Scope 3: a practical guide to the GHG Protocol's 15 categories

Why Scope 3 is the hardest, and the most relevant

The GHG Protocol divides corporate emissions into three scopes. Scope 1 covers direct emissions: combustion in boilers, owned fleet, industrial processes. Scope 2 covers purchased electricity. Both are relatively simple to calculate because the company controls the data.

Scope 3 is different. It covers every indirect emission across the value chain, upstream (suppliers, inbound logistics, corporate travel) and downstream (use of sold products, waste treatment, investments). For most companies, Scope 3 is between 70% and 90% of the total carbon footprint.

That weight creates a paradox: the most significant scope is also the hardest to measure. The data sits across hundreds of suppliers, carriers, logistics partners and end customers. Quality varies enormously. And the organisational boundaries are not always clear.

Even so, Scope 3 has become unavoidable. CDP requires Scope 3 reporting for A and A- scores. SBTi requires Scope 3 targets when it accounts for more than 40% of total emissions. The European CSRD requires detailed value chain disclosure. And CVM 193 in Brazil points the same way.

The good news: you do not have to calculate everything with absolute precision from the first cycle. The GHG Protocol Scope 3 Standard allows a progressive approach: start with sector estimates, refine with primary data over time, and focus on the hotspots that actually move the needle.

Upstream (categories 1-8), one by one

The upstream categories cover everything that happens before the product reaches the company gate.

Category 1, purchased goods and services. The production emissions of every input the company buys: raw materials, components, packaging, outsourced services. It is usually the largest Scope 3 category for manufacturing and retail. The calculation can use a spend-based approach, physical quantity, or primary supplier data. Spend-based is the simplest, multiplying the amount spent by economic emission factors (such as IPCC EEIO or Exiobase), but it is also the least accurate.

Category 2, capital goods. Production emissions of capital assets acquired during the year: machinery, equipment, buildings, vehicles. Unlike financial accounting, the GHG Protocol recommends accounting for all emissions in the year of acquisition, with no depreciation. Companies making large infrastructure investments will see spikes here.

Category 3, fuel and energy activities not included in Scopes 1 and 2. The emissions of extracting, producing and transporting the fuels and electricity the company consumes but which are not counted in Scopes 1 and 2. It includes electricity transmission and distribution losses. In Brazil, with a predominantly hydro power mix, this tends to be smaller than in countries with fossil-heavy grids, but it is not negligible.

Category 4, upstream transport and distribution. Emissions from moving inputs from the supplier to the company, where the freight is paid by the supplier or a third party. If the company pays the freight, those emissions can sit in Category 1 or 4, as long as there is no double counting. In Brazil, where road transport carries more than 60% of freight, this category is usually significant.

Category 5, waste generated in operations. Emissions from treating and disposing of the solid waste and effluent the company generates. It covers landfill, incineration, recycling and effluent treatment. The calculation method depends on the waste type and final destination. Companies with industrial processes generating large volumes of organic waste will see substantial figures.

Category 6, business travel. Emissions from air and ground travel and accommodation for employees. Relatively simple to calculate when the company has a centralised travel agency. Tools such as the ICAO calculator estimate flight emissions from origin, destination and class. The absolute volume is usually small, but it is a highly visible category internally.

Category 7, employee commuting. Emissions from employees' home-to-work travel. It requires an internal survey covering transport modes, distances and frequency. In Brazilian cities with heavy traffic and limited public transport, this category can surprise. Companies with home-working programmes achieve measurable reductions here.

Category 8, upstream leased assets. Emissions from operating assets the company leases from third parties and which were not included in Scopes 1 and 2. Examples: rented premises, vehicles under operating leases, leased equipment. If those assets were already accounted for in Scopes 1 and 2 under the operational control approach, this category is zero.

Downstream (categories 9-15), one by one

The downstream categories cover what happens after the product leaves the company gate.

Category 9, downstream transport and distribution. Emissions from moving the finished product to the customer, where the freight is paid by the company or included in the price. It covers distribution centres, refrigerated storage and last-mile delivery. For e-commerce and retail, this category grows with logistics reach.

Category 10, processing of sold products. Emissions from processing intermediate products sold to industrial customers. Relevant for producers of steel, resins, paper and other inputs that get transformed before final use. It requires knowledge of the customer's processes, which makes data collection especially challenging.

Category 11, use of sold products. Emissions generated during the useful life of the products the company sells. For vehicle manufacturers, fuel combustion is accounted for here. For appliance makers, energy use. For software or service companies, this category may be zero or irrelevant. In sectors with energy-intensive use, it is frequently the largest Scope 3 category.

Category 12, end-of-life treatment of sold products. Emissions from disposing of and treating products after consumer use. It covers landfill, incineration and recycling. It requires assumptions about product lifetime and the disposal mix in the market served. Producers of single-use packaging have significant exposure here.

Category 13, downstream leased assets. Emissions from operating assets the company leases to third parties. Relevant for vehicle, property and equipment rental businesses. If those assets were already included in Scopes 1 and 2, this category is zero.

Category 14, franchises. Emissions from franchisee operations. It applies only to franchisors using the operational control approach in Scopes 1 and 2 (and which therefore excluded franchises from those scopes). Fast-food chains, filling station networks and retail chains find substantial figures here.

Category 15, investments. Emissions associated with the company's financial holdings: equity, debt, project finance. Particularly relevant for banks, insurers, asset managers and holding companies with diversified stakes. PCAF is the reference standard for this category in financial services.

Primary vs secondary data: when to use each

The GHG Protocol distinguishes two types of data for Scope 3.

Primary data is information specific to the actual activity: the exact quantity of steel bought from a specific supplier multiplied by the emission factor of the mill that produced it. It is the most accurate, but it requires direct engagement with suppliers and can be hard to obtain at scale.

Secondary data is an estimate based on sector averages, economic factors or proxies. Examples: emission factors per unit of spend in a given sector (spend-based), average factors per tonne of commodity, average transport distances by mode. Easier to obtain, less accurate.

The practical recommendation is a hybrid approach. In the first inventory cycle, use secondary data across all 15 categories and identify the hotspots, the 3 to 5 categories that concentrate most of the emissions. In the second cycle, start collecting primary data for those hotspots. In later cycles, expand primary data coverage progressively.

CDP and SBTi explicitly recommend that at least 67% of Scope 3 emissions be covered by the categories included in targets. That does not mean you need primary data for 67%, it means you need to include enough categories to cover that share.

Supplier engagement: how to collect the data

Collecting Scope 3 data is, in essence, an exercise in value chain engagement. Your most relevant suppliers need to understand why you are asking for data, exactly what is needed, and how it will be used.

Step 1, prioritise. Identify the suppliers accounting for the largest share of your spend or volume and cross-reference with the most carbon-intensive sectors. Typically 20% of suppliers account for 80% of upstream Scope 3 emissions.

Step 2, communicate. Send a formal communication explaining the initiative, the deadlines and the expected response format. Include a standardised form. Many companies use platforms such as CDP Supply Chain or their own questionnaires.

Step 3, technical support. Many suppliers, especially SMEs, have no emissions inventory of their own. Offer support: webinars, guides, simplified calculators. Mangue Tech provides a supply chain engagement module that sends questionnaires, collects responses and calculates emissions automatically.

Step 4, validate. Supplier-declared data needs cross-validation. Compare with sector benchmarks, check consistency over time and identify outliers. Emission factors far above or below the sector average deserve investigation.

Step 5, iterate. Supplier engagement is cyclical. Each year, data quality and coverage are expected to improve. SBTi recommends that companies with Scope 3 targets engage at least 67% of suppliers (by emissions) in reporting and reduction programmes.

Tools and emission factors for each category

Each Scope 3 category has its own emission factor sources and calculation tools.

The Mangue Tech platform maintains more than 60,000 up-to-date emission factors mapped to each category, drawing on MCTI, IPCC AR6, Defra and Ecoinvent. The system automatically suggests the most appropriate factor for each type of data collected.

How Mangue Tech automates Scope 3

The traditional approach of calculating Scope 3 in Excel has serious limits: error risk, no traceability, difficulty updating and no efficient way to audit.

The Mangue Tech platform solves that with a structured workflow. The Scope 3 module lets you configure the relevant categories and import purchasing data (ERP), logistics (TMS) and travel (agency) via integrations or bulk upload. The system applies the latest emission factors automatically, calculates emissions by category and produces reports ready for CDP, SBTi and the GHG Protocol.

The supply chain engagement module completes the workflow: it sends tailored questionnaires to suppliers, collects structured responses, validates data against benchmarks and feeds the results straight into the Scope 3 calculation.

The result: a complete, auditable, up-to-date Scope 3 inventory, without the weeks of manual work the traditional process demands.