Scope 3 emissions: State of corporate disclosure

The landscape of Scope 3 emissions disclosure, which encompasses all indirect emissions not covered by Scope 1 and Scope 2, presents a complex yet critical challenge for companies globally. In the lead-up to Climate Week NYC 2025, taking place Sept. 21–28 and featuring events such as the PACT Scope 3 Summit, growing attention on value chain emissions highlights the increasing relevance of robust disclosure practices.

These emissions, which include both upstream and downstream activities such as production, transportation, and disposal of goods and services, often constitute the largest portion of a company’s carbon footprint. Collecting and calculating Scope 3 emissions data is fraught with challenges due to the extensive and intricate nature of global value chains. Companies must rely on data from numerous suppliers and partners, making the process time-consuming and prone to inaccuracies. 

Despite these challenges, the opportunities from comprehensive Scope 3 emissions data are significant. By understanding their carbon dependencies in detail, companies can identify key areas for risk mitigation and enhance their sustainability strategies. Additionally, companies must consider Scope 3 reporting to align with global climate initiatives, such as the Science Based Targets initiative. Finally, the regulatory landscape surrounding Scope 3 emissions is evolving rapidly and cannot be overlooked. The International Sustainability Standards Board and the Corporate Sustainability Reporting Directive have introduced legal requirements for Scope 3 emissions reporting, further emphasizing its growing importance for stakeholders and investors. 

Within our ESG Scores and Raw Data, underpinned by the S&P Global Corporate Sustainability Assessment (CSA), we assess whether companies have implemented robust frameworks for measuring and reporting their Scope 3 emissions.

The CSA is an annual evaluation of sustainability practices covering about 14,000 companies worldwide. In this review, we examine the extent of corporate disclosure on Scope 3 emissions, with a particular focus on identifying the category that contributes most significantly in terms of absolute emissions and intensity according to the latest available data.

As companies improve their Scope 3 accounting and calculation capabilities, the absolute value of reported emissions increases. The number of companies reporting their total emissions for financial year (FY) 2023 stands at 4,785, an increase of more than 80% compared to those reporting for FY 2020.

Figure 1 shows that even when considering only companies that have consistently reported Scope 3 emissions between FY 2020 and FY 2023, and excluding outliers, total reported emissions increased by nearly 40% over the four-year period. While a marginal increase would align with global trends — the EDGAR database shows an increase of about 7% globally in this time frame — much of the sharp increase shown in figure 1 is likely attributed to companies’ improved data collection, calculation and reporting capabilities.

Figure 2 shows that two of the 15 GHG Protocol categories used to define Scope 3 emissions — “use of sold products” and “purchased goods” — represent the vast majority of those reported by companies. These categories present the greatest risks and opportunities for value chain decarbonization.

Examples of the first category include emissions from fuel combustion in vehicles sold to customers for automotive companies, from energy consumed by electronic devices during their lifetime for electronics companies, and from energy used by datacenters running software sold to customers for tech companies. 

Examples of the second category include emissions from manufacturing and production of clothing, electronics and food for retailers; from producing cement, steel and other building materials used by construction companies; and from sourcing chemicals obtained by pharmaceutical companies.

Even when considering median emissions per unit of revenue generated, these two categories are significantly more impactful than all others, with purchased goods taking the lead. Notably, some of the most frequently reported categories by companies, such as employee commuting and business travel, are responsible for a rather small share of Scope 3 emissions in both absolute and intensity terms. 

While collecting and calculating Scope 3 emissions data presents significant challenges, the opportunities for companies to enhance their sustainability practices and mitigate risks are equally substantial, especially when considering highly impactful upstream and downstream activities such as the use of sold products and purchased goods. As regulatory frameworks evolve and data collection methodologies improve, companies will be better equipped to manage their carbon footprints and contribute to global climate goals. Ultimately, thorough collection, calculation and understanding of Scope 3 data is necessary to set more accurate and achievable carbon-reduction targets, fostering innovation, efficiency and stakeholder confidence across direct operations, supply chains and overall value chains.