Scope 3 – Indirect emissions (Not owned)
Three scopes are defined in the GHG protocol to clearly set emission calculation boundaries. Scope 3 assesses your company’s other indirect GHG emissions, that are not owned or controlled by the company, and therefore not reported in Scope 1 and Scope 2. Reporting on Scope 3 is not mandatory, but recommended, as it can count for a large share of a company’s GHG emissions.
The GHG Protocol defines 15 main categories under Scope 3 emissions, which are differentiated based on upstream and downstream activities.
Upstream emissions | Downstream emissions |
Purchased goods and services | Downstream transportation and distribution |
Capital goods | Processing of sold products |
Fuel- and energy-related activities (excluded from Scope 1 or Scope 2) | Use of sold products |
Upstream transportation and distribution | End-of-life treatment of products sold |
Waste generated in operations | Downstream leased assets |
Business travel | Franchises |
Employee commuting | Investments |
Upstream leased assets |
|
A detailed description of upstream emissions:
Purchased goods and services
The category covers emissions that stem from the production of all the goods and services that the company has purchased, and that are not included in any of the following categories (Category 2 – Category 8). Differentiating between purchased products related and non-related to production can be practical for companies to increase the efficiency of data collection 🗄️.
Examples of production-related products:
Purchased intermediate products (e.g., components, and materials)
Purchased sale-ready products
Capital goods
Examples of non-production-related products:
Replacement elements for maintenance and reparation purposes
Office furniture and supplies
IT equipment and services
Differentiating between the following can also be practical for companies:
Intermediate products
Final products
Capital goods
NOTE❗Please refer to the GHG Protocol to learn more about the difference between categories.
Capital goods
The category covers emissions that stem from the production of purchased capital goods. These goods “are final products that have an extended life and are used by the company to manufacture a product, provide a service, or sell, store, and deliver merchandise.”
Examples of capital goods:
Plant (e.g., industrial plant)
Vehicles
Property
Machinery
Buildings
Equipment
Facilities
Fuel- and energy-related activities (excluded from Scope 1 or Scope 2)
The category covers emissions that stem from the production of purchased fuels and energy that have been consumed by the company.
Examples of fuel- and energy-related activities:
Coal mining
Fuel refining
Fuels extracted, produced, and transported
Energy generation
Upstream transportation and distribution
The category covers emissions that stem from the transportation and distribution process of purchased products, where vehicles and facilities are owned or controlled by a third party (fuel and energy products are an exception).
Examples of upstream transportation and distribution:
Transportation by land, air, and water
Purchased product storage in third-party warehouses
Waste generated in operations
The category covers emissions that stem from the company’s owned or controlled generated waste, which is then disposed of and handled by a third party.
Examples of waste generated in operations:
Solid waste disposed to landfills
Wastewater
Retrieval for recycling
Composting
Incineration
Business travel
The category covers emissions that stem from employees’ business-related travel, where the used vehicles are owned or controlled by a third party (employee commuting to and from work is discussed in the next category).
Examples of business travel:
Travel with trains and buses
Air travel
Cars owned or rented by employees
Water transportation
Employee commuting
The category covers emissions that stem from employees’ commuting travel to their workplace, and then back home.
Examples of employee commuting:
Travel with trains and buses
Air travel
Travel with cars owned by employees
Water transportation
(Remote work can also be included here)
Upstream leased assets
The category covers emissions that stem from leased assets that have been controlled by the company (lessees) and have been excluded from Scope 1 and Scope 2 calculations.
Examples of upstream leased assets:
Leased vehicles from a third-party
Leased buildings from a third-party
Leased equipment from a third-party
A detailed description of downstream emissions:
Downstream transportation and distribution
The category covers emissions that stem from the transportation and distribution process of products that have been sold by the company, where vehicles and facilities are owned or controlled by a third party.
Examples of downstream transportation and distribution:
Transportation by land, air, and water
Sold product storage in third-party warehouses
Sold product storage in third-party retail facilities
(Customer travel to retail stores can also be included here in case the company owns or controls the retail facility.)
Processing of sold products
The category covers the emissions that stem “from the processing of sold intermediate products by third parties (e.g., manufacturers) subsequent to sale by the reporting company” […] “and before use by the end consumer.”
Examples of processing of sold products:
Semi-finished products that need to be modified, or integrated into another product before reaching the end-user
Use of sold products
The category covers emissions that stem from the usage phase of products that are sold by the company. The company is required to report on direct use-phase emissions, if applicable. However, reporting on indirect use-phase emissions is voluntary.
Examples of the use of sold products:
Direct use-phase emissions:
Products emitting greenhouse gases while being used (e.g., fertilizers, refrigerators)
Vehicles, machines, tools, and buildings running on energy while being used
Fuels and feedstocks
Indirect use-phase emissions:
Goods and services that use indirect energy while being used (e.g., clothes, washing powder, food, cooking pots)
(The maintenance of sold products in the use phase can also be included here.)
End-of-life treatment of products sold
The category covers emissions that stem from waste disposal activities, that happen with sold products at the end of their lifecycle.
Examples of end-of-life treatment of sold products:
Incineration
Products disposed to landfills
Retrieval for recycling
Composting
Downstream leased assets
The category covers emissions that stem from owned or controlled assets that the company (lessor) leased to a third party and have been excluded from Scope 1 and Scope 2 calculations.
Examples of downstream leased assets:
Leased vehicles to a third-party
Leased buildings to a third-party
Leased equipment to a third-party
Franchises
The category covers emissions that stem from operating franchises, that are excluded from Scope 1 and Scope 2 calculations. It is relevant for companies that act as franchisors.
Investments
The category covers emissions that stem from investments made by the company and have been excluded from Scope 1 and Scope 2 calculations.
Examples of investments:
Equity investments
Project Finance
Debt investments
Managed investments and client services
How BeCause can help 💜
At BeCause, we can help you with matchmaking with companies that are experts in the field of GHG emissions calculation and offsetting, so you get the right guidance you need. If you would like us to set you up with a solution provider, contact us here.
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