akar.earthScope 3: Definition
What are Scope 3 emissions? Value chain emissions under the GHG Protocol, why they dominate many footprints, and how land-based supply chains affect them.
Scope 3 emissions are all the indirect greenhouse gas emissions in a company’s value chain that are not in Scope 1 (direct) or Scope 2 (purchased energy). The GHG Protocol splits them into 15 categories, from purchased goods and services to use and end-of-life of sold products.
Why it matters
For most companies, Scope 3 is the largest part of the footprint, often by a wide margin. For food, beverage, cosmetics and retail companies, purchased agricultural commodities, and the land use change behind them, are a big share. Targets under SBTi, disclosure rules and investor pressure all push companies to measure and reduce Scope 3.
How it is measured
- Spend-based estimates using emission factors per currency unit (fast, rough).
- Average-data methods using emission factors per tonne of commodity.
- Supplier-specific data from farms, mills or processors (more accurate, harder to get).
- Land sector rules for land use change and removals, now set by the GHG Protocol’s land sector guidance.
See GHG Protocol land sector for how removals and land emissions are handled.
Indonesia and Southeast Asia angle
Indonesian commodities often appear in global companies’ Scope 3 Category 1 (purchased goods). Palm oil, pulp and paper, coffee and cocoa from recently cleared land carry high emission factors. Buyers are asking suppliers for primary data: plot locations, land use history and on-farm trees. Exporters that can provide it help buyers lower reported Scope 3 and meet FLAG targets, and the same data supports EUDR.
Supplier engagement is the main lever for reducing Scope 3. Buyers increasingly offer premiums, technical support or co-finance for farm-level practices, such as agroforestry, that cut emissions or add removals in their sourcing regions.
Common mistakes
- Netting purchased credits against the Scope 3 inventory.
- Using global default factors when supplier data exists.
- Double counting removals claimed by both supplier and buyer.
More on finance and corporate demand on the climate finance hub.
Frequently asked questions
What is the difference between Scope 1, 2 and 3?
Scope 1 covers direct emissions from owned sources, Scope 2 covers purchased energy, and Scope 3 covers all other indirect emissions in the value chain, upstream and downstream.
Can carbon credits reduce Scope 3 emissions?
Not under GHG Protocol inventory rules; credits are reported separately. Removals within the value chain, such as trees on supplier farms, can be accounted under land sector guidance.