Measuring Scope 3 emissions: the definitive methodology guide
Jonas Weber
Head of Climate Science
Why Scope 3 is so difficult
Scope 3 emissions are all indirect emissions in a company's value chain — upstream from suppliers and downstream from customers using your products. For most companies, Scope 3 represents 70–90% of the total greenhouse gas footprint.
The challenge is structural: you don't control these emissions. You can't install a meter on your supplier's factory floor. You must estimate — and estimation error at the category level is often ±40%. The GHG Protocol Scope 3 Standard explicitly acknowledges this, permitting a tiered approach to data quality from primary supplier data down to spend-based estimates.
This uncertainty is not an excuse to avoid Scope 3. CSRD's ESRS E1, the SBTi, and CDP all require Scope 3 disclosure. The question is not whether to measure — it's which methodology to apply at what stage of your programme maturity.
The 15 Scope 3 categories
Upstream categories (1–8): Purchased goods and services (typically the largest for manufacturers and retailers), Capital goods, Fuel and energy-related activities not in Scope 1/2, Upstream transportation and distribution, Waste generated in operations, Business travel, Employee commuting, Upstream leased assets.
Downstream categories (9–15): Downstream transportation and distribution, Processing of sold products, Use of sold products (dominant for automotive, electronics, and energy companies), End-of-life treatment of sold products, Downstream leased assets, Franchises, Investments.
You are not required to report all 15 categories — only those that are relevant and material. The GHG Protocol screening tool helps identify priority categories. For most companies, categories 1, 11, and 4 account for over 80% of total Scope 3 and should be the starting point.
The three main methodologies
Spend-based: Multiply supplier spend by an environmentally extended input-output (EEIO) emission factor per unit of spend by sector. This is the fastest and lowest-cost approach, but also the least accurate — typically within an order of magnitude at best. Use it for initial screening, not for target-setting or disclosure.
Activity-based: Use physical activity data (tonnes purchased, kilometres shipped, MWh consumed) multiplied by process-specific emission factors from databases such as Ecoinvent, UK Government GHG Conversion Factors, or US EPA. This is the workhorse methodology — moderate accuracy, scalable, and auditable. Most CSRD filings will rely primarily on activity-based data.
Supplier-specific (primary data): Collect actual verified emission reports directly from suppliers. This is the gold standard and is required under some frameworks, but resource-intensive. Reserve it for your top 10–20 suppliers by emissions contribution, where the data quality improvement justifies the engagement cost.
Data quality tiers
The GHG Protocol defines a hierarchy: Tier 1 is primary data (direct measurements or supplier-reported verified data), Tier 2 is secondary data (industry averages, database emission factors specific to a process), and Tier 3 is proxy data (spend-based EEIO models or rough estimates).
CSRD's ESRS E1-6 requires you to disclose the data quality of your Scope 3 calculation and the percentage of spend covered by supplier-specific versus estimated data. Assurance providers are scrutinising this heavily in early CSRD filings.
TerraLedger tracks data quality at the activity level, automatically flagging categories where Tier 3 data covers a disproportionate share of emissions and recommending supplier engagement priorities for data collection programmes.