In the race toward sustainability, understanding and addressing Scope 3 emissions is crucial for organizations aiming to meet their environmental goals. Among these, Category 1: Purchased Goods and Services often represents a significant share of emissions. This category includes all upstream emissions from the production of products (both tangible goods and intangible services) purchased by a company during the reporting year.
This blog provides an in-depth exploration of Scope 3 Category 1 emissions, their importance, and actionable strategies for measuring and reducing them effectively.
Scope 3 emissions encompass indirect emissions throughout a company’s value chain. Category 1 includes all upstream (cradle-to-gate) emissions from the production of products or services purchased by a company in a given year. These products could include:
For example, a construction company’s Category 1 emissions might stem from the cement and steel used, while a tech company might focus on emissions from electronic components.
Purchased goods and services frequently contribute the majority of Scope 3 emissions. Addressing these emissions not only reduces environmental impact but also enhances compliance with frameworks like the Greenhouse Gas (GHG) Protocol and Science-Based Targets initiative (SBTi).
Bonus: Distinguishing between production-related and non-production-related purchases can simplify data collection and organization.
Purchased goods and services represent a substantial share of Scope 3 emissions, often accounting for 40–70% of a company’s total carbon footprint in industries such as manufacturing, retail, and technology. For instance:
With regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD), Global Reporting Initiative (GRI), Business Responsibility and Sustainability Reporting (BRSR), and increasing investor demand for transparency, addressing these emissions has become a business imperative.
Companies leading in sustainability gain a competitive edge, attract eco-conscious customers, and improve stakeholder trust.
Managing Scope 3 Category 1 emissions—those associated with purchased goods and services—can be one of the most complex areas of a company’s carbon footprint due to the following challenges:
Many businesses work with multi-tiered suppliers spread across regions, making it difficult to track emissions at every stage. Often, companies have limited visibility into upstream suppliers, particularly those at Tier 2 or beyond.
Gathering detailed emissions data and engaging suppliers can require significant financial and operational investment, particularly for small- and medium-sized enterprises.
The GHG Protocol outlines four primary methods, each with varying levels of specificity:
Insight: Companies should use a combination of methods tailored to their business goals and data availability, as highlighted in the Technical Guidance for Calculating Scope 3 Emissions.
Platforms such as Sprih or lifecycle databases (e.g., Ecoinvent) can streamline data collection and calculations. Explore Sprih’s solutions here.
Proactively managing emissions ensures compliance with evolving global regulations, such as the EU’s CSRD or the SEC’s climate disclosure rules, reducing legal and financial risks.
Transparency in emissions reporting positions companies as sustainability leaders, fostering trust among customers, investors, and other stakeholders.
Sustainability-focused investors prioritize businesses with robust Scope 3 management strategies, as they signal long-term resilience and commitment to climate goals.
Tackling Scope 3 emissions aligns businesses with global climate goals, ensuring relevance in an increasingly eco-conscious market.
Blockchain technology will become more prevalent for tracking emissions and verifying supplier compliance, enhancing trust and accountability.
More companies will adopt circular economy principles, focusing on products designed for reuse, recycling, or remanufacturing to minimize emissions from purchased goods.
Leading companies will expand collaborative initiatives, offering technical support and funding to help suppliers transition to low-carbon practices.
Governments and international bodies are expected to enforce stricter reporting and reduction requirements for Scope 3 emissions, pushing businesses to prioritize sustainability in procurement.
Addressing Scope 3 Category 1 emissions is a vital step for any organization committed to sustainability. By leveraging the right tools, engaging suppliers, and adopting innovative strategies, companies can reduce their environmental footprint and gain a competitive edge.
Ready to start your journey? Talk to an expert today to explore how you can measure, manage, and minimize Scope 3 emissions effectively.
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