What is Scope 3? The 15 categories

Scope 3 is all other indirect emissions in the value chain: upstream (what you buy) and downstream (what happens to what you sell). Under the Corporate Standard (2004), Scope 3 is an optional reporting category. The Scope 3 Standard (2011) sets the rules for companies that do report it and requires results to be shown by category.

The Scope 3 Standard (2011, Table 5.3) lists 15 categories:

#	Category	Direction	Indian example
1	Purchased goods and services	Upstream	Steel bought by a forging unit; cloud services bought by an IT firm
2	Capital goods	Upstream	New CNC machines, laptops, a new building
3	Fuel- and energy-related activities (not in Scope 1 or 2)	Upstream	Mining and transport of the fuel behind your grid power; transmission and distribution losses
4	Upstream transportation and distribution	Upstream	Hired trucks bringing raw material to your plant
5	Waste generated in operations	Upstream	Scrap, sludge and canteen waste sent to landfill or recyclers
6	Business travel	Upstream	Flights, trains and hotel stays for client visits
7	Employee commuting	Upstream	Staff travel by two-wheeler, car, bus or metro
8	Upstream leased assets	Upstream	A leased warehouse not already counted in your Scope 1 or 2
9	Downstream transportation and distribution	Downstream	Transport and storage by distributors and retailers after sale
10	Processing of sold products	Downstream	A vehicle maker machining and painting the parts you sold
11	Use of sold products	Downstream	Fuel burnt by the pumps, generators or vehicles you sell
12	End-of-life treatment of sold products	Downstream	Disposal of your packaging and of products at the end of their life
13	Downstream leased assets	Downstream	Office space you own and rent out
14	Franchises	Downstream	Emissions of franchise outlets
15	Investments	Downstream	Emissions linked to loans and shareholdings, mainly for banks and investors

The standard designs these categories so they do not overlap for one company. Companies may leave out an activity only if they disclose and justify the exclusion. Scope 3 can be much larger than Scope 1 and 2 combined, especially for businesses that burn little fuel themselves, but it is also the hardest to measure because the data sits with other companies.

One company's Scope 1 is another company's Scope 3. The Scope 3 Standard (2011) gives this example: a power generator's Scope 1 is an appliance user's Scope 2, and it is also Scope 3 for the appliance maker and the retailer. That is why Scope 3 figures should not be added up across companies.