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Understanding Scope 3 Emissions

Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in your value chain, both upstream and downstream. According to the GHG Protocol Corporate Value Chain Standard, Scope 3 includes 15 categories: 
┌─────────────────────────────────────────────────────────────────────────────┐
│                       SCOPE 3: Value Chain Emissions                         │
├─────────────────────────────────────────────────────────────────────────────┤
│                                                                              │
│  UPSTREAM EMISSIONS                    DOWNSTREAM EMISSIONS                  │
│  (Before your operations)              (After your operations)               │
│  ─────────────────────────             ─────────────────────────             │
│                                                                              │
│  Cat 1: Purchased goods & services     Cat 9: Downstream transportation     │
│  Cat 2: Capital goods                  Cat 10: Processing of sold products  │
│  Cat 3: Fuel & energy activities       Cat 11: Use of sold products         │
│  Cat 4: Upstream transportation        Cat 12: End-of-life treatment        │
│  Cat 5: Waste generated                Cat 13: Downstream leased assets     │
│  Cat 6: Business travel                Cat 14: Franchises                   │
│  Cat 7: Employee commuting             Cat 15: Investments                  │
│  Cat 8: Upstream leased assets                                              │
│                                                                              │
└─────────────────────────────────────────────────────────────────────────────┘
Why Scope 3 MattersFor most organizations, Scope 3 represents 70-90% of total emissions. Understanding and managing your value chain emissions is essential for:
  • Complete carbon footprint - Required for meaningful climate commitments
  • Science-based targets - SBTi requires Scope 3 if it’s >40% of total
  • Supply chain engagement - Identify and work with high-impact suppliers
  • Risk management - Understand exposure to carbon pricing and regulations

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Prerequisites

Before calculating Scope 3 emissions, ensure you have:
Start Where You Have DataYou don’t need to track all 15 categories immediately. Start with:
  1. Category 1 (Purchased goods) - Often the largest
  2. Category 6 (Business travel) - Usually easiest to track
  3. Category 7 (Employee commuting) - Important for office-based companies
Then expand to other relevant categories based on your business model.

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Scope 3 Categories Overview

The following table shows all Scope 3 categories, their typical relevance by industry, and availability in Dcycle:
CategoryNameTypical % of Scope 3Dcycle Status
1Purchased goods and services40-80%✅ Available
2Capital goods5-15%✅ Available
3Fuel and energy-related activities5-15%✅ Available
4Upstream transportation5-20%✅ Available
5Waste generated in operations1-5%✅ Available
6Business travel1-10%✅ Available
7Employee commuting1-5%✅ Available
8Upstream leased assets1-5%🔄 Coming soon
9Downstream transportation5-15%✅ Available
10Processing of sold productsVariable🔄 Coming soon
11Use of sold products10-50%✅ Available (LCA)
12End-of-life treatment1-5%✅ Available (LCA)
13Downstream leased assetsVariable🔄 Coming soon
14FranchisesVariable🔄 Coming soon
15InvestmentsVariable✅ Available

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Category Guides

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Category 1: Purchased Goods and Services

Category 1: Purchased Goods and Services

Track emissions from purchased raw materials, components, goods, and services. Typically the largest Scope 3 category for most organizations.Methods available:
  • Spend-based (Exiobase 3.8.2)
  • Activity-based
  • Supplier-specific (EPDs/PCFs)

Category 2: Capital Goods

Track emissions from purchased capital goods and fixed assets. Important for organizations with significant infrastructure investments.Methods available:
  • Spend-based (Exiobase 3.8.2)
  • Activity-based (physical quantities)
  • Supplier-specific (EPDs for equipment/buildings)
Amortization ApproachesThe GHG Protocol allows two approaches for reporting capital goods:
  1. Full accounting in year of purchase - Report all emissions in the acquisition year
  2. Depreciation approach - Spread emissions over the asset’s useful life
Dcycle supports both approaches. Contact support for guidance on which method fits your reporting needs.

Category 3: Fuel and Energy-Related Activities

Upstream emissions from fuels and electricity—automatically calculated when you upload Scope 1 and Scope 2 data.Includes:
  • Well-to-Tank (WTT) emissions for fuels
  • Upstream electricity generation
  • Transmission & distribution (T&D) losses
Category 3 emissions are automatically calculated by Dcycle. No additional input required—just ensure complete Scope 1 and Scope 2 data.

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Category 4: Upstream Transportation and Distribution

Category 4: Upstream Transportation

Track transportation of purchased goods from suppliers to your facilities, including:
  • Road, rail, air, and maritime transport
  • Third-party logistics providers
  • Inbound logistics

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Category 5: Waste Generated in Operations

Category 5: Waste Generated in Operations

Track emissions from disposal and treatment of waste generated at your facilities:
  • Landfill, incineration, recycling, composting
  • LER codes (European List of Waste)
  • Treatment method (R/D codes)
  • Transport to treatment facilities

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Category 6: Business Travel

Category 6: Business Travel

Track emissions from employee travel for business purposes:
  • Flights (domestic and international)
  • Rail and train travel
  • Rental cars and taxis
  • Distance-based calculations

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Category 7: Employee Commuting

Category 7: Employee Commuting

Track emissions from employees traveling between home and work:
  • Survey-based data collection
  • Transport mode breakdown (car, train, bus, bike)
  • Remote work and hybrid work patterns
  • Carpooling support

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Category 9: Downstream Transportation and Distribution

Category 9: Downstream Transportation

Track transportation of sold products from your facilities to customers, including:
  • Outbound logistics (customer-arranged)
  • Distribution to retailers
  • Last-mile delivery
For logistics service providers or detailed API documentation, see the Logistics Tutorial.

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Categories 11 & 12: Use and End-of-Life of Sold Products

Life Cycle Assessment (LCA)

Track emissions from the use phase and end-of-life treatment of products you sell. Requires product-level LCA data.

Category 15: Investments

Track emissions from equity investments, debt investments, and project finance. Essential for financial institutions and organizations with significant investment portfolios.Methods available:
  • Investment-specific method (proportional share of investee emissions)
  • PCAF methodology for financial institutions Comming soon!
PCAF AlignmentFor financial institutions, Dcycle will support the Partnership for Carbon Accounting Financials (PCAF) methodology, which provides standardized approaches for measuring financed emissions across asset classes.

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Data Quality and Methodology

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GHG Protocol Data Quality Hierarchy

The GHG Protocol recommends improving data quality over time: 
Level 1: Supplier-Specific Data ────────────────────────────── HIGHEST QUALITY
├─ Primary data from suppliers (EPDs, PCFs)
├─ Verified and specific to your supply chain
└─ Goal: 50%+ of Category 1 emissions

Level 2: Hybrid Data ──────────────────────────────────────── HIGH QUALITY
├─ Activity data × Secondary emission factors
├─ Physical quantities with industry-average factors
└─ Goal: 30%+ of remaining emissions

Level 3: Spend-Based Data ─────────────────────────────────── MEDIUM QUALITY
├─ Financial data × EEIO factors
├─ Broad coverage but lower accuracy
└─ Starting point for comprehensive coverage

Level 4: Extrapolated Data ────────────────────────────────── LOWER QUALITY
├─ Estimated from incomplete data
├─ Use for minor categories only
└─ Replace with better data as available
Continuous ImprovementTrack your data quality score over time:
  • Year 1: Achieve comprehensive coverage (even if spend-based)
  • Year 2: Move top 10 categories to activity-based
  • Year 3: Engage key suppliers for specific data
  • Year 4+: 50%+ supplier-specific data for Category 1

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Getting Started

We recommend starting with the most impactful and accessible categories:
1

Category 1: Purchased Goods

Start with spend-based for broad coverage, then improve data quality for high-impact purchases.Go to Category 1 Guide →
2

Category 6: Business Travel

Usually the easiest to track with high accuracy using booking systems data.Go to Business Travel Guide →
3

Category 7: Employee Commuting

Conduct employee surveys or use distance-based estimates.Go to Employee Commuting Guide →
4

Categories 4 & 9: Transportation

Track logistics for both inbound and outbound goods.Go to Logistics Tutorial →
5

Category 5: Waste

Track waste generated at your facilities.Go to Facilities Tutorial →

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Next Steps

Category 1: Purchased Goods

Start with your largest emission source

Supply Chain Tutorial

Complete supply chain management

Logistics Tutorial

Track transportation emissions

Custom Emission Factors

Use supplier EPDs and PCFs