energy emission factor.

Category 12 : End-of-life treatment of sold products

End-of-life treatment of sold products: landfill, incineration, recycling, reuse. This category encourages designing recyclable products from the R&D phase.

*Example:* A plastic packaging manufacturer. Even if packaging is recyclable, emissions from transportation and reprocessing are counted here.

*Measurement method:* product mass × rate per end-of-life pathway × emission factor.

Category 13 : Downstream leased assets

Emissions generated by assets the company leases to third parties (as lessor): real estate, equipment, fleets.

*Example:* A real estate company leasing office space to tenant companies. Emissions from heating and air conditioning in those offices are counted here.

Category 14 : Franchises

Emissions generated by franchisees in operating their business under the franchisor's brand.

*Example:* A fast food franchise network. Emissions from kitchens, cold chain and deliveries at each franchisee are counted here by the parent brand.

Category 15 : Investments

Category 15 is specific to financial institutions (banks, insurers, investment funds). It covers emissions of financed companies and projects, proportional to the share of financing held.

*Sector example:* A bank financing oil infrastructure projects. These emissions often represent more than 99% of a financial institution's total carbon footprint. The reference framework is the Partnership for Carbon Accounting Financials (PCAF).

Summary table {#table}

# | Category | Type | Sector example | Typical weight

1 | Purchased goods and services | Upstream | Raw materials for manufacturers | 40-70%

2 | Capital goods | Upstream | Servers, machinery, buildings | 2-10%

3 | Fuel and energy-related activities | Upstream | Grid transmission losses | 1-5%

4 | Upstream transportation | Upstream | Maritime freight imports | 3-15%

5 | Waste from operations | Upstream | Industrial waste | 1-3%

6 | Business travel | Upstream | Business flights | 2-8%

7 | Employee commuting | Upstream | Commuters by car | 1-5%

8 | Upstream leased assets | Upstream | Leased offices | Variable

9 | Downstream transportation | Downstream | Last-mile delivery | 3-10%

10 | Processing of sold products | Downstream | Processing at customer site | Variable

11 | Use of sold products | Downstream | Appliance electricity consumption | 20-60%

12 | End-of-life treatment | Downstream | Packaging recycling | 1-5%

13 | Downstream leased assets | Downstream | Buildings leased to tenants | Variable

14 | Franchises | Downstream | Restaurant franchise network | Variable

15 | Investments | Downstream | Financed portfolio (banks) | Up to 99%

*Source: GHG Protocol Corporate Value Chain Standard : weights are indicative and vary significantly by sector.*

Measurement methods by category {#methods}

The GHG Protocol distinguishes four main approaches, usable alone or in combination depending on available data.

Spend-based method

The most accessible: multiply purchases in monetary terms by an economic emission factor (kgCO2e per currency unit) from databases such as Exiobase or Ecoinvent. This method suits categories 1 and 2 as a first-level estimate, or when physical data is unavailable.

Advantage: requires only accounting data, already available in ERP systems.

Limitation: moderate accuracy : two suppliers in the same sector can have very different carbon footprints.

Activity-based method

Uses measured physical data: tonnes of materials purchased, kilometers traveled, kWh consumed. This is the reference method for categories 4, 5, 6, 7, 11 and 12.

Advantage: significantly higher accuracy than spend-based.

Limitation: requires collecting operational data from procurement, HR and logistics departments.

Supplier-specific method

The supplier directly communicates their own declared or verified emissions (PCF : Product Carbon Footprint). This is the most accurate method for category 1.

Advantage: reflects the supplier's actual footprint, accounts for their decarbonization efforts.

Limitation: depends on suppliers' carbon maturity and willingness to share data.

Hybrid method

Combines multiple approaches: supplier-specific data for strategic suppliers, activity-based for measurable items, spend-based for the remainder. This is the recommended approach for a comprehensive first carbon assessment.

Practical rule: start with spend-based to get a global picture, then refine categories representing more than 10% of total Scope 3 using activity-based data.

Scope 3 and CSRD / ESRS E1: what are the obligations? {#csrd}

The CSRD (Corporate Sustainability Reporting Directive) makes sustainability disclosures mandatory for large European companies. For emissions, the ESRS E1 : Climate Change standard applies.

Application timeline

• 2024 (FY2024, reported in 2025): companies already subject to NFRD : approximately 11,700 large European companies.
• 2025 (FY2025, reported in 2026): all large non-financial companies (> 250 employees, > €40M turnover or > €20M balance sheet).
• 2026 (FY2026, reported in 2027): SMEs listed on regulated markets.

What ESRS E1 requires on Scope 3

ESRS E1 mandates the disclosure of Scope 1, 2 and 3 emissions. For Scope 3, the requirements include:

• Identification of material categories: companies must determine which categories are significant for their activities (materiality assessment).
• Quantitative disclosure: for each material category, emissions in tonnes CO2e with the measurement method used.
• Transition plan: companies publishing a decarbonization plan must include Scope 3 in their targets.
• Absolute value and intensity: ESRS E1 requires both absolute emissions and an intensity indicator (CO2e/revenue or CO2e/product).

Systematically material categories under ESRS E1

ESRS E1 does not mandate disclosure of all 15 categories, but requires a rigorous materiality analysis. In practice, categories 1 (purchased goods), 6 (business travel), 7 (employee commuting) and 11 (use of sold products) are almost always material for non-financial companies.

Scope 3 hotspots by sector {#hotspots}

Each sector has dominant Scope 3 categories. Knowing them allows organizations to focus data collection and action where they will have the greatest impact.

Heavy industry (chemicals, steel, cement)

Purchased raw materials (cat. 1) and upstream transportation (cat. 4) dominate. Scope 3 typically represents 60 to 75% of total emissions. Decarbonization requires substituting inputs (green steel, low-carbon cement) and optimizing logistics.

Retail and distribution

Category 1 (purchased merchandise) and downstream transportation (cat. 9) are predominant. For grocery retailers, animal feed and deforestation linked to meat and soy purchases are priority hotspots.

Financial services (banks, insurers, funds)

Category 15 (financed investments) accounts for more than 95% of emissions for most institutions. Reporting relies on the PCAF (Partnership for Carbon Accounting Financials) standard and the NZBA methodology for banks.

Professional services and consulting

Business travel (cat. 6), employee commuting (cat. 7) and purchases of digital services (cat. 1) dominate. Digital represents a growing share with the expansion of data centers.

Consumer goods manufacturers

Use of sold products (cat. 11) is often the primary hotspot : think household appliances, combustion-engine vehicles or IT equipment. Reduction requires improving product energy efficiency and offering refurbished products.

How to prioritize your Scope 3 categories {#prioritize}

Faced with 15 categories, the temptation is to measure everything at once. A materiality-based approach allows efficient progress.

Step 1 : Preliminary screening (spend-based)

Calculate a quick estimate across all categories using the spend-based method from your accounting data. This initial filter identifies in a few days the categories that concentrate 80% of Scope 3.

Step 2 : Materiality assessment

For each category, evaluate two criteria:

• Volume weight: what share of total Scope 3 does it represent?
• Data accessibility: are activity-based data accessible (ERP, suppliers, HR)?

High-weight categories with accessible data become priority 1 for refinement using the activity-based method.

Step 3 : Supplier engagement on priority categories

For category 1, engaging strategic suppliers (top 20 by purchase volume) allows a progressive shift from spend-based to supplier-specific data. This is a lever for both accuracy and reduction.

Step 4 : Reduction plan per category

Each material category must have a quantified reduction target and an operational action plan: revised procurement specifications, travel policy, product redesign, mobility plan.

FAQ : Frequently asked questions about Scope 3 {#faq}

What is the difference between Scope 3 category 1 and category 11?

Category 1 covers emissions generated to *produce* the goods and services purchased by the company (supplier upstream). Category 11 covers emissions generated through *using* the products the company itself manufactured and sold (customer downstream). For a washing machine manufacturer: cat. 1 = the steel and components purchased; cat. 11 = the electricity that washing machine will consume over 10 years in the customer's home.

Is Scope 3 mandatory under CSRD?

Yes. ESRS E1, the mandatory climate reporting standard under CSRD, requires the disclosure of Scope 3 emissions for all categories identified as material. The materiality assessment is mandatory, and its results must be documented and justified in the sustainability report.

Can we deduct our suppliers' Scope 3 emissions from our own?

No. The GHG Protocol prohibits deductions or offsets between scopes. Suppliers' decarbonization efforts reduce your category 1 emissions only through an update of the emission factors used : not through direct subtraction.

How should double counting between upstream and downstream Scope 3 be handled?

The GHG Protocol designed the 15 categories to avoid double counting *within* a single company. Between two companies (e.g., your cat. 1 = your supplier's Scope 1/2), double counting is expected and normal at the macro level. It is not a methodological error.

What level of accuracy can be expected from a first Scope 3 assessment?

A first assessment using the spend-based method carries an uncertainty margin of ±30 to 50% depending on the category. This is acceptable for identifying hotspots and prioritizing actions. Accuracy improves over time as data is enriched (activity-based, supplier-specific). The goal in year one is not absolute precision, but establishing a reduction trajectory.

Does Scope 3 category 15 apply to SMEs?

Category 15 applies primarily to financial institutions (banks, funds, insurers). A non-financial SME generally does not need to report this category, unless it holds significant equity stakes in other entities.

How does Kabaun help measure Scope 3?

Kabaun integrates the GHG Protocol calculation engine (CBC-001/CBC-002) with the ADEME Base Carbone for emission factors (API-003). The platform collects data via CSV/Excel import (GDD-001), manual entry (GDD-002) or ERP/IS connection (API-002). The Klem AI assistant (IA-004) guides category prioritization and detects data entry anomalies (IA-003). ESRS E1 reports are generated automatically (REG-002).

Conclusion {#conclusion}

Scope 3 is not a checkbox in a sustainability report. For 70 to 80% of companies, this is where the majority of emissions are concentrated and where decisions that will actually move the needle must be made.

The 15 GHG Protocol categories provide a precise methodological framework. CSRD and ESRS E1 now make this a legal obligation for large European companies. The priority: identify your sector hotspots, start with a spend-based estimate to frame orders of magnitude, then refine material categories with physical data.

Kabaun calculates your 15 Scope 3 categories and generates your CSRD/ESRS E1 reports in compliance with the GHG Protocol → [kabaun.com/contact](https://kabaun.com/contact)