Scope 3 Emissions Under the CSRD: How to Measure and Report Your Full Value Chain Impact

If there's one area of CSRD reporting that keeps sustainability managers up at night, it's Scope 3 emissions. These indirect greenhouse gas (GHG) emissions — generated across your entire value chain — typically account for 70–90% of a company's total carbon footprint. And under the CSRD, most companies will need to report them.

This guide explains what Scope 3 means in the context of the CSRD and ESRS standards, which categories apply, how to collect the data, and how to avoid the most common pitfalls.

What Are Scope 3 Emissions?

The GHG Protocol divides emissions into three scopes:

• Scope 1: Direct emissions from owned or controlled sources (e.g. company vehicles, on-site fuel combustion).
• Scope 2: Indirect emissions from purchased electricity, heat, or steam.
• Scope 3: All other indirect emissions across the value chain — both upstream (suppliers, purchased goods, business travel) and downstream (product use, end-of-life treatment, distribution).

Scope 1 and 2 are relatively straightforward: you control the data sources. Scope 3, however, requires gathering information from hundreds or thousands of external partners, making it the most complex — and most impactful — part of your climate disclosure.

What Does the CSRD Require for Scope 3?

The CSRD's climate reporting requirements are defined in ESRS E1 (Climate Change), one of the 12 European Sustainability Reporting Standards. Under ESRS E1, companies must disclose:

• Total GHG emissions broken down by Scope 1, 2, and 3.
• Scope 3 emissions by significant category (using the 15 GHG Protocol categories as a reference).
• Methodologies used for estimation and calculation.
• Emission intensity ratios (e.g. tonnes CO₂e per million EUR revenue).
• Transition plans showing how the company intends to reduce emissions in line with a 1.5°C pathway.

The Materiality Question

Through the double materiality assessment, your company determines which ESRS topics — including climate — are material. For the vast majority of companies falling under CSRD scope, climate change (and therefore Scope 3) will be material. If your organisation has any significant upstream or downstream value chain, Scope 3 is almost certainly relevant.

That said, ESRS E1 allows a phased approach: companies in their first year of CSRD reporting may use estimates and acknowledge data gaps, provided they explain their methodology and improvement plans.

The 15 Scope 3 Categories: Which Ones Matter Most?

The GHG Protocol defines 15 categories of Scope 3 emissions. Not all will be material for every company. Here's a quick overview with typical relevance:

Upstream Categories

1. Purchased goods and services — Often the largest category for manufacturing and retail companies.
2. Capital goods — Significant for asset-heavy industries.
3. Fuel and energy-related activities (not in Scope 1/2) — Covers extraction, production, and transport of fuels.
4. Upstream transportation and distribution — Relevant for companies with complex logistics.
5. Waste generated in operations — Usually a smaller share, but easy to measure.
6. Business travel — Typically small but highly visible; often the first category companies tackle.
7. Employee commuting — Moderate impact, can be estimated through surveys.
8. Upstream leased assets — Only relevant if you lease significant assets.

Downstream Categories

9. Downstream transportation and distribution — Important for companies that don't control their own logistics.
10. Processing of sold products — Relevant for intermediate product manufacturers.
11. Use of sold products — Can be enormous for energy-consuming products (vehicles, appliances, electronics).
12. End-of-life treatment of sold products — Relevant for physical goods manufacturers.
13. Downstream leased assets — For companies that lease assets to others.
14. Franchises — Specific to franchise business models.
15. Investments — Critical for financial institutions (banks, insurers, asset managers).

Pro tip: Start by screening all 15 categories to determine which are significant. Focus your detailed measurement efforts on the top 3–5 categories that represent 80%+ of your total Scope 3 footprint.

How to Measure Scope 3: A Practical Approach

Step 1: Screen and Prioritise

Before diving into data collection, perform a rough screening of all 15 categories. Use spend-based estimates or industry averages to identify the most significant ones. This prevents wasting resources on categories that contribute less than 1% of your total.

Step 2: Choose Your Methodology

For each significant category, you'll typically use one of three approaches (from most to least accurate):

• Supplier-specific data: Actual emissions data from your suppliers. This is the gold standard but requires supplier engagement.
• Activity-based data: Using physical quantities (e.g. kg of materials purchased, km travelled) multiplied by emission factors from databases like DEFRA, ecoinvent, or the EPA.
• Spend-based data: Using financial expenditure multiplied by sector-average emission factors. Least accurate, but useful as a starting point.

Most companies use a hybrid approach: supplier-specific data for their top suppliers and spend-based estimates for the long tail.

Step 3: Engage Your Value Chain

This is where it gets challenging — and where many companies need help from a CSRD consultant. You need to:

• Survey key suppliers for their emissions data or product carbon footprints.
• Establish data-sharing agreements that comply with confidentiality requirements.
• Set expectations for data quality improvement over time.

Don't expect perfect data in year one. The CSRD recognises this — what matters is transparency about your methodology, acknowledged gaps, and a credible plan to improve.

Step 4: Calculate and Document

Use a consistent calculation methodology and document everything. Your external auditor will need to understand:

• Which categories you included and excluded (and why).
• Which emission factors you used and their sources.
• How you handled data gaps and estimates.
• Year-over-year changes in methodology.

Common Challenges and How to Overcome Them

"We can't get data from our suppliers"

Start with your top 20 suppliers by spend — they likely represent 60–80% of your purchased goods emissions. Use industry averages for the rest. Many suppliers are also facing CSRD requirements themselves, so frame data requests as a collaborative effort.

"The numbers seem unreliable"

They will be in year one. That's expected. The key is to be transparent about uncertainty ranges and commit to improving data quality. ESRS E1 explicitly allows for estimates with explained methodologies.

"We don't know where to start"

Begin with the categories you already have data for — business travel (booking systems), employee commuting (surveys), waste (waste management contracts). Then tackle purchased goods using spend data. Build complexity gradually.

"Our Scope 3 dwarfs our Scope 1+2"

That's normal. For most companies, Scope 3 is 5–20x larger than Scope 1 and 2 combined. This is precisely why the CSRD requires it — without Scope 3, your carbon footprint picture is incomplete.

Scope 3 and Transition Plans

Under ESRS E1, companies must also disclose transition plans aligned with limiting global warming to 1.5°C. Your Scope 3 strategy should include:

• Short-term targets (2025–2030): Supplier engagement programmes, procurement policy changes, logistics optimisation.
• Medium-term targets (2030–2040): Shifting to low-carbon materials, circular economy initiatives, product redesign.
• Long-term targets (2040–2050): Full value chain decarbonisation aligned with net-zero commitments.

Your transition plan should be realistic and backed by specific actions — vague commitments to "work with suppliers" won't satisfy auditors or investors.

What About SMEs in the Value Chain?

Even if your company is directly subject to the CSRD, many of your Scope 3 data needs flow down to SME suppliers who aren't. The EU has developed voluntary SME reporting standards (VSME) to help smaller companies respond to data requests without excessive burden.

When engaging SME suppliers, consider:

• Providing templates and guidance for data collection.
• Accepting simplified metrics initially (energy bills, fuel receipts).
• Offering capacity-building support or training sessions.
• Allowing reasonable timelines — SMEs need time to build reporting capabilities.

Tools and Resources

Several tools can help streamline Scope 3 measurement:

• GHG Protocol Scope 3 Evaluator — Free screening tool from the World Resources Institute.
• Emission factor databases — DEFRA (UK), EPA (US), ecoinvent (global), ADEME (France).
• Carbon accounting platforms — Software solutions that automate data collection and calculation.
• Industry-specific guidance — Many sectors (automotive, textiles, finance) have published Scope 3 calculation guidelines.

If the complexity feels overwhelming, working with an experienced sustainability consultant can save significant time and ensure your methodology stands up to assurance requirements.

Getting Started: Your Scope 3 Action Plan

1. Conduct a screening of all 15 categories using spend-based estimates.
2. Identify your top 3–5 categories by significance.
3. Assess data availability for each significant category.
4. Launch supplier engagement for your top suppliers.
5. Calculate your baseline using the best available data.
6. Document your methodology including assumptions and gaps.
7. Set improvement targets for data quality in subsequent years.
8. Integrate Scope 3 into your broader transition plan.

Scope 3 reporting under the CSRD is a journey, not a destination. The first report won't be perfect — and regulators know that. What matters is starting with a credible methodology, being transparent about limitations, and demonstrating year-over-year improvement.

Need help navigating Scope 3 emissions reporting? Browse the CSRD Experts directory to find consultants with climate and carbon accounting expertise, or get in touch to discuss your specific situation.