The 15 Scope 3 Emissions Categories Explained: What to Measure and How to Calculate Them

For many companies, the largest part of their carbon footprint lies outside their direct operations.

The materials they purchase, the goods they transport, the waste they generate, and even the products they sell can all contribute to greenhouse gas emissions throughout their value chain.

These emissions are known as Scope 3 emissions.

Unlike Scope 1 emissions, which arise from sources owned or controlled by a company, or Scope 2 emissions, which arise from the generation of purchased energy, Scope 3 covers indirect emissions occurring throughout the company's upstream and downstream value chain.

According to the GHG Protocol Corporate Value Chain (Scope 3) Standard, Scope 3 emissions are divided into 15 categories.

But what does each category actually include? Which data should companies collect? And how can these activities be translated into greenhouse gas emissions?

In this guide, we'll explain all 15 Scope 3 categories using practical business examples and simplified calculations.

Understanding Upstream and Downstream Scope 3 Emissions

The 15 Scope 3 categories are divided into two groups.

Upstream emissions (Categories 1-8) are associated with activities connected to the goods and services a company purchases or acquires, as well as other activities supporting its operations.

Downstream emissions (Categories 9-15) are associated with activities occurring after products leave the company, as well as leased assets, franchises, and investments.

The categories are designed to help companies organize emissions systematically and avoid counting the same activity more than once within their Scope 3 inventory.

Not all categories will apply to every company.

For example, a consulting company may primarily need to calculate emissions from purchased services, business travel, and employee commuting, while a manufacturing company may also need to account for raw materials, transportation, and the use of sold products.

The first step is understanding which activities are relevant to your business.

Upstream Scope 3 Emissions: Categories 1-8

Category 1: Purchased Goods and Services

What does this category include?

Category 1 covers upstream, cradle-to-gate emissions associated with the production of goods and services purchased or acquired by a company during the reporting year, excluding purchases accounted for in Categories 2-8.

Examples include:

• Raw materials such as steel, aluminium, plastics, and chemicals
• Components and intermediate products
• Office supplies
• Purchased professional services
• IT services and other external business services

For manufacturing companies, this category is often an important contributor to Scope 3 emissions because purchased materials may have substantial production-related carbon footprints.

Practical example: Purchasing steel

A manufacturer purchases 10,000 kg of steel for its production process.

The company knows:

These emissions represent the upstream production of the purchased steel, rather than the emissions generated by the manufacturer's own production equipment.

What data do you need?

• Type and quantity of purchased materials
• Purchased services and associated expenditure
• Supplier-specific product carbon footprints, if available
• Relevant emission factors

Alternative calculation method: If physical quantities are unavailable, companies can use expenditure data from purchase invoices and appropriate spend-based emission factors.

For example, €50,000 spent on a service multiplied by an illustrative factor of 0.4 kgCO₂e/€ gives an estimate of 20,000 kgCO₂e.

Spend-based calculations require appropriate treatment of VAT, currency, price year, and sector classifications.

How Verde365 simplifies Scope 3 calculations

With Verde365, companies can upload invoices exported from their accounting software and use AI to automatically classify purchases into the appropriate Scope 3 categories.

For example, invoices for purchased materials and services can be assigned to Category 1, while invoices for machinery and equipment classified as capital goods can be assigned to Category 2.

Verde365's spend-based calculation model uses environmentally extended input-output (EEIO) emission factors to estimate emissions from financial data, allowing companies to calculate Scope 3 emissions without manually processing every invoice.

The platform also provides emission factors for activities across Scope 3 categories, supported by an AI-assisted emission factor selection helper that simplifies identifying appropriate factors for different purchases and activities.

1. Your data
   • Invoices
   • Accounting exports
   • Supplier data
2. AI classifies invoices into Scope 3 categories
   • Category 1: Purchased goods and services
   • Category 2: Capital goods
3. EEIO spend-based calculations
   • Built-in emission factors
   • AI emission factor selection helper

Scope 3 categories and emissions estimates Example

1. 1 Purchased goods and services 12,840 tCO₂e
2. 2 Capital goods 4,320 tCO₂e
3. 3 Fuel- and energy-related activities 2,890 tCO₂e
4. 4 Upstream transportation and distribution 2,410 tCO₂e
5. 5 Waste generated in operations 630 tCO₂e

Reporting outputs

• Sustainability reports (CSR/ESG)
• CDP questionnaires
• Regulatory disclosures (e.g. CSRD, SEC)

Category 2: Capital Goods

What does this category include?

Category 2 covers the upstream, cradle-to-gate emissions associated with capital goods purchased or acquired during the reporting year.

Capital goods are generally long-lasting assets that companies use to produce goods, provide services, or support their operations.

Examples include:

• Manufacturing machinery
• Industrial equipment
• Buildings and production facilities
• Company vehicles
• Computers and other capitalized equipment

Unlike operating expenses, capital goods are typically recorded as long-term assets in financial accounting.

However, for Scope 3 reporting, the emissions associated with producing a capital good are generally accounted for in the year the asset is acquired, rather than distributed across its useful life.

Practical example: Purchasing manufacturing equipment

A manufacturer purchases a new industrial machine.

Assume the machine has an estimated cradle-to-gate carbon footprint of 15,000 kgCO₂e, based on its materials and manufacturing processes.

These emissions are reported under Category 2 in the year the machine is acquired.

Emissions generated from using the machine later, such as electricity consumption, are accounted for separately under the appropriate scope.

What data do you need?

• Type and number of capital goods purchased
• Product-specific carbon footprint, where available
• Material composition and quantities
• Purchase expenditure, if using spend-based estimates
• Relevant cradle-to-gate emission factors

Calculating Capital Goods Emissions with Verde365

Capital goods emissions can also be calculated using Verde365's spend-based calculation model when detailed physical or supplier-specific emissions data is unavailable.

Companies can upload invoices for purchased machinery, equipment, vehicles, and other capital assets. Verde365 uses AI to help classify these invoices into the appropriate Scope 3 categories, distinguishing capital goods under Category 2 from regular purchased goods and services under Category 1.

Once classified, expenditure data can be combined with relevant EEIO emission factors to estimate the upstream emissions associated with these capital purchases.

As more detailed information becomes available, companies can improve their estimates using activity-based calculations or supplier-specific emission factors.

Category 3: Fuel- and Energy-Related Activities Not Included in Scope 1 or Scope 2

What does this category include?

Category 3 covers emissions associated with producing and delivering fuels and energy purchased or consumed by the reporting company that have not already been included in Scope 1 or Scope 2.

This includes:

• Upstream emissions from extracting, refining, and transporting purchased fuels
• Upstream emissions associated with fuels used to generate purchased electricity
• Transmission and distribution losses
• Generation of electricity purchased and resold to end users, for applicable companies

For example, burning natural gas in a company-owned boiler produces Scope 1 emissions. However, extracting, processing, and transporting that natural gas also generate emissions, which are accounted for separately under Category 3.

Practical example: Upstream emissions from diesel consumption

A company consumes 10,000 litres of diesel in its own vehicles.

The combustion emissions are already included in Scope 1.

However, the company must also consider upstream fuel-related emissions.

Assume:

These are upstream fuel-related emissions, additional to the direct combustion emissions already reported under Scope 1.

What data do you need?

• Fuel consumption by fuel type
• Purchased electricity, heat, steam, and cooling
• Relevant upstream fuel and energy emission factors
• Electricity transmission and distribution loss information, where applicable

Category 4: Upstream Transportation and Distribution

What does this category include?

Category 4 covers transportation and distribution services purchased by the reporting company, including transportation of purchased products from suppliers and transportation of sold products when the reporting company purchases the transportation service.

It also includes relevant third-party warehousing and distribution activities.

Examples include:

• Transportation of raw materials from suppliers to manufacturing facilities
• Transportation services purchased to deliver products to customers
• Third-party logistics and distribution services purchased by the company
• Storage of purchased products in third-party warehouses

Transportation in vehicles owned or controlled by the reporting company is generally accounted for under Scope 1 or Scope 2 instead.

Practical example: Transporting raw materials

A manufacturer purchases 20 tonnes of raw materials transported by truck over 500 kilometres.

Assume:

What data do you need?

• Type of transportation (truck, rail, ship, aircraft)
• Transported mass
• Transportation distance
• Vehicle or fuel characteristics, where available
• Third-party warehouse energy use, where relevant

If detailed transport data is unavailable, companies may use expenditure-based estimates or appropriate average transport data.

Category 5: Waste Generated in Operations

What does this category include?

Category 5 covers emissions associated with the third-party treatment and disposal of waste generated by the company's operations during the reporting year.

Examples include:

• Landfilled waste
• Incinerated waste
• Recycled materials
• Wastewater treatment
• Other externally managed waste streams

The type of treatment is important because different waste management methods have different greenhouse gas emission profiles.

Practical example: Waste sent to landfill

A manufacturing company generates 5 tonnes of non-hazardous waste that is sent to landfill.

Assume:

Actual landfill emissions depend strongly on the waste composition, landfill management, methane capture, and the selected accounting methodology.

What data do you need?

• Total waste generated by type
• Waste treatment or disposal method
• Waste quantities
• Waste contractor information
• Waste-specific treatment emission factors

Where waste contractors provide actual treatment information, companies can use it to improve the representativeness of their calculations.

Category 6: Business Travel

What does this category include?

Category 6 covers emissions from transporting employees for business-related activities in vehicles not owned or controlled by the reporting company.

Examples include:

• Business flights
• Train journeys
• Rental cars
• Taxis and other third-party passenger transportation
• Other business-related employee travel

Companies may also include business travel hotel accommodation emissions, following the applicable GHG Protocol guidance.

Practical example: Business flight

An employee travels by plane to attend a business meeting.

Assume:

What data do you need?

• Travel distance
• Transportation mode
• Number of travellers
• Flight characteristics, where relevant
• Hotel nights, if included in the inventory

Business travel data can often be obtained from travel booking systems, expense reports, and employee records.

Category 7: Employee Commuting

What does this category include?

Category 7 covers emissions associated with employees travelling between their homes and workplaces.

Examples include:

• Commuting by private car
• Public buses
• Trains
• Motorcycles
• Other commuting transport modes

Companies may also report emissions from teleworking under the applicable optional boundary.

Practical example: Commuting by car

An employee commutes 30 kilometres per working day, including the return journey.

Assume:

What data do you need?

• Number of employees
• Average commuting distance
• Transportation mode
• Number of office days
• Carpooling information, if applicable

A simple employee questionnaire can often provide sufficient initial data for estimating commuting emissions.

Category 8: Upstream Leased Assets

What does this category include?

Category 8 covers emissions from operating assets leased by the reporting company that are not already included in its Scope 1 or Scope 2 inventory.

Examples may include:

• Leased office spaces
• Leased warehouses
• Leased manufacturing facilities
• Leased vehicles and equipment

The classification depends on the lease arrangement and the organizational boundary approach applied by the company.

For example, electricity consumed in a leased office may already be included in Scope 2. In that case, the company should not report the same emissions again in Category 8.

Practical example: Leased warehouse

A company leases warehouse space, but the associated operational energy emissions fall outside its Scope 1 and Scope 2 organizational boundary.

Assume the warehouse consumes:

This example represents the electricity-related portion of operational emissions. Any other relevant fuel, process, or fugitive emissions would also need to be assessed.

What data do you need?

• Type of leased asset
• Lease period
• Electricity and fuel consumption
• Relevant refrigerant or process emissions
• Asset-specific or lessor-provided emissions data

Downstream Scope 3 Emissions: Categories 9-15

Category 9: Downstream Transportation and Distribution

What does this category include?

Category 9 covers the transportation, distribution, storage, and retail of sold products after they leave the reporting company's operations, when those services are not purchased by the reporting company.

Examples include:

• Transportation from distributors to retail locations
• Third-party storage of sold products
• Transportation from retailers to final customers
• Relevant third-party distribution and retail activities

A key distinction between Categories 4 and 9 is who purchases the transportation or distribution service.

For example, if a manufacturer pays a logistics provider to deliver its products, the purchased transport service generally belongs in Category 4.

If a customer purchases the products and independently arranges their transportation, the relevant downstream transport emissions generally fall under Category 9.

Practical example: Customer-arranged transportation

A manufacturer sells 10 tonnes of finished products.

The buyer arranges transport over 800 kilometres using a third-party trucking company.

Assume:

What data do you need?

• Quantity of products sold and transported
• Transportation distances
• Transportation mode and vehicle type
• Information from customers or distribution partners
• Storage and retail energy consumption, where applicable

If actual logistics information is unavailable, companies may need to estimate transportation distances and distribution patterns using representative data.

Category 10: Processing of Sold Products

What does this category include?

Category 10 covers emissions generated when third parties further process intermediate products sold by the reporting company.

This category is particularly relevant to manufacturers supplying materials or components that require additional processing before becoming finished products.

Examples include:

• Steel sold to a company that manufactures metal components
• Plastic granules processed into packaging
• Aluminium profiles further processed into manufactured products
• Intermediate chemical products processed into final formulations

The emissions arise from the third party's processing activities, not from the original production of the intermediate product.

Practical example: Processing purchased steel

A steel supplier sells 10 tonnes of steel to another manufacturer.

The customer uses electricity to process the steel into finished components.

Assume:

This is a simplified example covering electricity-related processing emissions. A complete calculation would also need to account for other relevant processing inputs and emissions, including fuels and waste treatment, where applicable.

What data do you need?

• Quantity of intermediate products sold
• Type of downstream processing
• Energy consumption during processing
• Relevant fuel, waste, and process emissions
• Customer-specific processing data, where available

When customer-specific information is unavailable, representative processing assumptions and average data may be used.

Category 11: Use of Sold Products

What does this category include?

Category 11 covers emissions resulting from the use of products sold by the reporting company during the reporting year.

For certain products, emissions during the use phase can be significantly greater than emissions associated with manufacturing.

Examples include:

• Electricity consumed by electrical appliances
• Fuel consumed by vehicles
• Natural gas consumed by heating equipment
• Other products that directly consume energy or release greenhouse gases during use

For products with direct use-phase emissions, companies generally calculate emissions across the expected lifetime of all products sold during the reporting year.

Practical example: Electricity consumption of sold appliances

A manufacturer sells 1,000 electrical appliances.

Assume:

This represents the estimated lifetime electricity-related emissions of the appliances sold during the reporting year.

In a real calculation, the company would need to consider actual use patterns, product lifetimes, and geographically and temporally appropriate electricity emission factors.

What data do you need?

• Number of products sold
• Expected product lifetime
• Energy or fuel consumption during use
• Typical customer usage patterns
• Relevant emission factors

Product manufacturers should pay particular attention to this category because product efficiency improvements can have a substantial influence on lifetime emissions.

Category 12: End-of-Life Treatment of Sold Products

What does this category include?

Category 12 covers emissions from the disposal and treatment of products sold by the reporting company at the end of their useful lives.

This includes the product itself and relevant packaging.

Examples include:

• Recycling of plastic packaging
• Disposal of electrical equipment
• Incineration of packaging waste
• Landfilling of products
• Other end-of-life treatment processes

Companies generally estimate the end-of-life treatment of products sold during the reporting year, even if the products will only become waste in future years.

Practical example: End-of-life treatment of plastic packaging

A packaging manufacturer sells 100 tonnes of plastic packaging during the reporting year.

Assume:

This example covers only one end-of-life route.

A complete calculation would also assess the remaining 40% of the packaging using the relevant treatment assumptions and factors.

What data do you need?

• Quantity and material composition of products sold
• Packaging quantities and materials
• Expected end-of-life treatment methods
• Recycling, incineration, and landfill rates
• Waste treatment emission factors

End-of-life assumptions should reflect the geographic markets where products are sold and the relevant waste management conditions.

Category 13: Downstream Leased Assets

What does this category include?

Category 13 covers emissions associated with the operation of assets owned by the reporting company and leased to other organizations, when those emissions are not already included in the reporting company's Scope 1 or Scope 2 inventory.

Examples include:

• Commercial buildings leased to tenants
• Warehouses leased to other companies
• Equipment leased to customers
• Vehicles leased to other organizations

This category represents the lessor's perspective, while Category 8 represents the lessee's perspective.

Practical example: Warehouse leased to another company

A company owns a warehouse and leases it to another organization.

Assume the warehouse's operational electricity emissions fall outside the owner's Scope 1 and Scope 2 inventory.

The warehouse consumes:

Other relevant operational emissions, such as heating fuels and refrigerant leakage, would also need to be included where applicable.

What data do you need?

• Type and number of leased assets
• Energy and fuel consumption
• Tenant-provided operational data
• Lease duration
• Relevant emission factors

As with Category 8, the classification depends on the company's organizational boundaries and accounting approach.

Category 14: Franchises

What does this category include?

Category 14 covers emissions from the operation of franchises that are not already included in the franchisor's Scope 1 or Scope 2 inventory.

This category is especially relevant to companies operating franchise business models.

Examples include:

• Fast-food franchise locations
• Retail franchise stores
• Franchise-operated hotels
• Other independently operated franchise businesses

The franchisor generally accounts for the relevant Scope 1 and Scope 2 emissions associated with franchise operations.

Practical example: Franchise restaurants

A restaurant brand has 10 franchise-operated locations.

Assume each franchise generates:

This is a simplified example assuming all franchise locations have the same emissions.

In practice, companies should use franchise-specific emissions data where possible.

What data do you need?

• Number of franchise locations
• Electricity and fuel consumption
• Refrigerant emissions
• Franchise-specific Scope 1 and Scope 2 data
• Relevant activity information for estimation

Category 15: Investments

What does this category include?

Category 15 covers emissions associated with investments that are not already included in the reporting company's Scope 1 or Scope 2 inventory.

This category is particularly relevant to:

• Banks
• Investment funds
• Financial institutions
• Companies holding equity investments
• Organizations providing certain forms of debt or project financing

Depending on the investment type, companies may need to account for an appropriate share of the investee company's emissions.

Practical example: Equity investment in another company

A company holds a 20% equity investment in another business.

Assume:

This simplified example assumes that proportional equity allocation is appropriate for the particular investment and that the investee's relevant emissions are not already included in the reporting company's Scope 1 or Scope 2 inventory.

Actual financed-emissions methodologies depend on the investment instrument, organizational boundaries, and applicable accounting framework. Debt investments, for example, may require different attribution methods.

What data do you need?

• Investment type
• Ownership share or financing amount
• Investee-company emissions
• Financial information used for emissions attribution
• Appropriate financed-emissions accounting methodology

Financial institutions may also use methodologies such as those developed by the Partnership for Carbon Accounting Financials (PCAF), as applicable to their investment portfolios.

Which Scope 3 Categories Are Most Relevant to Your Business?

Not every company needs to collect detailed information for all 15 categories.

The relevant categories depend on the company's activities, purchased goods and services, products sold, and business model.

• 1 Purchased goods and services Raw materials, components, professional services
• 3 Fuel- and energy-related activities Upstream emissions from fuels and purchased electricity
• 4 Upstream transportation and distribution Transport of purchased materials
• 6 Business travel Flights, trains, taxis, hotels
• 7 Employee commuting Travel between home and work
• 11 Use of sold products Lifetime energy or fuel use of products sold

The following examples illustrate which categories may deserve particular attention.

These are illustrative examples, not exhaustive category assessments. Categories should be screened individually, and potentially significant activities should not be excluded simply because they are not typical for an industry.

Companies should evaluate categories based on expected emissions significance, operational relevance, stakeholder expectations, and the availability of reliable information.

How to Start Calculating All Relevant Scope 3 Categories

Once a company understands which categories apply to its operations, the next step is collecting and organizing the information required for calculations.

1. 1 Identify relevant categories
2. 2 Collect your data
3. 3 Choose a calculation method
4. 4 Apply emission factors
5. 5 Calculate emissions
6. 6 Document and improve over time

GHG emissions (kgCO₂e) = Activity data × Emission factor

Activity data

e.g. kg of material, km travelled, euros spent, kWh of electricity

Emission factor

e.g. kgCO₂e per kg, per km, per €, per kWh

A practical process includes:

Step 1: Identify applicable categories

Review the company's operations, purchasing activities, products, services, and value chain relationships to determine which Scope 3 categories are relevant.

Step 2: Gather existing data

Start with information already available in accounting systems, procurement records, energy invoices, transport documentation, and employee records.

Step 3: Select appropriate calculation methods

Depending on the category and available data, companies may use spend-based calculations, activity-based calculations, supplier-specific data, or other methods described in the GHG Protocol technical guidance.

Step 4: Apply suitable emission factors

Emission factors should reflect the assessed activity and be consistent with the relevant geographic area, reporting period, technology, units, and system boundaries.

Step 5: Calculate and consolidate emissions

Calculate emissions for the relevant activities and organize the results according to the corresponding Scope 3 categories.

Step 6: Improve data quality over time

An initial inventory may rely partly on estimates. Companies can progressively improve data quality by collecting detailed activity data, working with suppliers, and incorporating representative emission factors.

For additional guidance on calculation approaches, see our article Scope 3: From Spend-Based Estimates to Activity Data and Supplier-Specific Emissions.

Simplify Scope 3 Accounting with Verde365

Calculating emissions across 15 different Scope 3 categories can become challenging, particularly when companies need to collect and organize large amounts of data from different sources.

Purchase invoices, accounting records, transportation data, energy consumption, business travel information, and supplier-specific data may all contribute to a company's Scope 3 inventory.

Verde365 helps companies simplify Scope 1, Scope 2, and Scope 3 emissions accounting in one platform.

With Verde365, companies can:

• Automatically classify purchase invoices into Scope 3 categories: Upload invoices exported from accounting software and use AI to help identify and assign purchases to the appropriate Scope 3 categories, including purchased goods and services (Category 1) and capital goods (Category 2).
• Calculate spend-based Scope 3 emissions: Use Verde365's spend-based model and EEIO emission factors to estimate emissions from purchased goods, services, capital assets, and other applicable activities based on financial data.
• Access emission factors across Scope 3 categories: Verde365 provides emission factors for different activities within Scope 3 categories, helping companies calculate emissions without having to independently search for every factor.
• Simplify emission factor selection with AI: An AI-assisted emission factor selection helper supports users in finding suitable emission factors based on the type of purchased product, material, service, or activity.
• Use detailed activity data: Calculate emissions using physical quantities, transportation distances, energy consumption, and other operational information.
• Incorporate supplier-specific emission factors: Improve calculation accuracy by using reliable supplier-specific data or custom emission factors.
• Improve data quality over time: Start with spend-based estimates and progressively introduce more representative activity-based and supplier-specific calculations.
• Generate GHG reports: Consolidate Scope 1, Scope 2, and Scope 3 emissions into structured reports for analysis and reporting.

Verde365's GHG accounting solution has been validated by Bureau Veritas against the GHG Protocol Corporate Accounting and Reporting Standard and Scope 2 Guidance.

Whether your company is preparing its first greenhouse gas inventory or improving its existing calculations, Verde365 provides the tools to make carbon accounting more efficient, structured, and accessible.

Ready to simplify your Scope 3 calculations?

Discover how Verde365 helps companies turn existing business data into meaningful emissions insights.

Conclusion: Understanding the 15 Categories Is the First Step

Scope 3 emissions can represent a substantial share of a company's total carbon footprint, but understanding where these emissions occur is often the first challenge.

The GHG Protocol's 15 Scope 3 categories provide a framework for identifying and organizing emissions across upstream and downstream activities.

From purchased materials and transportation to product use, waste treatment, and investments, each category represents a different part of the company's value chain.

The key is to identify relevant activities, collect available data, choose appropriate calculation methods, and improve data quality over time.

Companies don't need perfect information to begin. They need a structured process and a clear understanding of what they are measuring.

By calculating Scope 3 emissions, organizations can gain greater visibility into their value chains, identify significant emissions sources, and support more informed decarbonization decisions.