Scope 3, as defined by the GHG Protocol—the international standard for calculating and reporting greenhouse gas (GHG) emissions—refers to the GHG emissions generated by other entities outside of the company, such as suppliers and customers, arising from the company’s business activities.

In other words, Scope 3 encompasses all GHGs resulting from business activities that fall outside of Scope 1 (direct emissions produced by the company) and Scope 2 (indirect emissions from purchased electricity, etc., used by the company).

This relationship can be expressed as: Supply Chain Emissions = Scope 1 Emissions + Scope 2 Emissions + Scope 3 Emissions.

The GHG Protocol categorizes Scope 3 emissions into 15 distinct categories based on the flow of economic activities (i.e., the flow of money) centered on the reporting company, dividing the supply chain into upstream and downstream activities.

Upstream emissions are identified as those released through purchases, such as raw materials and related transport/distribution, while downstream emissions are those released through sales, such as the use and disposal of products.