Scope 3 Categories 1 to 15: A Quick Reference Guide
You don't need to memorize Scope 3 categories. Once you understand the logic, the categories fall into place naturally.
Scope 3 Categories 1 to 15: A Quick Reference Guide
Scope 3 covers value chain emissions that a company does not directly control but are connected to its activities. The GHG Protocol Corporate Value Chain (Scope 3) Standard classifies these emissions into 15 categories. This is a broad area. It is also the area where companies struggle the most.
The difficulty usually doesn't come from not knowing the categories. The difficulty comes from finding which data in the company corresponds to which category and choosing the right calculation method. In this article, we cover each category with explanations, data source recommendations, and calculation approaches.
Upstream Categories (1-8)
Upstream categories cover emissions in the company's supply chain. They include processes from raw materials to production.
Category 1: Purchased goods and services
Production emissions of all products and services purchased by the company. Includes raw materials, semi-finished products, office supplies, consulting services, and cleaning services. For many companies, this is the largest Scope 3 item.
Calculation methods: Supplier-specific, spend-based, average-data. Getting primary data from suppliers is the most accurate method. If data is not available, expenditure amounts and sector average emission factors are used.
Data sources: Procurement records, supplier invoices, ERP systems.
Category 2: Capital goods
Production emissions of long-lived assets (machinery, equipment, buildings, vehicles). These assets are used for multiple years, but their emissions are reported in the year of purchase. Distribution using depreciation logic is not applied.
Calculation methods: Spend-based or average-data based. Manufacturer data can be used for specific equipment.
Data sources: Investment budgets, fixed asset records.
Category 3: Fuel and energy-related activities
Energy chain emissions not reported in Scope 1 and Scope 2. Has three sub-components:
- Extraction and refining of fuel (well-to-tank)
- Upstream emissions of fuels used for electricity generation
- Transmission and distribution losses
Calculation methods: Well-to-tank factors are applied to Scope 1 and 2 activity data.
Data sources: Scope 1 and 2 inventory data.
Category 4: Upstream transportation and distribution
Transportation of materials coming from suppliers to the company. Logistics paid for or controlled by the company falls into this category. Warehouse operations can also be included.
Calculation methods: Activity-based (ton-km), distance-based (km), spend-based. Activity-based gives the most accurate result.
Data sources: Logistics invoices, shipment records, carrier reports.
Category 5: Waste generated in operations
Transportation and processing of waste generated at company facilities. Methods such as recycling, incineration, landfill, and composting use different emission factors.
Calculation methods: Based on waste type and disposal method.
Data sources: Waste management records, disposal company reports.
Category 6: Business travel
Employee flights for business purposes, road travel, train journeys, hotel stays. Company vehicle use falls under Scope 1 and is not included in this category.
Calculation methods: Distance-based (passenger-km), spend-based.
Data sources: Travel agency reports, expense management systems, flight records.
Category 7: Employee commuting
Employee transportation from home to work and back. Includes shuttle services, public transport, private vehicles, bicycles, and walking.
Calculation methods: Distance-based (based on survey results), average-data based (sector averages).
Data sources: Employee surveys, HR data, shuttle service records.
Category 8: Upstream leased assets
Operation emissions of assets leased by the company (warehouses, office buildings, vehicle fleets). Parts not reported in Scope 1 and 2 fall into this category. Lease type and accounting approach affect classification.
Data sources: Lease agreements, operation data.
Downstream Categories (9-15)
Downstream categories cover the customer-side impacts of the company's products and services.
Category 9: Downstream transportation and distribution
Transportation of products from the company to customers. Logistics not paid for or controlled by the company falls into this category. The distinction between K4 and K9 is made based on payment and control responsibility.
Data sources: Point of sale data, distribution channel information.
Category 10: Processing of sold products
Applicable to companies selling intermediate products. Emissions occurring during the buyer's processing of this product are calculated. Not applicable to companies selling final products.
Data sources: Customer information, sector averages.
Category 11: Use of sold products
Emissions occurring during the customer's use of the product. An important item for energy-consuming products (appliances, vehicles, electronics). Direct emissions are calculated for fuel-powered products, indirect emissions for electric products.
Calculation methods: Product energy consumption x usage lifetime x emission factor.
Data sources: Product technical specifications, usage scenarios.
Category 12: End-of-life treatment of sold products
Product disposal after use. Recycling, incineration, and landfill scenarios produce different emissions.
Data sources: Product material composition, sector recycling rates.
Category 13: Downstream leased assets
Operation emissions of assets leased to others by the company. Applicable to real estate lessors and equipment lessors.
Category 14: Franchises
Applicable to franchise-granting companies. Operation emissions (Scope 1 and 2) of franchisees fall into this category.
Category 15: Investments
Associated emissions of financial investments (equity, debt, project financing). A critical category for the finance sector, investment companies, and holdings. PCAF (Partnership for Carbon Accounting Financials) methodology is widely used.
Prioritization approach
It is not necessary to calculate all 15 categories at the same detail level. GHG Protocol recommends conducting a materiality assessment. Identifying major items through screening and applying detailed calculations to these items is a practical approach.
Conclusion
Building the logic rather than memorizing Scope 3 categories is more permanent. Upstream covers the company's upstream flow (supply). Downstream covers its downstream flow (customer and use). Each category corresponds to a different department within the company: procurement, logistics, HR, finance, sales. Collaboration with these departments is the key to Scope 3 project success.
