Most companies can measure Scope 1 and Scope 2 within a few weeks. Fuel invoices, electricity bills, refrigerant top-ups. It is tedious but it is bounded.
Then they get to Scope 3 and everything falls apart. Suddenly you need data from suppliers who have never measured anything, from logistics partners who quote you tonne kilometres in a format that does not match your system, and from customers who have no reason to tell you how they use your product.
And Scope 3 is usually 70 to 90 percent of the total. Which means the easy part of your footprint is the part that barely matters.
The quick distinction
Scope 1 is what you burn. Boilers, furnaces, company vehicles, process emissions, fugitive refrigerant leaks. Direct, owned or controlled.
Scope 2 is the electricity, steam, heat and cooling you buy. Indirect, but you paid the bill and you know the number.
Scope 3 is everything else in your value chain. Fifteen categories under the GHG Protocol, split eight upstream and seven downstream. You did not burn the fuel. Somebody in your chain did, on your behalf.
The eight upstream categories
- Purchased goods and services. Emissions embedded in everything you buy that goes into your product or operations. For most manufacturers this is the single largest category by a wide margin. Steel, resins, chemicals, packaging, components.
- Capital goods. Emissions from producing the machinery, buildings and vehicles you bought this year. Counted in full in the year of purchase, not depreciated.
- Fuel and energy related activities not in Scope 1 or 2. Upstream extraction, refining and transport of the fuels you burned, plus transmission and distribution losses on the electricity you bought. Small but easy to calculate.
- Upstream transportation and distribution. Getting raw materials to you, and your finished goods to the customer where you paid the freight.
- Waste generated in operations. Emissions from treating or disposing of your waste at third party facilities. Landfill, incineration, treatment.
- Business travel. Flights, hotels, taxis, rail. Easy to calculate, visible to employees, almost never material. Companies love reporting it because the data is clean.
- Employee commuting. Staff getting to work. Often estimated from a survey.
- Upstream leased assets. Assets you lease but that do not fall in your Scope 1 or 2 boundary.
The seven downstream categories
- Downstream transportation and distribution. Freight after you sold the goods, where the buyer paid.
- Processing of sold products. If you sell an intermediate that someone else processes further. Big deal for chemicals, metals and textiles firms in India, because so much of Indian manufacturing sits mid-chain.
- Use of sold products. Emissions when the customer uses what you made. For anyone selling appliances, motors, vehicles, pumps or fuels, this is enormous. A ceiling fan manufacturer’s use phase dwarfs its factory emissions.
- End of life treatment of sold products. Disposal or recycling once the customer is done.
- Downstream leased assets. Assets you own and lease to others.
- Franchises. For franchisors.
- Investments. Financed emissions. This is the entire game for banks, NBFCs and insurers, and it is why financial institutions have a completely different Scope 3 conversation from manufacturers.
Which ones actually matter, by sector
Not all fifteen apply to you. The GHG Protocol expects you to screen for relevance and then explain what you excluded and why.
Chemicals and agrochemicals: categories 1 and 10 dominate. Purchased feedstock plus downstream processing. Product level footprints matter here, which is why cradle-to-gate LCA work has become standard. We ran exactly this for an agrochemical manufacturer in our life cycle assessment of pesticides synthesis project.
Steel, cement, aluminium: category 1 for raw materials, and increasingly category 11 depending on the product. These sectors also face CBAM at the EU border, where embedded emissions have to be reported at product level.
Electrical equipment and appliances: category 11 is usually 80 percent plus of the total. If you make anything with a motor in it, use phase is your footprint.
Textiles and apparel: categories 1 and 4. Fibre production and freight.
Pharma: categories 1 and 4, plus cold chain distribution.
Financial services: category 15 and nothing else really moves the needle.
The data problem, and how to get past it
There are two ways to calculate a Scope 3 category, and they are not equally good.
Spend based. Take how much money you spent on a category, multiply by an emission factor per rupee. Fast, cheap, and almost useless for decision making. Halve your supplier’s emissions and your spend based number does not budge. It is fine for a first screening. It is not fine for a target.
Activity based. Take actual quantities (tonnes of steel, kilowatt hours, tonne kilometres) and multiply by physical emission factors. Better. Harder. And where supplier specific data replaces industry averages, better still.
The realistic path is to start spend based across all fifteen, see which three or four categories carry 80 percent of the total, then invest in activity based data only for those. Trying to do all fifteen properly in year one is how Scope 3 projects die.
For the categories that matter, you eventually need suppliers to give you real numbers. That means building their capability, not just sending questionnaires. We have done this both ways and the questionnaire only approach has a poor hit rate. Working directly with partners is slower and works better, which is what we did on a supply chain sustainability assessment for channel partners.
Where Scope 3 shows up in Indian regulation
BRSR. Scope 3 sits in the leadership indicators under Principle 6, so it is technically voluntary. But value chain disclosure obligations under BRSR Core are tightening, and the direction of travel is obvious. Detail in our BRSR Core compliance guide.
CBAM. The EU wants embedded emissions per tonne of product, which for most exporters means at minimum category 1 data on inputs. See what Indian exporters must do before the 2026 deadline.
CDP and customer questionnaires. Multinationals asking their Indian suppliers for product carbon footprints. This is now the most common trigger we see. Somebody’s German or Japanese customer asked, and there is a deadline.
Science based targets. If Scope 3 is more than 40 percent of your total, SBTi requires a Scope 3 target. For almost every manufacturer, it is.
CCTS. Not directly, since the scheme works on emission intensity within your own boundary. But if you are running a decarbonisation programme anyway, Scope 3 is where the biggest reductions usually sit. Our post on emission intensity target calculation covers the compliance side.
How to actually start
Pick a base year with reasonably clean procurement data. Run a spend based screen across all fifteen categories using published factors. Rank them. Take the top three or four and build activity based inventories for those, with supplier specific data where you can get it. Document every assumption, because the first question any assurance provider asks is where the number came from.
Then set a target on the categories you can actually influence. A Scope 3 target on business travel is theatre. A target on purchased goods, backed by a supplier engagement programme, is real work.
Questions we get asked
What are Scope 3 emissions in simple terms? Emissions that happen because of your business but not at your own sites. Your suppliers making things for you, your freight partners moving goods, your customers using your product.
How many Scope 3 categories are there? Fifteen under the GHG Protocol Corporate Value Chain Standard. Eight upstream, seven downstream.
Are Scope 3 emissions mandatory in India? Under BRSR they sit in leadership indicators, so voluntary for now. Under CBAM they are effectively mandatory for exporters of covered goods. Under customer contracts they are mandatory whenever the customer says so.
What is a Scope 3 emissions example? The steel you buy for a switchgear enclosure (category 1), the truck bringing it to your plant (category 4), and the electricity the switchgear consumes over its service life at the customer’s site (category 11).
Can you double count Scope 3? Yes, across companies, and that is expected. Your Scope 1 is your customer’s Scope 3. The GHG Protocol accepts this because Scope 3 is a management tool, not a national inventory.
Bilancia Consulting is an Ahmedabad based sustainability and ESG advisory firm. We work with Indian manufacturers on GHG accounting, sustainable supply chain management, and capacity building for supplier data programmes. If a customer has asked you for value chain emissions data and you are not sure where to start, a short call will save you a few weeks.
Call +91-9510144494 or email general@bilanciaconsulting.co.in