What is Scope 3?
Scope 3 emissions are indirect greenhouse gas emissions that occur across a company’s value chain, from the materials it buys to how customers use and dispose of its products. They include all indirect emissions outside Scopes 1 and 2, such as business travel, employee commuting and home working, purchased goods and services, logistics, waste, investments, and product use.
For most companies, Scope 3 makes up over 90% of total emissions. The Greenhouse Gas (GHG) Protocol divides them into 15 categories, covering both upstream and downstream activities. The largest for most office-based firms is Category 1 (purchased goods and services), which includes everything a company buys - from laptops and software to legal and professional services.
Because accurate measurement can be challenging, many organisations start with spend-based estimates (e.g., “£1 million in professional services = X tonnes of CO₂e”). Alectro improves accuracy by collecting supplier-specific data wherever possible - asking service providers for emissions linked to their work, or using product-level carbon footprints from major brands.
Other key categories include Category 6 (business travel), Category 7 (employee commuting and home working), and Category 15 (investments), which are particularly relevant for finance, construction, and insurance clients. By defining all 15 categories but focusing on the most material ones, organisations can build clear reduction plans and progress confidently toward net-zero goals.
Clarification: Scope 3 differs from Scope 1 and Scope 2 because these emissions come from activities outside a company’s direct ownership or control.
Scope 3 for small businesses
For small and medium-sized enterprises (SMEs), Scope 3 emissions often come from supplier production, employee commuting or home working, and product transport. The GHG Protocol’s 15 categories cover both upstream and downstream activities, but for most SMEs, the most relevant are purchased goods and services, waste generated in operations, business travel, employee commuting, and upstream and downstream transport.
Although it is not yet mandatory in the UK for SMEs to report Scope 3 emissions, many are targeting a 42% reduction by 2030 in line with global near-term goals from your baseline measurement. Meaning, when you measure your baseline period later, reductions become more difficult to achieve. Reporting these emissions builds sustainability credibility, prepares businesses for future disclosure rules, and strengthens relationships with clients and suppliers already tracking their own value-chain impacts.
Common use cases for Scope 3
Supplier engagement in finance
Financial institutions can reduce Scope 3 emissions by measuring those linked to outsourced services, business travel, and investments. Engaging suppliers to share emissions data improves ESG transparency and helps identify reduction opportunities across complex service networks.
Material sourcing in construction
Construction firms can address Scope 3 emissions by assessing embodied carbon in materials, optimising transport routes, and working with low-carbon suppliers. Alectro’s data-driven approach helps track emissions across supply chains and set targeted actions per category.
Insurance value-chain emissions
Insurance companies often face significant Scope 3 impacts from investment portfolios, claims supply chains, and service providers. Tracking Category 15 (investments) and collecting supplier-specific data enables insurers to quantify financed emissions, engage partners, and align portfolios with net-zero strategies.
Measure and manage your Scope 3 emissions with Alectro
Scope 3 emissions reporting may be complex - but it’s essential for building a credible, data-driven sustainability strategy.
