Scope 3 is where the bulk of most manufacturers' emissions actually live. GHG Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard defines 15 categories of upstream and downstream value chain emissions. ESRS E1 under CSRD requires disclosure of all relevant categories with methodology notes on any that are excluded.
This is a reference post. For each of the 15 categories, we cover: what it includes, what data you need, how material it typically is for manufacturers, and where methodological challenges arise. At the end, we flag which categories Circulyft handles from structured data feeds versus which require manual input or estimation.
Upstream categories (1–8)
Category 1: Purchased Goods and Services
The emissions from producing all goods and services your organization purchases — raw materials, components, packaging, and purchased services. For most manufacturers, this is the largest single Scope 3 category, often 50-80% of total Scope 3 emissions.
Three calculation methods are recognized: supplier-specific (using your suppliers' product-level footprint data), hybrid (combining supplier data where available with secondary data elsewhere), and spend-based (applying industry-average emission factors per dollar of spend). Most mid-size manufacturers use primarily spend-based for Category 1 due to limited supplier data availability, with hybrid approaches where larger direct material suppliers have provided footprint data.
Data needed: purchased quantity by material type (preferred), or total spend by supplier category with EEIO emission factors. The EPA's USEEIO model provides spend-based emission factors by NAICS industry code.
Category 2: Capital Goods
The emissions from producing capital equipment, buildings, and infrastructure your company purchases and uses for more than one year. Manufacturing companies that are capital-intensive — significant equipment purchases in a given year — will have meaningful Category 2 emissions. Companies with stable, aging capital bases may have relatively small Category 2 in most years with periodic spikes during expansion.
Method: typically spend-based using capital goods EEIO factors, unless you're purchasing from a supplier who provides equipment-level footprint data (uncommon but not rare for large, complex machinery).
Category 3: Fuel- and Energy-Related Activities Not in Scope 1 or 2
This covers the upstream emissions associated with the fuels and energy your company consumes — specifically: extraction and transportation of fuels you burn (Scope 1), transmission and distribution losses for purchased electricity (Scope 2), and production of fuels consumed for electricity generation. It's often called T&D losses plus upstream fuel emissions.
For a manufacturer with significant natural gas consumption, Category 3 adds roughly 15-25% to Scope 1 emissions for the upstream extraction and transport of the gas. For electricity, T&D losses typically run 4-7% of consumed electricity for US grid connections. These are calculable directly from Scope 1 and Scope 2 activity data using published upstream emission factors — no additional data collection required beyond what you've already done for Scope 1 and 2.
Category 4: Upstream Transportation and Distribution
Transportation of purchased goods to your facilities — inbound freight. For manufacturers with geographically distributed supply chains (which is nearly all of them), this is a material category, typically 3-10% of total Scope 3.
Data needed: freight volumes by mode and distance (tonne-km), or carrier-provided fuel consumption data. For LTL trucking, carrier sustainability portals increasingly provide emissions per shipment. For dedicated truckloads, mileage from freight manifests combined with assumed payload efficiency is the typical approach. Rail, air, and ocean freight each have mode-specific emission factors from ICAO, IMO, or EPA MOVES.
Category 5: Waste Generated in Operations
Emissions from disposal and treatment of waste generated at your facilities — landfill, incineration, recycling, wastewater treatment. For most manufacturers, this is a smaller category (1-3% of Scope 3) but one where facility-specific data exists: waste hauler invoices, manifest data, and disposal method documentation.
Data needed: waste volume by type and disposal method. EPA factors for landfill methane generation, incineration combustion, and wastewater treatment emissions are published in the GHG Reporting Program technical resources.
Category 6: Business Travel
Flights, rail, hotel stays, and personal vehicle use for business purposes. Typically minor for manufacturers (often 0.1-0.5% of Scope 3) but easy to calculate from corporate travel booking data and expense reports. Most travel management systems can now export emissions estimates directly.
Category 7: Employee Commuting
Emissions from employees traveling between home and workplace. For a facility with 500+ employees, commuting emissions can be meaningful in absolute terms. Data collection typically relies on employee surveys on commute mode and distance, with emission factors applied by mode. This is one of the harder categories to collect precisely — survey response rates are imperfect and mode splits vary — but the methodology is well-defined.
Category 8: Upstream Leased Assets
Emissions from assets leased by your organization that are not already captured in Scope 1 and Scope 2 under the operational control boundary. Relevant when companies lease equipment or facilities and the leaseholder's emissions aren't consolidated into their own Scope 1 and 2 under the chosen organizational boundary. For companies using an operational control approach to organizational boundary (most common), upstream leased assets may be zero if all leased facilities are operated and metered by the lessee.
Downstream categories (9–15)
Category 9: Downstream Transportation and Distribution
Transportation of your finished goods from your facilities to customers, distributors, or end users. Mirror to Category 4 but for outbound freight. For manufacturers selling to OEMs or distribution channels rather than directly to end consumers, this covers the freight lanes from your warehouse or dock to the customer's receiving facility.
Data needed: outbound shipment records with carrier, mode, weight, and distance. Many manufacturers have this in their ERP or logistics systems; the challenge is pulling it in a structured form that maps to the Category 9 calculation methodology.
Category 10: Processing of Sold Intermediate Products
Emissions from processing your products further downstream — when you sell a component that gets assembled into something else, the energy and emissions from that downstream processing belong in Category 10. This category is relevant for manufacturers selling intermediate goods to other manufacturers.
It's one of the harder categories to quantify because it requires knowing how your customers process your products, which is not information you typically have. Acceptable approaches include customer surveys, industry average processing intensity factors, or exclusion with documented justification if the category is genuinely immaterial.
Category 11: Use of Sold Products
For manufacturers of products that consume energy during use — vehicles, appliances, machinery, electronics — this is often the largest category in the entire Scope 3 inventory. A manufacturer of internal combustion engine components, for example, carries the fuel combustion emissions from vehicles containing those components over the vehicle lifetime.
Calculation requires: annual energy consumption per product unit in use, emission factor per unit of energy (or fuel combustion factor), assumed product lifetime, and total units sold. The GHG Protocol Scope 3 standard provides specific guidance for direct use-phase emissions (products that contain fuels or directly combust them), indirect use-phase emissions (products that consume electricity), and products with no direct or indirect energy use during the use phase.
For manufacturers whose products are not energy-consuming during use (structural components, packaging, raw materials), Category 11 may be zero or excluded with justification.
Category 12: End-of-Life Treatment of Sold Products
Emissions from disposing of your products at end of life — landfill, incineration, recycling. For most manufacturers, this is relatively small compared to Categories 1 and 11, but it requires knowing product material composition and typical disposal pathways at end of life.
Data needed: product material composition (by weight and material type), assumed end-of-life disposal method mix (% landfill, % recycling, % incineration), and applicable waste treatment emission factors.
Category 13: Downstream Leased Assets
Emissions from assets owned by your company that are leased to others. Relevant for companies that lease equipment to customers. For most manufacturers that sell rather than lease, this category is zero.
Category 14: Franchises
Emissions from franchised operations. Not relevant for most manufacturers.
Category 15: Investments
Emissions associated with the activities of companies in which your organization has equity or debt investments. Primarily relevant for financial institutions and holding companies. For operating manufacturers without significant investment portfolios, this category is typically excluded with documented justification.
Which categories are typically material for manufacturers
Based on GHG Protocol guidance and industry data, the high-materiality categories for most manufacturers are: Category 1 (purchased goods — usually the largest), Category 11 (use of sold products — depends heavily on product type), Category 4 and 9 (freight), and Category 3 (upstream energy). Categories 6, 7, 13, 14, and 15 are often minor or zero for manufacturing operations.
ESRS E1 doesn't require including every category if you can document that a category is not material to your operations. The standard requires you to disclose which categories are included, which are excluded, and the reasoning for exclusions. "Not applicable to our business model" is an acceptable exclusion justification for Categories 13, 14, and 15 for most manufacturers.
A note on double-counting and scope boundaries
We're not saying Scope 3 is free from ambiguity in practice. One genuine methodological challenge is avoiding double-counting between categories. Category 1 (purchased goods) should cover the emissions from producing materials up to the point of delivery to your facility. Category 4 (upstream transportation) covers the freight from your supplier to you. If your supplier's Category 9 already includes shipping to your facility, there's a potential overlap. GHG Protocol addresses this with clear boundaries, but in practice, supplier footprint data often doesn't cleanly separate production from transportation emissions.
The Circulyft approach to this: when processing supplier-provided footprint data for Category 1, we flag whether the supplier's reported footprint appears to include transportation, and prompt for confirmation before mapping it to the Category 1 calculation. Category 4 is calculated independently from freight manifest data. The two calculations are kept separate with source documentation.
Categories 1-8 cover your upstream value chain. Categories 9-15 cover what happens to your products after you've sold them. Together they define your full value chain footprint — which for most manufacturers is 5-20 times larger than Scope 1 and 2 combined. That's why Scope 3 is where decarbonization strategies have to engage, even if the data is harder to collect.