When organizations discuss carbon footprints, the conversation often starts with Scope 1 and Scope 2 emissions. But for many companies, Scope 3 emissions account for more than 70–90% of their total greenhouse gas (GHG) footprint, making them one of the most important and challenging areas of sustainability reporting.
What is Scope 3?
Scope 3 emissions are indirect emissions that occur across a company’s value chain but are not directly owned or controlled by the organization. These emissions span 15 categories, including purchased goods and services, business travel, employee commuting, transportation and distribution, use of sold products, end-of-life treatment, and investments. The framework is defined by the GHG Protocol Corporate Value Chain (Scope 3) Standard.
Why is Scope 3 important?
Scope 3 accounting provides a more complete picture of an organization’s climate impact and helps identify emission hotspots beyond operational boundaries. It is increasingly critical for:
- Regulatory compliance for Scope 3 disclosure such as New York Part 253 and California SB253
- Net-zero and science-based target setting
- Investor and stakeholder transparency
- Supply chain engagement and decarbonization
- Compliance with emerging sustainability disclosure requirements such as ISSB, CSRD, and other reporting frameworks.
What’s new in Scope 3 standard development?
Lately, there has been an ongoing effort to revise the GHG Protocol Scope 3 Standard, the first major update since its original publication in 2011, with a focus on increased transparency, level of rigor, and granularity. The recently released Phase 1 Progress Update outlines proposed changes, including:
- Enhanced data quality and transparency requirements
- Disclosure of calculation methods and data types used for Scope 3 estimates
- Updates to inventory boundary setting
- Revisions related to investments and financed emissions
- Potential addition of new value-chain activity categories not currently covered by the existing 15 categories.
As sustainability reporting continues to evolve, companies that invest early in robust Scope 3 data management and supplier engagement will be better positioned to meet stakeholder expectations, regulatory requirements, and decarbonization goals. Contact our expert team to navigate your Scope 3 GHG accounting: LCA@amspecgroup.com.