What Are Scope 3 Emissions?

Scope 3 emissions are indirect greenhouse gas (GHG) emissions that occur throughout a company’s value chain, and often account for the largest share of its total carbon footprint. These emissions are generated by activities outside a company’s direct control, both upstream and downstream. (For a breakdown of Scope 3 categories and value chain structure, see our introductory post on Scope 3 emissions). While Scope 3 covers a broad range of emission sources, electricity-related Scope 3 emissions is one area where companies have a clear path to action. Before exploring that in more detail, it’s helpful to look at some of the most common sources of Scope 3 emissions across industries.

Sources of Scope 3 Emissions

Scope 3 emissions originate from a wide variety of activities across the value chain. While specific sources vary by sector, common examples include:

• Fossil Fuel Use at Supplier Factories: Many suppliers still burn fossil fuels, such as natural gas or coal, to generate steam or heat for manufacturing processes. The resulting emissions are embedded in the carbon footprint of the raw materials that a company purchases from these suppliers.
• Methane Emissions from Agriculture: Agricultural supply chains release methane (CH₄) through various processes, including livestock digestion, manure management, and rice cultivation. These activities are significant contributors to global warming, as methane is 28 times more potent than CO₂ at trapping heat in the atmosphere.
• Transportation and Distribution: The movement of raw materials and finished goods generates emissions from fuel combustion in trucks, ships, and airplanes.
• Use of Sold Product: Some products generate emissions during use – throughout their lifetime. These emissions can be direct, (e.g. carbon dioxide emitted from driving a car) or indirect (e.g. emissions generated to produce electricity to power an electronic product).

While these examples highlight the breadth of Scope 3, electricity plays a unique role across multiple categories—particularly in supplier operations. The next section explores why electricity-related Scope 3 emissions present a focused opportunity for emissions reductions.

The Challenge of Scope 3 Reductions – and the Role of Electricity

Reducing Scope 3 emissions remains one of the most complex challenges in corporate decarbonization. While companies can redesign processes to use low carbon materials, or reroute supply chains to reduce emissions from transportation, they often struggle to influence activities outside their direct control. Emissions data from suppliers or downstream partners can be difficult to access or verify. However, electricity use often represents a known, consistent input – and, given the availability of renewable energy solutions, one that can be addressed without needing to overhaul entire supplier operations.

When a supplier consumes electricity, those emissions fall under the supplier’s Scope 2 – but they are also included in the reporting company’s Scope 3 emissions. This overlap creates an opportunity: by supporting suppliers with decarbonizing their electricity consumption, companies can reduce their own Scope 3 footprint in a measurable and targeted way.

Electricity is also a more standardised and traceable input than many other Scope 3 categories. It’s typically easier to quantify than emissions from raw materials, transport logistics, or product end-use, and in most markets renewable energy procurement is a mature, widely available solution. Understanding how electricity-related emissions show up in different sectors can help companies identify where interventions are likely to have the most impact.

Electricity Use by Sector: What the Data Tells Us

To better understand where electricity use plays a material role in supply chain emissions, it’s useful to look at sector-level data. Insights from CDP highlight industries where Scope 2 emissions, largely from electricity, make up a notable share of total emissions. These sectors include Chemicals, Food, Beverage & Tobacco, Paper & Forestry, Real Estate, and Steel.

However, the electricity intensity of certain sectors is not always clearly reflected in aggregated reporting categories. Industries such as data centers, aluminum production, textiles, electronics, and semiconductor manufacturing may fall under broader classifications, but often rely heavily on purchased electricity. In semiconductor fabrication, for example, electricity alone can account for up to 45% of a facility’s carbon footprint.

For companies with suppliers in these high-electricity sectors, enabling access to renewable electricity can be one of the most direct and scalable ways to reduce Scope 3 emissions. One way to support this transition, and to account for electricity-related emissions reductions in a verifiable way, is through the use of Renewable Energy Certificates (RECs).

The Role of Renewable Energy Certificates (RECs)

RECs are a market-based instrument used to verify that electricity was generated from renewable sources. When companies purchase RECs, they can match their electricity consumption with clean energy – even in markets where direct procurement through power purchase agreements (PPAs) or on-site solar isn’t feasible. As such, RECs are one of the most widely used instruments for addressing Scope 2 emissions.

For companies seeking to decarbonize their supply chains, supplier electricity use presents one of the few areas where Scope 3 emissions can be directly influenced and credibly reduced. Because electricity-related emissions fall under a supplier’s Scope 2 and the buyer’s Scope 3, RECs can support verified reductions in Scope 3 Category 1: Purchased Goods and Services.

In certain situations companies may wish to take an active role in supporting a suppliers’ transition to renewable energy, with interventions that could include encouraging suppliers to procure RECs independently, providing guidance or technical support, or – in some cases – purchasing RECs on their behalf. These interventions can help overcome market, regulatory, or capacity barriers that would otherwise prevent supplier action.

However, attribution is not always straightforward. In complex or shared supply chains, it can be difficult to link a supplier’s REC-backed electricity use to a specific product, production run, or customer. Establishing clear and auditable boundaries is essential for companies looking to make credible Scope 3 claims.

In our next blog post, we’ll explore how LockStatements can help address this challenge by enabling RE purchases to be tracked, attributed, and validated across supply chains. Stay tuned!