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: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
Prerequisites
Before calculating Scope 3 emissions, ensure you have:- Dcycle API credentials (get them here)
- Completed Step 1: Company Structure
- Relevant data for the categories you want to track (see individual guides below)
Scope 3 Categories Overview
The following table shows all Scope 3 categories, their typical relevance by industry, and availability in Dcycle:Category Guides
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:
- Full accounting in year of purchase - Report all emissions in the acquisition year
- Depreciation approach - Spread emissions over the asset’s useful life
Category 3: Fuel and Energy-Related Activities
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.
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
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
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
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
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
Category 11: Use of Sold Products
Category 11: Use of Sold Products
Track downstream emissions from the use phase of energy-consuming products your organization sells. Define product lifespan, energy consumption, and sales volumes by country.Data needed:
- Product lifespan and energy consumption (electricity, fuel, water)
- Units sold per country per period
Category 12: End-of-Life Treatment of Sold Products
Life Cycle Assessment (LCA)
Track emissions from 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.
Data Quality and Methodology
GHG Protocol Data Quality Hierarchy
The GHG Protocol recommends improving data quality over time: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 →
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