The GHG Protocol splits a company's emissions into three scopes:
- Scope 1: direct emissions from sources you own or control, such as boilers and vehicles.
- Scope 2: indirect emissions from the electricity, heat and steam you buy.
- Scope 3: all other indirect emissions in your value chain.
The 15 categories
Upstream (1–8): purchased goods and services, capital goods, fuel- and energy-related activities, upstream transport, waste, business travel, employee commuting and upstream leased assets.
Downstream (9–15): downstream transport, processing of sold products, use of sold products, end-of-life treatment, downstream leased assets, franchises and investments.
Why it matters
For retailers, manufacturers, banks and software companies alike, Scope 3 is usually the largest share of the footprint. It is also where most reduction levers sit: supplier engagement, product design and procurement choices.
How it is calculated
- Spend-based: money spent multiplied by an emission factor. Fast, but rough.
- Average-data: physical quantities (tonnes of steel, km travelled) multiplied by industry averages.
- Supplier-specific: primary data from suppliers. Best quality, hardest to collect.
Most companies use a mix and improve data quality over time. Disclose which method you used for each category.
Reporting rules
Scope 3 is required under ESRS E1 (where material), ISSB IFRS S2, and the UK and Australian standards, often with transition relief in the first year or years.
Last checked 12 October 2026. Educational content, not legal advice.