Scope 3 Emissions
Definition
Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain, both upstream and downstream. They include emissions from purchased goods, business travel, employee commuting, waste disposal, and use of sold products. For most companies, Scope 3 represents the largest share of their total emissions.
Why It Matters
Scope 3 reporting is increasingly required by frameworks like CSRD and ISSB, despite being the most complex to measure. Addressing Scope 3 requires deep supply chain engagement and collaboration across industries.
Related Terms
Scope 1 Emissions
Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by an organisation. These include emissions from on-site fuel combustion, company vehicles, and industrial processes. They are the most straightforward emissions for a company to measure and reduce.
Scope 2 Emissions
Scope 2 emissions are indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting organisation. They occur at the facility where the energy is generated, not where it is consumed. Companies can reduce Scope 2 emissions by switching to renewable energy sources.
Ethical Supply Chain
An ethical supply chain is one in which all participants – from raw material suppliers to final distributors – operate in compliance with environmental, social, and governance standards. This includes fair labour practices, safe working conditions, environmental responsibility, and anti-corruption measures. Managing ethical supply chains requires ongoing due diligence, auditing, and supplier engagement.
Life Cycle Assessment
Life Cycle Assessment (LCA) is a systematic methodology for evaluating the environmental impacts of a product, process, or service throughout its entire life cycle. This includes raw material extraction, manufacturing, distribution, use, and end-of-life disposal or recycling. LCA helps identify the most significant environmental hotspots and improvement opportunities.