Most corporate climate claims become serious, or seriously shaky, when they reach Scope 3 emissions.
These are the emissions that sit outside a company’s direct operations but inside its wider value chain: the raw materials it buys, the factories it relies on, the transport it uses, the way customers use its products, and what happens when those products are thrown away. For many businesses, especially in retail, food, fashion, electronics, construction, and consumer goods, Scope 3 is not a side issue. It is the footprint.
That makes Scope 3 work both essential and uncomfortable. A company can switch to renewable electricity, improve office efficiency, and electrify its own vehicles, then still find that the overwhelming majority of its climate impact sits with suppliers, customers, land use, shipping, processing, and product design decisions made far beyond its direct control.
Some companies are also exploring carbon insetting through biochar and other supply-chain projects, but the same rule applies: the climate benefit needs to be measured, attributed, and communicated without pretending it solves the whole Scope 3 problem.
That is the difficult line companies now have to walk. Scope 3 action needs ambition, but ambition without discipline becomes greenwash. Honest progress means knowing what can be measured, admitting what is still uncertain, helping suppliers reduce emissions in practice, and avoiding the temptation to turn every pilot project into a sweeping net-zero claim.
Key Takeaways
- Scope 3 emissions often dominate corporate footprints, especially in product-heavy sectors.
- Honest Scope 3 action starts with credible accounting, but it cannot stop at better spreadsheets.
- Supplier engagement needs practical support, including finance, training, better contracts, and procurement reform.
- Carbon removals and insetting can play a role, but they should not be used to distract from direct emissions cuts.
- Climate claims should be specific, evidenced, and clear about what has changed and what has not.
In Focus: Key Data
- 15 categories: The GHG Protocol Scope 3 Standard divides value-chain emissions into 15 upstream and downstream categories.
- 40 percent threshold: Under SBTi criteria, companies whose Scope 3 emissions represent more than 40 percent of total Scope 1, 2, and 3 emissions must set Scope 3 targets.
- 67 percent coverage: Those near-term Scope 3 targets must collectively cover at least 67 percent of total Scope 3 emissions under SBTi criteria.
- 23,000 companies: CDP’s Strengthening the Chain report draws on supply-chain disclosure data from more than 23,000 companies.
- Durable storage: The IPCC states that achieving global net-zero CO2 emissions requires remaining anthropogenic CO2 emissions to be balanced by durably stored CO2 from removals.
Why Scope 3 Is So Hard to Cut
Scope 1 and Scope 2 emissions are not always easy, but they are at least closer to home. Scope 1 covers emissions from sources a company owns or controls, such as fuel burned in company vehicles or boilers. Scope 2 covers purchased energy, such as electricity, steam, heating, or cooling.
Scope 3 is messier. It includes emissions across the value chain, which can mean purchased goods and services, capital goods, upstream transport, waste, business travel, employee commuting, downstream distribution, product use, franchises, investments, and end-of-life treatment.
A food company may discover that farming practices dominate its footprint. A clothing brand may find the biggest impacts in raw fibres, dyeing, manufacturing, transport, and product care. A technology company may face significant emissions from manufacturing, components, data infrastructure, product use, and end-of-life disposal.
That complexity creates a credibility problem. A company can publish a polished climate target while still relying on poor supplier data, broad industry averages, optimistic assumptions, or incomplete product boundaries. The result may look precise, but precision is not the same as truth.
The first honest step is not claiming success. It is building a Scope 3 inventory that clearly explains what is included, what is estimated, what is excluded, and where the data quality is weak.
Start With a Real Inventory, Not a Marketing Claim
Companies should begin by mapping their Scope 3 categories and identifying which ones are likely to matter most. The GHG Protocol framework is useful because it forces businesses to look beyond the emissions they can see from their own facilities.
That does not mean every category will be equally important. For some companies, purchased goods and services will dominate. For others, the use of sold products may be the biggest issue. For banks and investors, financed emissions can be central. For food and agriculture businesses, land use, fertiliser, livestock, soil carbon, and processing may matter more than office electricity ever will.
A credible inventory should distinguish between primary data and estimates. Primary data might come directly from suppliers, logistics partners, factories, farms, meters, invoices, or product-level lifecycle assessments. Estimates may rely on industry averages, spend-based calculations, or emissions factors.
Both can be useful. The problem comes when companies blur the difference. A spend-based estimate may be reasonable for a first inventory, but it is not strong evidence that a supplier has actually cut emissions. Better accounting should eventually lead to better decisions, not just a more sophisticated annual report.
Prioritise the Biggest Hotspots
Once a company has a workable inventory, the next step is prioritisation. Trying to fix everything at once usually leads to shallow action everywhere. Honest Scope 3 work starts by asking where the largest emissions sit, where the company has real influence, and where intervention can produce measurable change.
For a retailer, this may mean working with major suppliers on energy use, materials, packaging, and logistics. For a food company, it may mean focusing on fertiliser efficiency, methane reduction, deforestation risk, regenerative practices, or lower-emission processing. For a manufacturer, it may mean redesigning products to use less material, last longer, require less energy, or be easier to repair and recycle.
The important point is that Scope 3 strategy should not be built around whatever is easiest to promote. It should be built around what actually drives the footprint.
That may produce less glamorous work. Supplier energy audits, procurement policy changes, contract redesign, shared logistics, product durability, lower-impact materials, and manufacturing efficiency do not always make exciting press releases. They are often more meaningful than vague claims about “supporting climate solutions.”
Work With Suppliers, Not Just Against Them
Many Scope 3 programmes fail because large companies treat supplier engagement as a compliance exercise. They send questionnaires, request emissions data, set expectations, and then act surprised when smaller suppliers cannot respond with consultant-grade carbon accounts.
Suppliers may lack money, staff, technical expertise, or even basic emissions data. Some may operate in regions where clean energy is expensive or unreliable. Others may be small businesses with thin margins and little capacity to absorb the cost of new equipment, certification, monitoring, or reporting.
If a buyer wants lower-emission products, it may need to help create the conditions that make those products possible. That can include longer contracts, co-investment, advance purchase agreements, supplier training, shared tools, preferential financing, or paying enough for low-carbon production instead of demanding sustainability at the same price as business as usual.
This is where procurement becomes climate policy in disguise. If a company rewards only the cheapest supplier every year, it should not be shocked when suppliers avoid long-term decarbonisation investments. Honest Scope 3 action requires buyers to change their own behaviour too.
Use Insetting Carefully
Carbon insetting is often described as climate action within a company’s own value chain, rather than buying offsets from unrelated projects elsewhere. In principle, that can make sense. If a company’s footprint is tied to agriculture, forestry, food processing, biomass, or land-based supply chains, then projects that reduce emissions or store carbon within those systems may be more relevant than distant offset purchases.
But insetting is not automatically credible. A weak insetting claim can be just as misleading as a weak offset claim.
For an insetting project to be taken seriously, companies need to show where the project sits in the value chain, what activity changed, how emissions were reduced or removed, how the result was measured, who can claim it, and whether the benefit would have happened anyway.
Biochar is one example that is attracting interest because it can combine waste biomass use, soil or material applications, and relatively durable carbon storage when produced and monitored properly. But that sentence needs all its caveats. Feedstock sourcing matters. Production conditions matter. End use matters. Lifecycle accounting matters. Certification matters. Monitoring matters.
Companies should avoid presenting biochar, soil carbon, regenerative agriculture, tree planting, or any other intervention as a magic answer to Scope 3. These projects can be valuable, but they need to be part of a wider strategy that prioritises direct reductions and transparent accounting.
Do Not Confuse Reductions With Removals
One of the most common problems in corporate climate communication is the quiet blending of emissions reductions, avoided emissions, offsets, and carbon removals into one convenient story.
They are not the same thing.
Reducing emissions means cutting the greenhouse gases produced by the company or its value chain. That might involve renewable energy, lower-carbon materials, better logistics, less waste, improved farming practices, cleaner industrial heat, product redesign, or reduced energy use during a product’s lifetime.
Carbon removal means taking CO2 out of the atmosphere and storing it. The IPCC makes clear that durable removals are needed to balance remaining emissions in net-zero pathways, but that does not make removals a substitute for cutting emissions where cuts are possible.
Durability is also not a minor detail. A tonne of carbon stored for a few years is not equivalent to a tonne stored for centuries. Forestry, soil carbon, biochar, enhanced weathering, mineralisation, and direct air capture all involve different risks, costs, monitoring requirements, and storage timescales.
For example, Puro.earth labels qualifying biochar carbon removal under its methodology as having durability of 200-plus years. That kind of durability claim depends on methodology, project design, production standards, and verified end use. It should not be casually generalised to every project that uses the word biochar.
Avoid Double Counting
Double counting is one of the easiest ways for Scope 3 claims to become misleading.
Imagine a farm that supplies grain to three food companies. If the farm installs renewable energy, reduces fertiliser use, or adopts a lower-emission process, each buyer may want to claim part of the benefit. Without clear allocation rules, the same emissions reduction can be counted multiple times.
The problem gets worse in complex supply chains. A single supplier may serve multiple brands. A processing facility may handle materials from many farms. A logistics provider may move goods for dozens of companies. A carbon project may affect a landscape rather than one neat product line.
Honest Scope 3 accounting needs clear ownership. Companies should explain whether they are reporting inventory reductions, project-level interventions, carbon credits, supplier engagement results, or broader value-chain progress. They should also be clear about whether another company, supplier, or credit buyer may be claiming the same benefit.
This is not just a technical accounting detail. It is the difference between real climate progress and several companies telling the same story as if they each did it alone.
Communicate Progress Without Greenwashing
The safest Scope 3 claim is usually the most specific one.
Instead of saying a product is “sustainable,” a company can say it reduced transport emissions on a specific route by switching to lower-emission freight. Instead of saying a supply chain is “climate positive,” it can say it helped a defined group of suppliers install renewable energy, adopt lower-emission equipment, or participate in a verified carbon removal project.
The UK Competition and Markets Authority’s Green Claims Code warns businesses that environmental claims should be truthful, clear, accurate, substantiated, and not omit important information. Its supply-chain guidance also makes clear that companies need to understand responsibility for claims made across supply chains.
That should make companies more careful with broad phrases such as “carbon neutral,” “net zero,” “climate friendly,” “sustainable,” and “green.” These terms can sometimes be defended, but only with strong evidence and clear explanation. Without that, they often create more risk than value.
A better approach is to communicate Scope 3 work as progress, not perfection. Companies can explain what they measured, what they changed, how much confidence they have in the result, what independent standards or verification were used, and what remains unresolved.
That kind of honesty may feel less exciting than a sweeping climate claim. It is also much harder to tear apart.
Build a Transition Plan That Includes the Value Chain
Scope 3 work should not sit in a separate sustainability brochure. It should be part of a company’s transition plan, capital allocation, procurement strategy, product design, supplier relationships, and risk management.
A credible plan should explain how the company intends to reduce emissions over time, not just how it intends to compensate for them. That includes near-term targets, long-term targets, supplier engagement, investment needs, governance, progress metrics, and the role of removals for residual emissions.
The most useful plans are also honest about barriers. If a company depends on suppliers in regions with limited clean-energy access, say so. If low-carbon materials are scarce or expensive, say so. If product-use emissions depend on customer behaviour or grid decarbonisation, say so. These are not excuses for inaction. They are the real constraints that serious strategy has to confront.
Scope 3 emissions are difficult because they expose how deeply companies are connected to other companies, communities, landscapes, infrastructure, and consumer habits. That is exactly why they matter.
The Bottom Line
Companies cannot cut Scope 3 emissions honestly by outsourcing the problem to offsets, hiding behind averages, or asking suppliers to do impossible things for no extra money.
They need better data, but they also need better relationships. They need targets, but also investment. They need carbon removals for the parts that remain difficult to eliminate, but not as a substitute for direct cuts. They need to communicate progress, but without turning partial improvements into exaggerated claims.
The companies that handle Scope 3 well will probably sound less dramatic than the companies making the loudest climate promises. They will talk about boundaries, baselines, suppliers, evidence, uncertainty, durability, and unfinished work.
That may not be as tidy as a slogan. It is far more useful.
FAQ
What are Scope 3 emissions?
Scope 3 emissions are indirect greenhouse gas emissions that occur across a company’s value chain. They can include purchased goods and services, transport, waste, business travel, product use, investments, and end-of-life treatment of sold products.
Why are Scope 3 emissions often so large?
Many companies outsource manufacturing, rely on complex supply chains, sell products that use energy, or depend on raw materials with large upstream impacts. As a result, their direct operations may be much smaller than the emissions connected to everything they buy, sell, transport, finance, or influence.
Can companies use offsets for Scope 3 emissions?
Offsets and carbon credits should not be treated as a substitute for reducing Scope 3 emissions. High-quality credits may have a role in some climate strategies, especially for residual emissions or beyond-value-chain mitigation, but companies should prioritise direct reductions and be clear about what credits do and do not represent.
What is carbon insetting?
Carbon insetting usually refers to climate projects connected to a company’s own value chain. Examples may include supplier energy upgrades, regenerative agriculture, biochar projects, agroforestry, or other interventions that reduce emissions or store carbon within supply chains linked to the company’s products or materials.
Is biochar permanent?
Biochar can offer relatively durable carbon storage when it is produced from appropriate feedstocks, processed correctly, used in suitable applications, and verified under credible standards. However, companies should avoid blanket claims. Durability depends on the project, methodology, monitoring, and end use.
How can companies avoid greenwashing in Scope 3 claims?
They should make claims specific, evidenced, and limited to what has actually changed. Strong Scope 3 communication explains the boundary, baseline, method, result, uncertainty, verification, and remaining work. Vague claims such as “green,” “carbon neutral,” or “sustainable” need especially careful substantiation.
Sources & Further Reading
- GHG Protocol: Corporate Value Chain Scope 3 Standard
- GHG Protocol: Scope 3 Calculation Guidance
- Science Based Targets initiative: Standards and Guidance
- CDP: Strengthening the Chain
- UK Competition and Markets Authority: Making Green Claims Across the Supply Chain
- IPCC: AR6 Synthesis Report
- Puro.earth: Biochar Methodology