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Supplement to the Corporate Value Chain (Scope 3)

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Scope 3 Emissions (version 1.0)

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Introduction

A
n effective corporate climate change strategy requires a detailed under-
standing of a company’s greenhouse gas (GHG) emissions. Until recently,
companies have focused on emissions from their own operations under
scope 1 and scope 2 of the GHG Protocol. Increasingly companies understand the
need to also account for GHG emissions along their value chains and product
portfolios to comprehensively manage GHG-related risks and opportunities.

The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting
Standard (referred to as the Scope 3 Standard), the parent document to this
guidance, offers an internationally accepted method to enable GHG management
of companies’ value chains. This guidance document serves as a companion to
the Scope 3 Standard to offer companies practical guidance on calculating their
scope 3 emissions. It provides information not contained in the Scope 3 Standard,
such as methods for calculating GHG emissions for each of the 15 scope 3 categories,
data sources, and worked examples.

Please refer to the Scope 3 Standard for requirements and guidance related to
scope 3 accounting and reporting.

Technical Guidance for Calculating Scope 3 Emissions [05]

 Introduction

Descriptions of scope 3 categories

Figure I shows the 15 distinct reporting categories in scope 3 and also shows how scope 3 relates to scope 1 (direct
emissions from owned or controlled sources) and scope 2 (indirect emissions from the generation of purchased
purchased electricity, steam, heating and cooling consumed by the reporting company). Scope 3 includes all other
indirect emissions that occur in a company’s value chain. The 15 categories in scope 3 are intended to provide
companies with a systematic framework to measure, manage, and reduce emissions across a corporate value chain.
The categories are designed to be mutually exclusive to avoid a company double counting emissions among categories.

Table I gives descriptions of each of the 15 categories. The Scope 3 Standard requires companies to quantify and report
scope 3 emissions from each category.

CO2 CH4 N2O HF

CO2 CH4 N2O HFCs PFCs SF6

Figure [I] Overview of GHG Protocol scopes

CO2 and emissions
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CO2 CH4 N2O HFCs PFCs SF6

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employee leased assets investments leased assets franchises

commuting

Technical Guidance for Calculating Scope 3 Emissions [06]


Table [I] Description and boundaries of scope 3 categories
Upstream scope 3 emissions
Category
1. P
 urchased goods
and services
2. Capital goods
3. F
 uel- and energy-
related activities
(not included in
scope 1 or scope 2)
Technical Guidance for Calculating Scope 3 Emissions [07]
Category description
• Extraction, production, and
transportation of goods and services
purchased or acquired by the reporting
company in the reporting year, not
otherwise included in Categories 2 - 8
• Extraction, production, and transport-
ation of capital goods purchased or
acquired by the reporting company in
the reporting year
• Extraction, production, and
transportation of fuels and energy
purchased or acquired by the
reporting company in the reporting
year, not already accounted for in
scope 1 or scope 2, including:
a. Upstream emissions of purchased
fuels (extraction, production, and
transportation of fuels consumed
by the reporting company)
b. Upstream emissions of purchased
electricity (extraction, production,
and transportation of fuels
consumed in the generation of
electricity, steam, heating, and
cooling consumed by the reporting
company)
c. Transmission and distribution (T&D)
losses (generation of electricity,
steam, heating and cooling that
is consumed (i.e., lost) in a T&D
system) – reported by end user
d. Generation of purchased electricity
that is sold to end users (generation
of electricity, steam, heating, and
cooling that is purchased by the
reporting company and sold to end
users) – reported by utility company
or energy retailer only
Introduction
Minimum boundary
• All upstream (cradle-to-gate) emissions
of purchased goods and services
• All upstream (cradle-to-gate) emissions
of purchased capital goods
a. For upstream emissions of
purchased fuels: All upstream
(cradle-to-gate) emissions of
purchased fuels (from raw material
extraction up to the point of, but
excluding combustion)
b. For upstream emissions of
purchased electricity: All upstream
(cradle-to-gate) emissions of
purchased fuels (from raw material
extraction up to the point of, but
excluding, combustion by a power
generator)
c. For T&D losses: All upstream
(cradle-to-gate) emissions of
energy consumed in a T&D
system, including emissions from
combustion
d. For generation of purchased
electricity that is sold to end users:
Emissions from the generation of
purchased energy
 Introduction

Table [I] Description and boundaries of scope 3 categories (continued)

Upstream scope 3 emissions

Category Category description Minimum boundary

4. U
 pstream
• Transportation and distribution of • The scope 1 and scope 2 emissions
transportation
products purchased by the reporting of transportation and distribution
and distribution
company in the reporting year between providers that occur during use of
a company’s tier 1 suppliers and its own vehicles and facilities (e.g., from
operations (in vehicles and facilities not energy use)
owned or controlled by the reporting • Optional: The life cycle emissions
company) associated with manufacturing
• Transportation and distribution services vehicles, facilities, or infrastructure
purchased by the reporting company in
the reporting year, including inbound
logistics, outbound logistics (e.g., of
sold products), and transportation and
distribution between a company’s own
facilities (in vehicles and facilities not
owned or controlled by the reporting
company)

5. W
 aste generated
• Disposal and treatment of waste
in operations
generated in the reporting company’s
operations in the reporting year (in
facilities not owned or controlled by the
reporting company)
• The scope 1 and scope 2 emissions
of waste management suppliers that
occur during disposal or treatment
• Optional: Emissions from
transportation of waste

6. Business travel
• Transportation of employees for
business-related activities during
the reporting year (in vehicles
not owned or operated by the
reporting company)
• The scope 1 and scope 2 emissions
of transportation carriers that occur
during use of vehicles (e.g., from
energy use)
• Optional: The life cycle emissions
associated with manufacturing vehicles
or infrastructure

7. E
 mployee
• Transportation of employees between • The scope 1 and scope 2 emissions
commuting
their homes and their worksites during of employees and transportation
the reporting year (in vehicles not providers that occur during use of
owned or operated by the reporting vehicles (e.g., from energy use)
company) • Optional: Emissions from employee
teleworking

8. U
 pstream
• Operation of assets leased by the • The scope 1 and scope 2 emissions of
leased assets
reporting company (lessee) in the lessors that occur during the reporting
reporting year and not included company’s operation of leased assets
in scope 1 and scope 2 – reported (e.g., from energy use)
by lessee • Optional: The life cycle emissions
associated with manufacturing or
constructing leased assets

Technical Guidance for Calculating Scope 3 Emissions [08]

 Introduction

Table [I] Description and boundaries of scope 3 categories (continued)

Downstream scope 3 emissions

Category Category description Minimum boundary

9. D
 ownstream
• Transportation and distribution • The scope 1 and scope 2 emissions of
transportation
of products sold by the reporting transportation providers, distributors,
and distribution
company in the reporting year and retailers that occur during use
between the reporting company’s of vehicles and facilities (e.g., from
operations and the end consumer (if energy use)
not paid for by the reporting company), • Optional: The life cycle emissions
including retail and storage (in vehicles associated with manufacturing
and facilities vehicles, facilities, or infrastructure
not owned or controlled by the
reporting company)

10. P
 rocessing of
• Processing of intermediate products • The scope 1 and scope 2 emissions
sold products
sold in the reporting year by of downstream companies that
downstream companies occur during processing
(e.g., manufacturers) (e.g., from energy use)

11. U
 se of
• End use of goods and services sold • The direct use-phase emissions of sold
sold products
by the reporting company in the products over their expected lifetime
reporting year (i.e., the scope 1 and scope 2 emissions
of end users that occur from the use
of: products that directly consume
energy (fuels or electricity) during use;
fuels and feedstocks; and GHGs and
products that contain or form GHGs
that are emitted during use)
• Optional: The indirect use-phase
emissions of sold products over their
expected lifetime (i.e., emissions from
the use of products that indirectly
consume energy (fuels or electricity)
during use)

12. E
 nd-of-life
• Waste disposal and treatment of • The scope 1 and scope 2 emissions of
treatment of
products sold by the reporting waste management companies that
sold products
company (in the reporting year) at the occur during disposal or treatment of
end of their life sold products

13. D
 ownstream
• Operation of assets owned by the
leased assets
reporting company (lessor) and leased
to other entities in the reporting year,
not included in scope 1 and scope 2 –
reported by lessor
• The scope 1 and scope 2 emissions of
lessees that occur during operation of
leased assets (e.g., from energy use).
• Optional: The life cycle emissions
associated with manufacturing or
constructing leased assets

Technical Guidance for Calculating Scope 3 Emissions [09]

 Introduction

Table [I] Description and boundaries of scope 3 categories (continued)

Downstream scope 3 emissions

Category Category description Minimum boundary

14. Franchises
• Operation of franchises in the reporting
year, not included in scope 1 and scope
2 – reported by franchisor
• The scope 1 and scope 2 emissions
of franchisees that occur during
operation of franchises (e.g., from
energy use)
• Optional: The life cycle emissions
associated with manufacturing or
constructing franchises

15. Investments
• Operation of investments (including
equity and debt investments and
project finance) in the reporting year,
not included in scope 1 or scope 2
• See the description of category 15
(Investments) in section 5.5 for the
required and optional boundaries

Source: Table 5.4 from the Scope 3 Standard

How to use this document

The 15 sections in this document correspond to the 15 scope 3 categories in table II. Each section follows the structure below:

•• Category description (from chapter 5 of the Scope 3 Standard)

•• Summary of calculation methods (and decision tree if applicable)
•• For each calculation method:
•• Activity data needed
•• Emission factors needed
•• Data collection guidance
•• Calculation formula
•• Example(s)

The Scope 3 Standard contains a lot of important information that is not repeated in this calculation guidance document,
including business goals for conducting a scope 3 assessment; accounting and reporting principles; setting the scope
3 boundary; setting reduction targets; and reporting. This document should be used in conjunction with the Scope 3
Standard when calculating emissions. The following Scope 3 Standard chapters contain information that is especially
relevant to performing various emissions calculations:

•• Chapter 4, which defines the accounting and reporting principles (relevance, completeness, consistency,
transparency, accuracy)
•• Chapter 5, which defines each of the 15 scope 3 categories and provides detailed descriptions of which activities are
included in each scope 3 category
•• Chapter 6, which provides guidance on setting the scope 3 boundary
•• Chapter 7, which provides guidance on collecting data, including prioritizing data collection efforts, selecting among
different types of data, and ensuring data quality
•• Chapter 8, which provides guidance on allocating emissions
•• Chapter 10, which describes assurance procedures
•• Chapter 11, which defines scope 3 reporting requirements
•• Appendix B, which describes uncertainty in scope 3 inventories
•• Appendix C, which describes how to create a data management plan

Technical Guidance for Calculating Scope 3 Emissions [10]