Scope 1
Sources owned or controlled by the organisation.
Emissions · the value chain, in fifteen categories
Scope 3 emissions
Scope 3 covers indirect value-chain emissions outside Scope 1 and Scope 2 within a corporate inventory.
Definition
What Scope 3 is, and what it is not
Scope 3 covers indirect value-chain emissions outside Scope 1 and Scope 2 within a corporate inventory.
Value chain
Scope 2
Purchased electricity, steam, heat and cooling.
Scope 3
Other upstream and downstream value-chain emissions.
Read the detailed guidance and evidence
Scope 3 emissions are the indirect emissions in a company’s value chain beyond its own operations and purchased energy, organised by the GHG Protocol’s Scope 3 Standard into fifteen categories.
Under that Standard no category is optional: exclusions must be disclosed and justified.
In the UK, UK SRS S2 ¶B32 asks an entity to consider all fifteen and say which it includes.
Scope 3 covers indirect upstream and downstream value-chain emissions outside Scope 1 and Scope 2 within a corporate inventory.
Upstream, it covers what the company buys and the activities that support its operations; downstream, what happens to the products it sells.
The Corporate Standard of 2004 treats Scope 3 as an optional reporting category; the Scope 3 Standard of 2011 is the text for a company that measures it.
The scopes themselves, and the documents behind them, are explained on the GHG Protocol page.
One company’s Scope 3 is another company’s Scope 1 or 2, which is why value-chain figures overlap across an economy by design.
| Scope | What it covers |
|---|---|
| Scope 1 | Direct emissions from sources the company owns or controls |
| Scope 2 | Emissions from generating the electricity, steam, heat and cooling it buys |
| Scope 3 | Every other indirect emission in the value chain, upstream and downstream |
The categories
The fifteen Scope 3 categories, upstream and downstream
The GHG Protocol organises Scope 3 into eight upstream and seven downstream categories.
Fifteen categories, one value chainRequirements and evidence
Module 01 / 03
Upstream
Purchased inputs, assets, energy activities, transport and people.
Module 02 / 03
Downstream
Distribution, use, disposal and other activities.
Module 03 / 03
Investments
Category 15 has its own boundary and methods.
Read the detailed guidance and evidence
| # | Category | What falls in it |
|---|---|---|
| 1 | Purchased goods and servicesUpstream | Making the goods and services the company buys in the year, other than those counted in categories 2 to 8. |
| 2 | Capital goodsUpstream | Making the long-lived assets bought in the year, such as plant, machinery, vehicles and buildings. |
| 3 | Fuel- and energy-related activities (not included in Scope 1 or 2)Upstream | Extracting, refining and transporting the fuels and energy the company uses, and grid losses — the parts Scopes 1 and 2 leave out. |
| 4 | Upstream transportation and distributionUpstream | Carriage and storage of purchased goods by third parties, and distribution the company pays for. |
| 5 | Waste generated in operationsUpstream | Third-party disposal and treatment of the waste the company’s own operations produce. |
| 6 | Business travelUpstream | Employee travel for work in vehicles the company does not own or control, including rental cars and flights. |
| 7 | Employee commutingUpstream | Employees travelling between home and their place of work. |
| 8 | Upstream leased assetsUpstream | Running assets the company leases in, where they are not already in its Scope 1 or 2. |
| 9 | Downstream transportation and distributionDownstream | Carriage, storage and retail of sold products that the company does not pay for. |
| 10 | Processing of sold productsDownstream | Further processing of intermediate products by the businesses that buy them. |
| 11 | Use of sold productsDownstream | Emissions when customers use the products sold in the year — fuels, vehicles and appliances above all. |
| 12 | End-of-life treatment of sold productsDownstream | Disposal, recycling and treatment of sold products and their packaging at the end of their life. |
| 13 | Downstream leased assetsDownstream | Running assets the company owns and leases out to others. |
| 14 | FranchisesDownstream | Running the franchises a franchisor licenses, where not in its own Scope 1 or 2. |
| 15 | InvestmentsDownstream | Emissions of investees and borrowers attributed to the company’s investments and loans — financed emissions. |
The split is the Standard’s: upstream emissions relate to purchased or acquired goods and services, downstream emissions to sold goods and services (Scope 3 Standard).
Category 3 exists so that the extraction, refining and transport of the fuels and energy a company uses — and grid losses — are counted somewhere, since Scopes 1 and 2 leave them out.
Categories 4 and 9 divide transport by who pays for it, not by direction of travel alone.
Categories 8 and 13 mirror each other for leased assets, depending on whether the company is the lessee or the lessor.
Why it matters
Why Scope 3 draws the most attention
A Scope 3 inventory can identify where procurement, product design and investment decisions affect emissions.
- 1
Buying
Understand purchased goods and services.
- 2
Designing
Understand product use and end-of-life.
- 3
Financing
Understand relevant investment emissions.
Read the detailed guidance and evidence
For many companies the value chain holds most of their emissions, and none of it is under their direct control.
That is why investors ask for it and why it is the hardest part of an inventory to measure well.
Which category dominates depends on the business model, and an initial screen across all fifteen is how a company finds out.
The UK government’s own call for evidence, in late 2023, found that respondents saw demand for Scope 3 reporting and felt the benefits outweighed the costs, while describing it as “largely voluntary” in the UK.
Customer programmes add their own pressure: large buyers ask their suppliers for emissions data through schemes such as CDP’s supply chain programme.
Where the weight usually sits
A manufacturer: category 1, what it buys.
A fuel or appliance seller: category 11, what customers burn or plug in.
A bank or asset manager: category 15, what it finances.
Illustrative patterns, not measurements.
What the Standard requires
No optional categories, and one genuine sub-rule
Scope 3 coverage depends on the reporting framework and the legal instrument applying it.
Three frameworks, separate requirementsRequirements and evidence
Module 01 / 03
Corporate Standard
Read its treatment of optional Scope 3.
Module 02 / 03
Scope 3 Standard
Account for categories and justify exclusions.
Module 03 / 03
UK SRS
Consider all categories and disclose included categories.
Read the detailed guidance and evidence
A company applying the Scope 3 Standard “shall account for all scope 3 emissions” as the Standard defines them “and disclose and justify any exclusions” (§6.2).
Lists that rank some categories as required and others as optional do not come from the Standard.
Where a category does not apply to a company — a business with no franchises, say — it reports zero or not applicable rather than treating the category as optional.
One sub-rule is real: a company selling intermediate products may disclose and justify excluding downstream emissions from categories 9 to 12, but should not exclude only some of those four.
UK SRS S2 takes a third position, set out below: every category considered, the included ones named.
| Instrument | Scope 3 position |
|---|---|
| GHG Protocol Corporate Standard | Optional in full |
| GHG Protocol Scope 3 Standard | All fifteen accounted for; exclusions disclosed and justified |
| UK SRS S2 | Consider all fifteen; disclose which are included |
Measurement
How Scope 3 is estimated
The calculation method should reflect available evidence, the category and the intended reporting purpose.
- 1
Spend estimate
Use an appropriate economic factor and record limitations.
- 2
Activity estimate
Use physical activity with matching emission factors.
- 3
Supplier information
Check boundary, period, method and provenance.
Read the detailed guidance and evidence
| Approach | What it multiplies | Strength | Weakness |
|---|---|---|---|
| Supplier-specific | Emissions reported by the supplier for the goods bought | Closest to the real figure; reflects supplier action | Depends on supplier data and its quality |
| Activity-based | Physical quantities — kWh, litres, tonne-kilometres, nights — by an emission factor | Tracks real changes in activity | Needs operational data across the value chain |
| Spend-based | Money spent, by an emissions factor per pound | Complete coverage quickly | Moves with prices, not emissions |
In practice companies mix approaches, using better data for the categories that matter most and coarser estimates elsewhere, and say which they used.
For UK activity data, the government conversion factors include business travel, freight, hotel stays, material use and waste disposal, as well as fuels and electricity (2026 set).
Match the factor year to the year of the activity: the 2026 set is for activity data falling mostly within 2026.
A spend-based figure falls when a supplier cuts prices and rises with inflation, so it is a screening tool more than a measure of progress.
Worked answer
Does a lower Scope 3 estimate prove a real emissions reduction?
A method change can alter the reported estimate even when the underlying purchased quantity stays the same, so explain the calculation change before describing a reduction in the business’s emissions.
| Illustrative calculation | What changed | What the comparison supports |
|---|---|---|
| First estimate | A fictional purchase of 100 units uses an illustrative factor of 10 kgCO₂e per unit. | The calculated estimate is 1,000 kgCO₂e. |
| Revised evidence | The same 100 units are recalculated with a supported illustrative factor of 8 kgCO₂e per unit. | The revised estimate is 800 kgCO₂e. |
| Interpretation | The estimate is 20% lower because the factor changed. | This arithmetic alone does not show that production or transport physically emitted less. |
All quantities and factors are invented to explain the distinction; decide any required recalculation using the applicable framework and your documented significance policy.
ActivityAn editorial decision trace
Module 01 / 03
Activity
Keep the purchased quantity visible.
Module 02 / 03
Method
Record the factor and evidence change.
Module 03 / 03
Claim
Separate recalculation from real-world reduction.
In practice
Tracking Scope 3, year on year
A change in data quality or boundary can change a Scope 3 total without representing a reduction in activity emissions.
Compare like with likeRequirements and evidence
Module 01 / 03
Boundary
Record included entities and categories.
Module 02 / 03
Method
Record factors, estimates and changes.
Module 03 / 03
Performance
Explain reductions separately from methodological effects.
Read the detailed guidance and evidence
Tracking Scope 3 at scale is a data problem: many suppliers, many formats and factors that change each year.
The consistency principle applies as much here as anywhere: when a method changes, the change is stated so a trend still means something.
Carbon accounting systems automate the collection and the arithmetic; they are compared on the carbon management software guide.
The wider UK obligation landscape, of which Scope 3 is one piece, is on ESG reporting requirements in the UK.
A working sequence
- Screen all fifteen categories to find where emissions concentrate.
- Name the categories included, and justify those left out.
- Move the largest to better data — activity-based or supplier-specific.
- Record the method and factor set per category.
- Report against the regime that applies to you.
UK reporting
Where Scope 3 is asked for in the UK
SECR, ESOS, UK SRS and voluntary inventories ask different questions about energy and emissions.
A category is not a legal scope testRequirements and evidence
Module 01 / 03
SECR
Check prescribed emissions and transport requirements.
Module 02 / 03
ESOS
Assess UK energy use and qualifying routes.
Module 03 / 03
UK SRS
Assess the applicable disclosure requirements.
Read the detailed guidance and evidence
SECR asks quoted companies for no Scope 3 at all, and unquoted companies and LLPs for one element: emissions from the consumption of fuel for transport (¶20D(1)(b)).
The Environmental Reporting Guidelines make that business travel in rental cars or employees’ own vehicles where the company buys the fuel — the GHG Protocol’s category 6 in its own words.
UK SRS S2 asks an entity applying it for absolute gross Scope 3 emissions, having considered all fifteen categories, and for the list of categories included (¶B32–B33).
Under the FCA’s final rules, listed companies in scope report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027, and may use one year’s Scope 3 non-disclosure relief (PS26/19).
The UK SRS treatment in full is on Scope 3 under UK SRS, the standard on UK SRS S2, and the dates on the UK SRS timeline.
For UK groups with EU undertakings, the EU route is on CSRD for UK companies; SECR scope is on SECR reporting thresholds.
| Regime | What it asks for | Provision |
|---|---|---|
| SECR, quoted companies | No Scope 3 | Sch 7 ¶15 |
| SECR, unquoted companies and LLPs | Fuel for transport, where the company buys it | Sch 7 ¶20D(1)(b) |
| UK SRS S2 | Gross Scope 3; all fifteen considered; included ones named | ¶29(a), ¶B32–B33 |
| FCA listing rules | UK SRS on comply or explain; one-year Scope 3 relief | PS26/19 ¶3.14 |
Investments
Category 15 and financed emissions
Investments require a defined reporting boundary and attribution method, rather than a generic supplier calculation.
Identify the financing relationshipRequirements and evidence
Module 01 / 03
Activity
Identify the investment or financing category.
Module 02 / 03
Boundary
Identify which emissions are attributed.
Module 03 / 03
Method
Record attribution, period and estimation limitations.
Read the detailed guidance and evidence
Category 15 covers the emissions of the companies and projects a reporting company invests in or lends to.
The GHG Protocol’s calculation guidance applies it to investors and financial service providers, and counts equity, debt with a known use of proceeds and project finance.
UK SRS S2, following the ISSB’s December 2025 amendments, lets an entity limit Category 15 to its financed emissions and exclude derivatives (¶29A).
Banks, asset managers and insurers usually calculate financed emissions with the PCAF Standard, which UK SRS does not mandate.
Two sources, two roles
UK SRS S2 ¶29A sets what may be left out of Category 15.
PCAF is the method most financial institutions use to calculate it; UK SRS does not require it.
Software guides
For tracking Scope 3 through the year, see emissions management software.
For the supplier data record behind it, see carbon data management software.
Frequently asked
Scope 3 emissions: the questions people ask
What are Scope 3 emissions?
Scope 3 emissions are the indirect greenhouse gas emissions in a company’s value chain that are not in its Scope 1 (direct emissions from sources it owns or controls) or Scope 2 (emissions from the energy it buys).
They arise upstream, in what the company buys, and downstream, in what happens to what it sells.
What are the 15 Scope 3 categories?
Upstream: 1 purchased goods and services, 2 capital goods, 3 fuel- and energy-related activities, 4 upstream transportation and distribution, 5 waste generated in operations, 6 business travel, 7 employee commuting, 8 upstream leased assets.
Downstream: 9 downstream transportation and distribution, 10 processing of sold products, 11 use of sold products, 12 end-of-life treatment of sold products, 13 downstream leased assets, 14 franchises, 15 investments.
Are any Scope 3 categories optional?
Not under the Scope 3 Standard.
A company that adopts it shall account for all Scope 3 emissions and disclose and justify any exclusions; a category that does not apply is reported as zero or not applicable.
The word optional in the Standard attaches to activities within a category beyond its minimum boundary, not to categories.
Under the GHG Protocol Corporate Standard alone, Scope 3 as a whole is optional.
How are Scope 3 emissions measured?
Most categories are estimated rather than metered.
Activity-based methods multiply physical data — kilometres travelled, tonnes shipped, kilowatt-hours — by emission factors, and supplier-specific methods use the emissions a supplier reports.
Spend-based methods multiply what the company spent by an emissions factor per pound.
The GHG Protocol’s calculation guidance sets out the methods for each category.
Is Scope 3 reporting mandatory in the UK?
Not as a general rule.
SECR asks only unquoted companies and LLPs for one narrow element — fuel for transport where they buy it.
UK SRS S2 asks an entity applying it for Scope 3, having considered all fifteen categories, and listed companies in scope of the FCA’s rules report against UK SRS on a comply-or-explain basis from 2027, with a one-year Scope 3 relief.
What are the Scope 3 reporting rules under UK SRS S2?
An entity discloses its absolute gross Scope 3 emissions, considers its whole value chain and all fifteen categories, and discloses which categories are included in its figure. It is not required to report every category.
A financial institution may limit Category 15 to its financed emissions.
What is Scope 3 Category 15?
Investments.
It covers the emissions of the companies and projects a reporting company invests in or lends to, attributed to its share.
It is small or zero for most companies and usually the largest category for banks, asset managers and insurers, which report it as financed emissions.
Which UK conversion factors help with Scope 3?
The government conversion factors published by DESNZ include factors for business travel, freight, hotel stays, material use and waste disposal as well as fuels and electricity.
The 2026 set, published on 11 June 2026, is for activity data falling mostly within 2026.
Editorial preparation
Build the category evidence record
An editorial inventory workflow connects category screening to a reproducible result.
- 1
Screen
Identify applicable activities across the value chain.
- 2
Calculate
Record data, factors and estimates.
- 3
Review
Explain exclusions, uncertainty and changes.
Read the detailed guidance and evidence
An editorial inventory workflow connects category screening to a reproducible result.
Prepare the evidence
Scope 3 emissions: from a requirement to a reporting pack
Use this preparation sequence alongside the detailed requirements on this page.
An editorial workflow, not a statutory schedule.
- Stage 0101
Organisational boundary
Record which entities and operations the inventory covers.
- Stage 0202
Scope classification
Separate direct emissions, purchased energy and value-chain categories.
- Stage 0303
Activity data
Retain the underlying fuel, electricity, transport and supplier records.
- Stage 0404
Calculation methods
Pair activity data with the correct factor set, units and methodology.
- Stage 0505
Inventory reconciliation
Explain estimates, exclusions and changes between reporting periods.
- Stage 0606
Disclosure and targets
Keep gross inventory figures distinguishable from credits, targets and claims.
Read the applicable instrument: Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011)
A practical brief
An evidence pack, with a clear review trail
Ask for a pack that lets the next reviewer retrace the scope decision, follow the evidence and understand the limitations.
This describes a useful handover; it does not certify compliance or establish that a vendor or adviser delivers it.
Trace the answerScope → evidence → review
Module 01 / 04
Applicability record
Write down the entity, reporting route and relevant period, including why the route applies.
Module 02 / 04
Evidence register
Attach each reported figure or statement to its source, method, version and limitations.
Module 03 / 04
Review trail
Name the preparer, reviewer, open questions and decisions taken before publication.
Module 04 / 04
Usable handover
Retain the working files and unresolved actions so the next reporting cycle can reuse the evidence.
View the preparation diagram
- Prepare01
Create the traceable pack
Keep the input records, calculation files and narrative together.
- Challenge02
Resolve questions before publication
Record the assumptions challenged and any limitations still unresolved.
- Retain03
Make the next cycle reproducible
Keep the approved version and the actions carried forward.
Continue your research
Related guides, one question at a time
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
Checked against 16 sources fromGHG ProtocolDepartment for Business and TradeIFRS FoundationFinancial Conduct Authoritylegislation.gov.ukDESNZ, Defra and BEIS
- GHG ProtocolCorporate Value Chain (Scope 3) Accounting and Reporting Standard (2011)
Table 5.4: the fifteen categories, upstream and downstream; §6.2: account for all Scope 3, disclose and justify exclusions.
- GHG ProtocolTechnical Guidance for Calculating Scope 3 Emissions (2013)
Calculation methods, data sources and worked examples for each category — guidance, not requirements.
- GHG ProtocolTechnical Guidance, Chapter 15 — Category 15: Investments
Equity, debt with known use of proceeds, project finance, managed investments.
- GHG ProtocolCorporate Accounting and Reporting Standard (2004)
Scope 3 an optional category under the Corporate Standard alone.
- Department for Business and TradeUK SRS S2 — Climate-related disclosures (PDF)
¶29(a)(i)(3) gross Scope 3; ¶29(a)(vi)(1) the 2011 categories; ¶B32 consider all fifteen; ¶B33 disclose which; ¶29A financed emissions; ¶C4 the Scope 3 relief.
- Department for Business and TradeUK SRS S1 and UK SRS S2
- IFRS FoundationAmendments to Greenhouse Gas Emissions Disclosures (Amendments to IFRS S2), December 2025
¶29A: Category 15 may be limited to financed emissions; derivatives may be excluded.
- Financial Conduct AuthorityPS26/19 — UK SRS on a comply-or-explain basis
- Financial Conduct AuthorityPS26/19 — Policy Statement (PDF)
¶3.14: one year’s non-disclosure of Scope 3; ¶3.20: the relief is stated, with no further explanation.
- legislation.gov.ukSI 2008/410 Schedule 7, paragraph 20D — SECR, unquoted companies
¶20D(1)(b): fuel for transport — the only Scope 3 element in SECR.
- legislation.gov.ukSI 2008/410 Schedule 7, paragraph 15 — SECR, quoted companies
No transport-fuel limb.
- DESNZ, Defra and BEISEnvironmental Reporting Guidelines, including SECR requirements
Business travel in rental or employee-owned vehicles where the company buys the fuel is mandatory for unquoted SECR reporters.
- Department for Energy Security and Net ZeroUK greenhouse gas emissions reporting: Scope 3 emissions — call for evidence and outcome
19 October to 14 December 2023; 184 responses; “Scope 3 emissions remain largely voluntary”.
- Department for Energy Security and Net ZeroGovernment conversion factors for company reporting
- Department for Energy Security and Net ZeroGreenhouse gas reporting: conversion factors 2026
Includes business travel, freight, hotel stay, material use and waste disposal factors.
- Partnership for Carbon Accounting FinancialsThe Global GHG Accounting and Reporting Standard
The financed-emissions method most financial institutions use; UK SRS does not mandate it.