All 15 Scope 3 Categories Explained (With UK Business Examples)

For most UK businesses, Scope 3 is simultaneously the largest part of their carbon footprint and the least well understood. The GHG Protocol Corporate Value Chain (Scope 3) Standard defines 15 categories of indirect emissions — 8 upstream (your supply chain) and 7 downstream (your customers and beyond). Together they typically account for 70–95% of a company's total greenhouse gas impact.

This guide explains each category plainly, with UK examples and a note on which calculation approach works in practice. Not all 15 will be material for your business — understanding which ones are is the starting point for a proportionate reporting effort.

Upstream categories (1–8): your supply chain

Upstream Scope 3 covers emissions that occur before goods or services reach you — in your suppliers' operations, in the transport of goods to you, and in the fuels and energy you use before they're burned or consumed.

Category 1 — Purchased goods and services

Everything you buy that isn't a long-lived capital asset: raw materials, components, finished goods, office supplies, IT services, outsourced functions, cloud software, professional fees, marketing spend. The emissions occur in your suppliers' operations to produce those goods and services.

UK example: A law firm buying legal research software subscriptions, office stationery, and outsourced cleaning — all of it lands in Category 1. For most service businesses, this is the largest Scope 3 category by a significant margin.

Calculation approach: Spend-based — multiply GBP spend by category by an economy-sector emission intensity factor (from EXIOBASE or similar). The spend data lives in your accounting system (Xero, QuickBooks, Sage). This is covered in detail in how to calculate Scope 3 from spend data.

Category 2 — Capital goods

Long-lived assets you purchase: machinery, equipment, vehicles, buildings, IT infrastructure. The distinction from Category 1 is durability — capital goods are used over multiple years, so the emissions from manufacturing them are allocated entirely to the year of purchase.

UK example: A distribution company buying a new van fleet; a restaurant chain fitting out a new site; a manufacturer purchasing a CNC machine.

Calculation approach: Spend-based (similar to Category 1) or, for large assets, supplier-specific data. Often smaller than Category 1 for service businesses; material for capital-intensive industries.

Category 3 — Fuel and energy-related activities

The upstream emissions from extracting, refining, and transporting the fuels and electricity you consume — the emissions that happen before the fuel reaches your meter. These are separate from Scope 1 (combustion) and Scope 2 (grid electricity generation).

UK example: Every kWh of natural gas you burn has associated upstream emissions from the gas field, processing plant, and pipeline network. Every kWh of grid electricity has transmission and distribution (T&D) losses. DEFRA publishes upstream and T&D loss factors for both.

Calculation approach: Apply DEFRA's upstream fuel factors and T&D loss factors to your Scope 1 and 2 consumption figures. Typically adds 10–15% on top of Scope 1 and Scope 2 for most businesses.

Category 4 — Upstream transportation and distribution

Emissions from transporting goods you purchase from your suppliers to your facilities — inbound freight, where you pay for or control the transport.

UK example: A retailer paying for road delivery of stock from a UK warehouse; a manufacturer importing components by sea freight from Europe; a business using a courier to receive supplier deliveries billed to them.

Calculation approach: Tonne-kilometres × mode factor (road, sea, rail, air). DEFRA provides HGV, van, sea, and air freight factors. If you don't control or pay for transport, it sits with your supplier and doesn't need to be reported here.

Category 5 — Waste generated in operations

Disposal of solid waste and wastewater produced in your operations — at the point of disposal, not generation.

UK example: An office business putting paper and food waste in general waste bins (likely landfill); a restaurant with food waste sent to anaerobic digestion; a light manufacturer with packaging offcuts going to recycling.

Calculation approach: Weight (kg or tonnes) × disposal pathway factor. Landfill has a higher factor than recycling or composting. Typically a small category for most service businesses.

Category 6 — Business travel

All travel by employees for business purposes — by any mode that isn't a company-owned vehicle (which would be Scope 1). Flights, rail, taxis, rental cars, hotels.

UK example: A consulting firm whose staff regularly fly to client sites; a sales team taking the East Coast Main Line; a company director hiring a car for a site visit.

Calculation approach: Distance × mode factor. DEFRA provides factors for economy and business class short-haul and long-haul flights, UK domestic rail, and road travel. Radiative forcing uplift (roughly 1.9×) can be applied to air travel to capture non-CO₂ warming effects — this is optional under GHG Protocol but recommended for completeness. Travel spend from Xero expense coding is a useful data source.

Category 7 — Employee commuting

Emissions from employees travelling between home and their regular workplace — by car, public transport, cycling, or on foot.

UK example: Employees driving to a suburban office; London-based staff commuting by Tube; a team working from regional offices across the UK.

Calculation approach: Employee survey to capture modes and distances, then apply mode factors (car, bus, rail, etc.). Alternatively, use average-data methods based on national commuting surveys. Remote-first businesses have materially lower Category 7 than office-centric ones.

Category 8 — Upstream leased assets

Scope 1 and Scope 2 emissions from assets you lease from a lessor where you don't operationally control the energy system — typically shared buildings managed by a landlord.

UK example: A business in a multi-tenanted office building where the landlord controls heating; a shared data centre where you rent rack space rather than running your own servers.

Calculation approach: Apply Scope 1 and 2 methodology to the asset's energy use, allocated by your share. Often estimated from floor area or energy consumption data from landlords. This category is excluded from Scope 1 and 2 if you report using the operational control boundary — check your boundary choice.

Downstream categories (9–15): beyond your gate

Downstream Scope 3 covers what happens after your products or services leave you — transport to customers, processing, customer use, and end-of-life disposal. These categories vary enormously in relevance: for a service business, most are zero or immaterial; for a product manufacturer, some can dwarf everything else.

Category 9 — Downstream transportation and distribution

Emissions from transporting your products to customers or to intermediate parties (distributors, retailers) after they leave your control.

UK example: An e-commerce business using a courier network to deliver orders; a manufacturer shipping pallets to a distributor's warehouse; a food producer transporting goods to supermarket distribution centres.

Calculation approach: Same as Category 4 — tonne-kilometres × transport mode factor — but for outbound logistics. Relevant for product businesses; low or zero for pure service firms.

Category 10 — Processing of sold products

Emissions from further processing of intermediate products you sell, carried out by your customers before the product reaches end use.

UK example: A steel service centre selling cut-to-length sections to manufacturers who weld or machine them further; a chemical supplier whose products are processed into formulations by customers.

Calculation approach: Estimate the processing energy and emissions at your customers' sites. Typically relevant only for businesses selling intermediate manufactured inputs; negligible for finished goods and services.

Category 11 — Use of sold products

Emissions from customers using what you sell — from direct energy use during operation, indirect energy use, or other use-phase emissions.

UK example: A boiler manufacturer whose products burn gas in customers' homes for 15+ years; a car maker whose vehicles consume fuel over their lifetime; a software company whose platform runs on energy-intensive cloud infrastructure at the customer's end.

Calculation approach: Expected annual energy/fuel consumption per unit × expected lifetime × emission factor × units sold. This is often the single largest Scope 3 category for energy or fuel product manufacturers — it can exceed all other categories combined. Less relevant for service businesses and zero for businesses whose products don't consume energy in use.

Category 12 — End-of-life treatment of sold products

Emissions from disposing of your products once customers are done with them — landfill, incineration, recycling, or composting.

UK example: A packaging manufacturer — the plastic or cardboard packaging goes to landfill or recycling at end of consumer use; an electronics brand — e-waste handling of devices at end of life.

Calculation approach: Weight of product sold per year × assumed end-of-life pathway split × disposal pathway factor. Relevant for physical product companies; zero for digital and pure-service businesses.

Category 13 — Downstream leased assets

Scope 1 and Scope 2 emissions from assets you own and lease out to customers — you are the lessor, not the lessee.

UK example: A commercial property company leasing office buildings to tenants; a fleet leasing company leasing vans to businesses; an equipment manufacturer leasing plant on a pay-per-use basis.

Calculation approach: Apply Scope 1 and 2 methodology to the asset's operational energy and fuel use in the customer's hands. Material for property owners and equipment lessors; zero for most operating businesses.

Category 14 — Franchises

Scope 1 and Scope 2 emissions from franchisee operations — applicable only if you operate a franchise model where others run outlets under your brand.

UK example: A UK fast-food chain's franchisee-operated restaurants; a gym chain with franchised clubs.

Calculation approach: Gather or estimate franchisees' Scope 1 and 2 data and aggregate it. Zero for the vast majority of businesses that aren't franchisors.

Category 15 — Investments

Emissions attributable to the equity and debt investments you hold — your financed emissions, proportional to your ownership share.

UK example: A bank's corporate lending portfolio; a private equity firm's portfolio companies; a pension fund's equity and bond holdings; a listed holding company with subsidiaries outside its consolidation boundary.

Calculation approach: PCAF (Partnership for Carbon Accounting Financials) Standard — emission intensity of investees × financial exposure. This is a specialised discipline. For most operating businesses (as opposed to financial institutions), this category is zero or negligible.

Which categories are material for your business?

The GHG Protocol doesn't require you to report all 15 categories — it requires you to report all relevant and material categories, and to justify any omissions. A proportionate approach for most UK SMEs:

• Almost always material: Categories 1 (purchased goods and services), 3 (fuel and energy upstream), 6 (business travel).
• Usually material for product businesses: Categories 4 (inbound freight), 9 (outbound freight), 12 (end-of-life).
• Potentially very large for specific industries: Category 11 (use of sold products) for energy/fuel/vehicle manufacturers; Category 15 (investments) for financial institutions.
• Often low or zero for service businesses: Categories 10, 11, 12, 13, 14, 15.

PPN 006 Carbon Reduction Plans require a specific subset of five categories (4, 5, 6, 7, 9) — not all 15. If your main near-term driver for Scope 3 reporting is a public sector contract, those five are your priority. For the broader approach, start with Category 1 — it's almost always the largest, and the spend-based method makes it the most tractable to calculate from your existing accounting data.

SpendToScope calculates Categories 1, 3, 4, 6, and 7 automatically from your Xero or QuickBooks data, with the remaining categories available for manual input. If you're starting your Scope 3 journey, using Xero for carbon accounting explains how the data flows from your general ledger into a footprint.