When we talk about corporate climate strategies, most people think of Scope 1 and Scope 2 emissions – the fuel you burn and the energy you buy. But here’s the catch: for most companies, Scope 3 is where the real action is. It often makes up 70–90% of the total carbon footprint. While reporting on it might feel like a burden, companies that take it seriously don’t just tick compliance boxes – they unlock cost savings, innovation, and competitive advantage.

What is Scope 3?

The GHG Protocol Corporate Standard defines Scope3 as: “All indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.” That covers a lot. In fact, Scope 3 spans 15 categories – everything from purchased goods and business travel to the use of your products and their end-of-life treatment.

• Upstream emissions (before your operations): purchased goods, capital goods, transport, waste, commuting, business travel, etc.
• Downstream emissions (after your operations): product use, processing, end-of-life, investments, franchises, etc. In other words, if Scope 1 and 2 are the energy and fuel you burn, Scope 3 is everything else happening in your supply chain and through your customers.

Why Do Companies Need to Collect Scope 3 Data?

There are three big reasons. Regulation and compliance New rules like the EU CSRD/ESRS, UK SECR, and SEC climate rules in the US require companies to report Scope 3. At the same time, retailers and large buyers are starting to demand emissions data from their suppliers. Being transparent protects revenue, ensures market access, and avoids fines. Customer and investor demand Investors increasingly use ESG ratings and Scope 3 transparency when deciding where to put their money. Strong Scope 3 data improves scores with frameworks like CDP and MSCI, lowering the cost of capital and unlocking green loans or sustainability-linked financing. Business value Beyond compliance, Scope 3 data is a goldmine for finding efficiencies and opportunities. Cutting waste in logistics, reducing packaging, or co-developing low-carbon products with suppliers saves costs and opens new revenue streams. Let’s explore the business value more.

The Business Value of Scope 3 Data

So what’s in it for companies that get Scope 3 right? The benefits are significant. Cost savings and efficiency By collecting and analyzing this data, businesses can uncover cost savings and efficiencies, identifying waste, optimizing logistics, and reducing material use, which ultimately leads to leaner and more affordable supply chains. Risk management and resilience Scope 3 insights provide a clearer picture of where companies are most exposed to risks such as rising carbon costs, supply disruptions, or reputational challenges, helping them build resilience and manage risks more effectively. Innovation and growth Scope 3 data also opens the door to innovation and growth. Companies can use it to design more sustainable products, command a price premium in the market, and strengthen their brand with customers and investors alike. In short, collecting Scope 3 data pays back not just in savings, but in resilience, innovation, and long-term growth.

How to Collect Scope 3 Data

Collecting Scope 3 data can seem daunting, but breaking it into steps helps:

1. Map your value chain → spot where emissions happen.
2. Prioritise key categories → focus on hotspots like purchased goods or transport.
3. Engage suppliers → surveys, data-sharing platforms, or direct collaboration.
4. Leverage technology → ESG platforms reduce manual work and improve accuracy.
5. Use proxies where needed → start with averages and refine with primary data over time.

Tips for Making It Easier

Collecting Scope 3 data can feel overwhelming, but there are practical ways to make the process more manageable. A good starting point is to carry out a Double Materiality Assessment (DMA), which helps you understand both where your company is linked to emissions across the value chain and where you may be financially at risk from climate transition or physical impacts. From there, it’s important to identify your hotspots and focus on the areas that contribute most to your emissions rather than trying to tackle everything at once. When it comes to gathering the data, no single method works on its own. The most effective approach is to mix surveys and questionnaires with supplier life cycle assessment (LCA) data and reliable emission factor estimates where direct data isn’t available. Supporting your suppliers is also essential, by offering templates, training, and sharing best practices, you can make reporting easier and less time-consuming for them. Finally, treat Scope 3 data collection as an ongoing process rather than a one-off project. Validate information through audits, replace estimates with real data wherever possible, and update your records annually. Over time, this approach builds accuracy, trust, and greater value from your reporting efforts.

Do this:

• Start with a Double Materiality Assessment (DMA). It shows where you’re linked to emissions (impact materiality) and where you’re financially at risk (financial materiality).
• Identify hotspots first. Focus your efforts where it matters most.
• Mix data collection methods. Combine surveys, LCA data, and emission factor estimates.
• Support your suppliers. Provide templates, training, and share best practices to make reporting less painful.
• Aim for continuous improvement. Validate data through audits, replace estimates with real data when possible, and update annually.

The Challenges

Even with the right strategy in place, collecting Scope 3 data is rarely straightforward. One of the biggest hurdles is simply the availability and quality of information. Many suppliers, especially smaller ones, don’t yet measure or disclose their emissions, which means you’re often working with incomplete or inconsistent data. On top of that, global supply chains are complex and multi-tiered, making it difficult to trace emissions all the way back to the source. Another challenge lies in consistency. Different suppliers may use different methods for calculating their emissions, which makes it hard to compare or combine the numbers in a meaningful way. And finally, the process itself can be resource-intensive. Without the help of digital tools or automation, collecting and validating data across a wide network of suppliers can take a lot of time and money. Perfect data isn’t the goal – progress is. The key is to start small, build trust with suppliers, and continuously improve your methods year after year. Over time, data quality gets better, processes become smoother, and Scope 3 reporting evolves from a compliance exercise into a real driver of business value.

Major challenges:

• Missing or poor-quality data from suppliers
• Complex global supply chains
• Inconsistent methodologies
• Time and resource constraints

Scope 3 may be the hardest part of carbon accounting, but it’s also the biggest lever for change. Companies that get ahead today won’t just be compliant tomorrow — they’ll be more efficient, more resilient, and more competitive.