HOW SCOPE 3 EMISSIONS ARE ONE OF THE LARGEST PORTIONS OF AN ORGANISATION’S TOTAL EMISSIONS, BUT NOT OFTEN PRIORITISED DUE TO COMPLEXITY
In the pursuit of a net-zero future, decarbonisation strategies are critical for rapidly reducing greenhouse gas (GHG) emissions. According to the Science Based Targets initiative (SBTi, 2024) between 75% to 90%, of an organisations total carbon footprint typically lies outside of its direct operations and control, embedded within its value chains, product lifecycles, and customer usage. These are known as Scope 3 emissions, as defined by the Greenhouse Gas (GHG) Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).
Together, with Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased electricity, steam, heating, and cooling), Scope 3 completes the full picture of an organisation’s emissions profile. However, Scope 3 often represents the largest and most complex component of an organisation’s carbon footprint, encompassing all indirect emissions that occur across the entire value chain. This includes everything from upstream supplier activities to downstream product use and disposal, presenting both a challenge and an opportunity for organisation’s striving for net-zero.
Though, despite its significance, Scope 3 emissions remains voluntarily reported in many regions globally, across different frameworks.
[Source: GHG Protocol]
Overview of Scope 1, 2, and 3 emissions, showing how businesses contribute to greenhouse gases across upstream, operational, and downstream activities.
Why Scope 3 Is Critical for Net-Zero
Due to the voluntary nature of Scope 3 reporting in many regions, most organisaiton’s tend to focus primarily on Scope 1 (direct emissions) and Scope 2 (purchased energy), which together typically account for only 25-40% of an organisations total carbon footprint (SBTi, 2024). This leaves the majority of emissions – Scope 3, unmonitored and undocumented.
Achieving net-zero emissions requires a comprehensive view of an organisation’s full climate impact. That means going beyond Scope 1 and Scope 2 to include Scope 3 emissions across the entire value chain.
If you are ignoring Scope 3, you are likely ignoring the bulk of your emissions – and without accounting for them, science-aligned net-zero targets lose credibility, and climate resilience efforts fall short.
How Scope 3 Reporting Is Becoming Mandatory
Though Scope 3 emissions remain voluntarily reported in many regions globally, regulatory developments are rapidly shifting this landscape. Regulatory shifts in 2025 and beyond are transforming Scope 3 reporting from a voluntary initiative into a legal mandate:
- The EU’s Corporate Sustainability Reporting Directive (CSRD) will require Scope 3 disclosures for large firms starting in 2025.
- California’s SB 253 sets similar requirements by 2027.
The Risks of Inaction: Regulatory & Reputational Risks
Neglecting Scope 3 can lead to multiple business risks, including:
- Vulnerability to supply chain disruptions from climate events
- Exposure to regulatory penalties as disclosure becomes obligatory
- Reputational harm from greenwashing or unverified sustainability claims
A high-profile example: In 2025, fast-fashion giant Shein was fined over €40 million in France and €1 million by Italy for misleading climate claims after failing to substantiate its environmental impact or product lifecycle data.
Bridging the Scope 3 Data Gap: What Organisations Can Do Now
Proactively tackling Scope 3 sends a powerful signal to investors, customers, and regulators that your climate strategy is credible and future-ready.
Measuring Scope 3 is complex, data often comes from suppliers or industry averages, but there are pragmatic steps organisations can take to improve data quality and reduction outcomes.
Map Hotspots
SUPPLIER ENGANGEMENTS
SBTi INDICATORS
INTERGRATE STATEGY
PROMOTE CIRCULARITY
- Map your value chain: Pinpoint the biggest emission hotspots among suppliers, logistics, and product usage to identify priority Scope 3 categories.
- Engage suppliers: Request data from key partners, most impact comes from the largest contributors. Supplier engagement is essential for improving Scope 3 data accuracy.
- Set ambitious targets: Align reduction goals with Science Based Targets initiative (SBTi) guidelines, which are being tightened in 2025 for clearer, verifiable Scope 3 progress.
- Integrate strategy: Embed Scope 3 reductions into procurement, packaging, and product design decisions, leveraging public tools like the GHG Protocol Evaluator and CDP guidance.
- Promote circularity: Invest in business models that extend product lifecycles, reuse materials, and reduce waste directly lowering Scope 3 emissions and aligning with new SBTi standards.
Conclusion
In the race to net zero, Scope 3 is no longer optional. It is the decisive battleground for credibility, competitiveness, and compliance. The Shein case proves that companies can face penalties even without fully disclosing their Scope 3 data, highlighting how much more severe the consequences could be if their Scope 3 footprint were scrutinised.
Proactive Scope 3 measurement, however, transforms this challenge into an advantage, unlocking cost savings, innovation, and market leadership.
How Can New River Support
New River Consulting supports organisations in operationalising Scope 3 management, moving beyond high-level footprint estimates to structured, defensible carbon accounting and value chain engagement.
We work with clients to:
- Identify and prioritise material Scope 3 categories using value chain mapping and hotspot analysis
- Design supplier engagement frameworks that improve primary data collection and strengthen audit readiness
- Develop actionable reduction roadmaps linked to procurement, logistics, and product lifecycle strategies
- Integrate Scope 3 metrics into ESG reporting, governance structures, and net-zero transition plans
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