Importance of Scope 3 Emissions

For most organizations, Scope 3 emissions represent the largest share of total greenhouse gas (GHG) emissions, often accounting for the majority of climate impact across the value chain. These emissions occur upstream and downstream of a company’s direct operations and include activities such as purchased goods and services, transportation, product use, and investments.

As a result, excluding Scope 3 emissions from a greenhouse gas inventory typically leads to a materially incomplete view of an organization’s climate impact and limits the ability to identify effective decarbonization strategies.

Analyses based on GHG Protocol and CDP research consistently show that Scope 3 emissions account for approximately 70–75% of total corporate emissions on average, though the proportion varies significantly by sector.

Despite their significance, Scope 3 emissions remain underreported. According to CDP’s data, in recent years, in 2023, only 41% of more than 23,000 disclosing organizations reported at least one Scope 3 emissions category. This gap persists even as corporate climate commitments increase. Many companies publicly disclose climate targets without reporting the full value-chain emissions required to assess progress toward those targets. With that, a substantial portion of corporate climate impact remains unmeasured and undisclosed because many organizations do not yet report Scope 3 emissions, even when those emissions are likely to be material.

Why Scope 3 is increasingly required

Many reporting frameworks, disclosure platforms, and target-setting initiatives now explicitly require or strongly encourage the inclusion of Scope 3 emissions:

• The GHG Protocol Corporate Value Chain (Scope 3) Standard defines Scope 3 accounting as a core component of a complete corporate GHG inventory.
  
• The Science Based Targets initiative (SBTi) requires companies to include Scope 3 emissions in target-setting when they represent 40% or more of total emissions, which applies to most organizations.
  
• Global disclosure standards increasingly expect Scope 3 transparency, including the International Sustainability Standards Board (ISSB) under IFRS S2 – Climate-related Disclosures.
  

As these expectations converge, Scope 3 emissions are no longer considered optional or supplementary, but a critical input to credible climate reporting and transition planning.

Risks of not measuring Scope 3 emissions

Failing to measure Scope 3 emissions introduces several risks:

• Incomplete understanding of climate impact
  Without Scope 3, organizations lack visibility into emissions that often dominate their footprint, limiting effective prioritization and reduction efforts.
• Misalignment with reporting and target-setting requirements
  Excluding material Scope 3 emissions may prevent organizations from meeting the expectations of standards, investors, and regulators.
• Reduced credibility with stakeholders
  Customers, investors, and the public increasingly scrutinize climate disclosures. Omitting Scope 3 emissions can lead to misunderstandings about the true scale of an organization’s impact and weaken trust in climate commitments.
• Missed business and risk insights
  Scope 3 data often reveals exposure to supply-chain disruption, regulatory change, and shifting customer preferences—risks that may go unmanaged without value-chain emissions visibility.

Lesson takeaway

Measuring Scope 3 emissions is essential for understanding the full extent of an organization’s climate impact, meeting evolving disclosure and target-setting expectations, and supporting informed, decision-useful climate strategies. As standards and regulations continue to mature, Scope 3 emissions are becoming a foundational element of credible corporate climate action.