What are Scope 3 Emissions?

GHG Protocol: What exactly is it?

Launched in 2001, the GHG Protocol is the world’s most widely used greenhouse gas accounting standards and guidance.

The protocol was built on a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) and is used by governments, NGOs, businesses, and other organizations.

According to the GHG Protocol, emissions are classified into 3 types: Scope 1, Scope 2, and Scope 3:

·      Scope 1: Direct emissions from owned or controlled sources

·      Scope 2: Indirect GHG emissions associated with the purchase of energy

·      Scope 3: The result of activities from processed goods, not owned or controlled by the reporting organization

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What does it mean to develop a GHG inventory?

A GHG inventory is a list of an organization’s emission sources, and the associated emissions quantified using a standardized method or framework such as the GHG Protocol.

There are many benefits of developing GHG inventories, some of which include:

·      Managing risks and reduction opportunities related to GHG emissions

·      Identifying clear data-driven emission reduction targets

·      Participating in voluntary or required GHG programs

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Scope 3 Emissions: The Basics

In this post, we will specifically be diving deeper into Scope 3 emissions, also known as value chain emissions. These emissions often represent most of an organization’s total GHG emissions.

The GHG Protocol defines 15 categories of Scope 3 emissions that include upstream and downstream emissions:

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As the GHG Protocol defines, upstream emissions are “indirect GHG emissions related to purchased or acquired goods and services”. On the other hand, downstream emissions are indirect GHG emissions related to sold goods and servicesincluding emissions from products that are distributed but not sold and those attributable to investments.

Importantly, not every category will be relevant to an organization! Hence, it is essential that companies first start with a screening process to determine which of the categories are relevant for a company to measure and include in their emissions inventory (something CEMAsys can help with!).

Scope 3 categories that could be relevant to a company could be those that have the most significant GHG emissions, offer the most significant GHG reduction opportunities, and are the most relevant to the company’s business goals.

When measuring Scope 3 emissions, more specific collection methods lead to higher quality Scope 3 emission data, which is needed to understand and act on emission reduction opportunities.

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Spend-Based Versus Activity-Based

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Now you may be wondering how to go about calculating these emissions. Well, there are two main methods: Spend-based and Activity-based.

Spend-based calculations are developed by multiplying the money spent on a good or service by an emission factor. These calculations are a great starting point when detailed data isn’t available. However, this approach has limitations; prices fluctuate due to inflation, suppliers can charge different amounts for the same product, and sustainable options often cost more. Hence, spend-based calculations don’t always reflect detailed emission information.

For in-depth insights, companies can develop activity-based (also known as consumption-based) calculations, which are developed by multiplying the physical quantity of goods or services consumed by the activity-specific emission factor. For example, for calculating emissions related to electricity, a company would multiply kWh of electricity consumed by the emission factor for electricity.  

The Rise of Mandatory Scope 3 Reporting

California’s SB 253, the Climate CorporateData Accountability Act, is the most comprehensive state-level GHG law in the U.S. It mandates that companies with over $1 billion in annual revenue doing business in California must publicly disclose Scope 1, 2, and 3 emissions.

These disclosures roll out in phases:

·      2026: Scope 1 and 2 (2025 data), with third-party limited assurance.

·      2027: Scope 3 (2026 data), initially under a “good faith” safe harbor.

By 2030, assurance requirements will increase, demanding limited (and eventually reasonable) third-party verification across all scopes.

For organizations tracking Scope 3emissions, SB 253 signals a clear shift from voluntary

action to regulatory mandate. It underscores the need for high-integrity supply chain data, third-party verification, and lifecycle thinking, not just to meet compliance but to drive credibility, resilience, and leadership in sustainability.

Now what?

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Calculating Scope 3 emissions is no easy task; you may still be confused about what data your company needs and where to get it from. That’s exactly where CEMAsys steps in.

At CEMAsys, we have a two-pronged approach to carbon accounting.

First, our carbon accounting tool helps clients measure emissions accurately, effectively, and efficiently. Our tool is also aligned with the GHG Protocol and is powered by a comprehensive database of worldwide emission factors. Second, our team of dedicated consultants provides expert guidance to support your organization along the way