Climate and Sustainability
Dealing with complex matters of climate change.
What are Scope 3 emissions?
When businesses around the world address carbon emissions, the conversation often starts with what’s directly under their control — fuel use, electricity consumption and on-site operations. These are known as Scope 1 and Scope 2 emissions. While managing them is essential, they represent only a portion of a company’s total climate impact.
Scope 3 emissions are the hidden majority. These include all indirect emissions that occur across a company’s value chain — both upstream and downstream. From raw material extraction and supplier operations to product use, disposal, business travel and financial investments, Scope 3 emissions often account for more than 70 percent of a company’s total footprint.
In sectors such as energy, transport, agriculture, manufacturing and mining, Scope 3 emissions are especially significant. Yet they remain the most complex to measure, manage and reduce. As global climate expectations intensify — from regulators, investors and communities — addressing Scope 3 is becoming a strategic imperative for industry worldwide.
Why Scope 3 emissions matter globally
They represent a significant climate impact
In industries like construction, logistics and consumer goods, the bulk of emissions stem from supply chains and product lifecycles. Tackling Scope 3 offers the greatest opportunity for meaningful decarbonisation.
Regulations are tightening
Governments and financial bodies across regions — from the European Union and North America to Asia and Latin America — are aligning with international frameworks like the International Sustainability Standards Board (ISSB), Greenhouse Gas (GHG) Protocol and the Task Force on Climate-related Financial Disclosures (TCFD). Mandatory climate-related disclosures increasingly include Scope 3 reporting.
Stakeholders expect leadership
Consumers, investors and employees globally are demanding transparency and action. Addressing Scope 3 signals a serious commitment to sustainability and long-term resilience.
It drives innovation and competitiveness
Managing Scope 3 can lead to smarter procurement, cleaner products and stronger supplier relationships. Whilst risk is an important consideration, it is also about building future-ready business models that thrive in a low-carbon economy.
Challenges facing global industry
Despite growing awareness, many organisations struggle to make progress on Scope 3. The challenges fall into three key areas:
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Understanding the scale
Global supply chains are vast and complex, often spanning multiple countries and regulatory environments. Visibility into material upstream and downstream emissions is limited, and data quality varies widely. Engaging suppliers — especially subject matter experts — can be difficult without shared standards or incentives.
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Identifying solutions
Businesses often lack direct control over Scope 3 sources. In sectors like agriculture or transport, low-carbon alternatives may be limited or costly. Changing supplier practices or redesigning products requires collaboration, investment and long-term planning.
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Documenting and reporting
Reporting Scope 3 emissions is resource-intensive. Companies must navigate evolving global standards while building internal systems and governance to track and disclose emissions consistently.
Practical steps for global businesses
Despite Scope 3’s complexity, organisations can take meaningful action by focusing on three strategic areas:
- Build visibility and understanding
Start by mapping your value chain and identifying material emission hotspots. Use screening tools and lifecycle assessments to estimate emissions where direct data isn’t available. Engage suppliers early to improve transparency and data quality. - Collaborate on solutions
Work with suppliers to co-develop low-carbon alternatives, shift procurement policies to favour sustainable inputs and invest in circular design. Rethinking product lifecycles — from materials to end-of-life — can unlock significant emissions savings. - Strengthen reporting and governance
Align disclosures with recognised frameworks like the GHG Protocol, ISSB and CDP. Use digital platforms to automate data collection and reporting. Build internal capability and governance to embed sustainability across your organisation.
Scope 3: A strategic lever for global industry
Scope 3 emissions are a catalyst for transformation. By embracing the challenge, businesses can drive innovation, build resilience and lead the transition to a low-carbon economy.
At GHD, we work with clients globally to navigate the complexity of Scope 3 — mapping emissions, identifying solutions and embedding sustainability into governance and culture. Tackling Scope 3 creates a future where industry thrives and communities’ benefit.
Want to go deeper?
To dive deeper into the tangible tools and implementation steps to help drive the transition forward, download GHD’s report on accelerating the energy transition.
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