As an increasing number of companies set ambitious climate targets to reduce their overall carbon footprint, managing indirect value chain emissions has emerged as a key priority. While Scope 1 direct on-site emissions and Scope 2 emissions from purchased energy have been comparatively easier to reduce, Scope 3 emissions remain a challenge because they come from areas in the value chain that the company does not directly control. These emissions often make up the largest share of a company’s carbon footprint, and addressing them is essential for real progress toward climate goals. 
 

The Role of Scope 3 in Corporate Sustainability 

The proportion of total emissions from Scope 3 varies greatly by sector, ranging from 16% in the cement industry to 100% in financial services. Companies that fail to address Scope 3 emissions risk falling short of their net-zero commitments. 

Scope 3 Categories 

There are 15 Scope 3 categories, divided into upstream and downstream activities in the company’s value chain. Upstream emissions are those that occur from activities associated with producing and delivering goods and services that a company purchases, including purchased raw material and transportation. Downstream emissions are those that occur after the product leaves the company’s gates, including emissions emitted from use of the product and end-of-life disposal. These emissions include carbon dioxide, as well as other greenhouse gases such as methane, nitrous oxide and hydrofluorocarbons. 

Upstream	Downstream
1. Purchased goods and services  2. Capital goods  3. Fuel and energy-related activities (not included in Scopes 1 or 2)  4. Upstream transportation and distribution  5. Waste generated in operations  6. Business travel  7. Employee commuting  8. Upstream leased assets	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

The relevance of each category varies by industry. For example, a significant portion of an electronics company’s Scope 3 emissions will come from use of the sold product, category 11. By assessing their value chains, companies can identify emission hotspots and opportunities for reduction. 
 

The Bottom Line 

Scope 3 emissions are no longer an afterthought—they are central to corporate sustainability. Businesses that take action now will build long-term resilience in the low-carbon economy. Ready to take the next step? Sign up for Lock Two Three to explore how your company can take real action on Scope 3 emissions.