Key
"Scope 3 emissions may account for up to 90% of a company's total carbon footprint." They arise across the full value chain — from suppliers, logistics, product use, and disposal.
What Are Scope 3 Emissions?
Scope 3 covers all indirect emissions beyond your own operations and energy use. These include
upstream
Activities occurring before your operations, such as raw material extraction, component manufacturing, and transportation to your facilities.
activities (like raw materials, manufacturing, transport) and
downstream
Refers to indirect emissions that occur after a company’s products leave its control — essentially, emissions generated during the use, distribution, and end-of-life of sold products or services.
(product use, disposal, customer services).
Why They Matter
Many assessments estimate Scope 3 emissions can be 11.4× greater than a company's operational emissions. Science Based Targets Initiative
Because they span many actors and tiers of supply chains, collecting accurate data is complex and often fragmented. MIT Sloan
Without transparency in
supplier emissions data
Actual emission measurements from your suppliers' operations, essential for accurate Scope 3 accounting.
, many companies rely on
approximations
Estimates based on industry averages or emission factors, which may not reflect actual supplier performance.
, which can misrepresent true carbon impact. Nature
Scope 1+2 vs Scope 3 Emissions
Scope 1+2 (Operational)
Baseline: 100%
Scope 3 (Value Chain)
1,140%
For most companies, value chain emissions dwarf direct operational emissions
Economic & Risk Implications
Supply chain emissions represent potential financial risk: suppliers project US$1.26 trillion in losses over the next five years unless decarbonization advances.
If these losses are passed to buyers, corporate expense could rise by ~US$120 billion.
As Scope 3 disclosure becomes more regulated and expected by investors, incomplete accounting exposes reputational, regulatory, and compliance risk.
Solutions & Action Levers
Supplier engagement
Actively working with suppliers to understand, measure, and reduce their emissions through collaboration and partnership.
& data sharing: Encourage or require suppliers to track and report emissions.
Capacity building: Provide training, tools, and incentives to suppliers to adopt cleaner processes.
Preferential procurement: Favor suppliers with low-carbon credentials.
Collective action / consortiums: Collaborate with peers to push standards and cost sharing.
Use of emission-factor databases and primary data where possible (vs
approximations
Using industry averages instead of actual supplier data, which reduces accuracy but is sometimes necessary when primary data is unavailable.
).
