Five mistakes companies make with Scope 3 emissions
Scope 3 emissions — the indirect emissions in a company's value chain — typically account for 70 to 90 percent of total corporate carbon footprint. They're also the most likely category to be measured wrong, because they sit outside a company's direct operational control and require modeling rather than measurement.
We've reviewed Scope 3 inventories from over fifty mid-market industrials in the past three years. Five mistakes account for most of the defects. Here they are, ranked by frequency.
1. Treating spend-based emissions as the long-term answer
Spend-based modeling (multiplying spend by industry-average emission factors) is the right starting point for a baseline inventory. It is not the right answer for year three.
We see companies whose entire Category 1 (Purchased Goods and Services) is still spend-based in their fifth annual disclosure. The result: emissions appear to track revenue rather than physical activity, decoupling fails, and any reduction the company achieves shows up as zero in the inventory because the model can't see it.
The fix. Set an explicit transition plan from spend-based to activity-based to supplier-specific data, with a year-by-year schedule. Most clients move from 80% spend-based in Year 1 to 50% by Year 3 to 20% by Year 5. The transition is the work; the methodology is comparatively simple.
2. Ignoring Category 11 (Use of Sold Products) because it's "too hard"
For a company that sells machinery, vehicles, or any energy-using product, the in-use emissions of what they ship typically dwarf everything else. We've seen a heavy-equipment manufacturer where Category 11 was 94% of their total footprint — and they had omitted it from their first three years of disclosure because the methodology was "still being developed".
The fix. Estimate Category 11 even when the methodology is imperfect. A coarse estimate with documented assumptions is more useful to your readers than an omission. Refine it later.
3. Double-counting between Categories 1 and 4
Category 1 (Purchased Goods and Services) covers cradle-to-gate emissions of the things you buy. Category 4 (Upstream Transportation and Distribution) covers third-party freight you pay for. Many emission factors for Category 1 already include some upstream transport. Double-counting is common.
The fix. Document explicitly which emission factor source you're using for Category 1 and what scope it covers. If the factor includes inbound transport, exclude transport in Category 4 to avoid double-count. If it doesn't, include it. Either is acceptable; mixing is not.
4. Excluding employee commuting because "it's small"
Category 7 (Employee Commuting) typically is small relative to upstream supply chain — single-digit percentages of total. But it gets disproportionate attention from auditors because the methodology is unambiguous and the data is easy to gather (a single employee survey can produce defensible numbers).
Companies that omit it on the grounds of immateriality often spend a week of audit time defending the omission. Including it is faster.
The fix. Survey, calculate, include. Even an estimate using national commuting averages is acceptable. The cost of including is trivial; the cost of explaining the exclusion is not.
5. Failing to disclose methodology choices
The GHG Protocol Corporate Standard accepts a range of methodological choices: which emission factor source, which boundary, which exclusions, which double-counting decisions. The standard requires you to disclose those choices. Most companies do not.
When a company says "our Scope 3 footprint is 1.2 million tons CO2e", that number is only meaningful if you also know which categories were included, which were excluded with what justification, what emission factor sources were used, and what data quality each source had. Most published inventories tell you the headline number and nothing else.
The fix. Publish a methodology document alongside the inventory number. Two to four pages, plainly written, covering every material choice. Audit firms love this; investors increasingly demand it; competitive disclosure pressure makes the absent methodology look suspicious.
What good Scope 3 work looks like
The companies whose Scope 3 work we most respect tend to share four habits:
- They publish data quality scores for each category, not just emissions numbers
- They disclose the methodology document the auditors actually use
- They report year-on-year changes with explanations (organic change vs. methodology change)
- They name the consultancy or internal team responsible, with a senior contact
None of this is hard. It is, mostly, a question of professional standards rather than technical capability.
We're available if you want help.