The Complete Guide to Reducing Scope 3 Emissions

For most companies, Scope 3 emissions—indirect emissions from the value chain—account for over 70% of their total carbon footprint. Tackling them is the new frontier of corporate climate action.

Understanding Scope 3 Categories

The GHG Protocol defines 15 categories of Scope 3 emissions, ranging from purchased goods and services to employee commuting and end-of-life treatment of sold products. Identifying your "hotspots"—the categories with the highest emissions—is the critical first step.

The Data Challenge

Unlike Scope 1 (direct) and Scope 2 (purchased electricity) emissions, Scope 3 relies heavily on data from third parties. Many companies start with spend-based estimates but must eventually move to activity-based data for accuracy.

• Spend-based method: Estimating emissions based on the financial value of purchased goods.
• Activity-based method: Using physical units (e.g., kg of steel, liters of fuel) to calculate emissions.

Strategies for Reduction

1. Supplier Engagement

Your suppliers' Scope 1 & 2 emissions are your Scope 3. Launching a supplier engagement program to educate and incentivize vendors to adopt renewable energy is the most effective lever for reduction.

2. Product Design Innovation

Designing products for circularity—using recycled materials, ensuring repairability, and minimizing packaging—can drastically reduce upstream and downstream emissions.

3. Logistics Optimization

Transitioning logistics from air freight to ocean or rail, and electrifying last-mile delivery fleets, offers significant carbon savings for companies with complex distribution networks.

Moving Forward

Reducing Scope 3 emissions is a long-term journey requiring collaboration across the entire ecosystem. Start by measuring what matters, engaging your partners, and setting science-based targets (SBTi) to guide your progress.