Scope 3 emissions | Explanation of the 15 categories according to the Greenhouse Gas Protocol

(Purchased Goods and Services) includes the indirect greenhouse gas emissions resulting from the extraction and processing of raw materials for goods and services used by a company for its own activities.

To explain it more clearly: When a company purchases raw materials, materials, or components for the production of products, the production of these purchased goods causes indirect emissions. The services a company uses can also cause emissions in this category if they involve high energy consumption or other environmentally impacting processes.

The "Purchased Goods and Services" category can have a significant impact on a company's carbon footprint, as it accounts for a significant portion of total indirect emissions. Companies can reduce these emissions by selecting suppliers that minimize their own carbon footprint.

(Capital Goods) includes the indirect greenhouse gas emissions resulting from the production of plant, equipment, machinery and other long-term capital goods that a company uses in its business activities.

To put it more simply: When a company constructs new buildings, installs production equipment, or acquires other long-term capital goods, the production of these capital goods causes indirect emissions. Emissions also arise from the use and maintenance of these goods throughout their lifetime.

The capital goods category can make a significant contribution to a company's overall greenhouse gas emissions, especially in capital-intensive industries. Companies can reduce these emissions by favoring energy-efficient technologies and environmentally friendly materials in the production and use of their capital goods.

(Energy- and Fuel-Related Activities) includes the indirect greenhouse gas emissions resulting from upstream chains and grid losses of energy and fuels.

For example, crude oil production, electricity generation in power plants, or natural gas extraction all involve losses in the form of unusable or unrecoverable energy. These losses occur before the point at which the energy is transferred into the utilization process.

Grid losses occur when electrical energy is transported over power lines and grids. These losses occur during transport from one point to another due to resistance and other physical factors.

(Upstream Transportation and Distribution) includes the indirect greenhouse gas emissions resulting from the transportation and distribution of raw materials, materials and products delivered to the company by suppliers.

To explain in more detail: When a company purchases raw materials, semi-finished products, or other materials from suppliers, emissions arise from the transport of these goods from the supplier's manufacturing site to the company. This includes transport by road, rail, water, or air, depending on the specific logistics and transportation methods.

The "Upstream Transportation and Distribution" category can have a significant impact on a company's overall greenhouse gas emissions, especially in industries with extensive value chains and global procurement activities. Companies can reduce these emissions by prioritizing sustainable transportation solutions, more efficient logistics routes, and environmentally friendly suppliers.

(Waste) includes the indirect greenhouse gas emissions resulting from the disposal and treatment of waste generated during a company's activities.

To explain in more detail: When a company produces waste, whether in the form of manufacturing waste, office waste, or other waste generated in the course of its business activities, the disposal of that waste results in emissions. These emissions can come from various sources, such as landfill gases produced by the anaerobic decomposition of organic waste or from the incineration of waste for energy.

Companies can reduce these emissions by implementing waste management strategies that promote recycling, reuse and waste reduction.

(Business travel) includes the indirect greenhouse gas emissions caused by business trips by employees of a company.

Business trips can take various forms, such as air travel, rail travel, car journeys or business trips using other means of transport.

These emissions are considered indirect because they are not directly caused by a company's operational activities at its headquarters or production facilities. Instead, they arise from the mobility of employees in the course of their work activities.

Companies can reduce these emissions by using alternative technologies such as video conferencing to minimize business travel or by promoting environmentally friendly transportation options for business trips.

(Employee Commuting) includes the indirect greenhouse gas emissions caused by the daily commute of a company’s employees.

These emissions arise from energy consumption and associated greenhouse gas emissions during commuting, such as fuel consumption during car journeys or energy consumption of public transport.

Companies can reduce these emissions by taking measures to promote climate-friendly mobility.

(Upstream Leased Assets) is located in Scope 1 & 2 according to the Operational Control approach.

If a company does not own tangible assets such as buildings, production facilities, machinery or vehicles, but rents or leases them from third parties, emissions arise from the energy consumption and operation of these leased or rented assets.

Companies can reduce these emissions by choosing energy-efficient leased equipment or implementing energy efficiency measures in their operations.

(Downstream Transportation and Distribution) includes the indirect greenhouse gas emissions that arise from transport and distribution to customers or end users – or are paid for by third parties.

To explain in more detail, when a company delivers or sells its products to customers, emissions arise from the transportation of those products from the company to the final consumer. This includes transport by road, rail, water, or air, depending on the specific logistics and transportation methods.

Companies can reduce these emissions by promoting sustainable transport solutions, more efficient logistics routes and environmentally friendly shipping methods.

(Processing of Sold Products) includes the indirect greenhouse gas emissions that arise from the further processing of the products sold by the company.

To explain it more precisely: When a company sells its products to customers and these are then further processed by the customer, greenhouse gas emissions are generated, for example through the energy requirements of the machines.

(Use of Sold Products) includes the indirect greenhouse gas emissions that arise during the use or utilization of the products sold by the company by customers or end users.

To explain in more detail: When a company sells its products and then uses them with customers or end users, emissions can arise during use. These emissions can arise from energy consumption during operation, such as the energy consumption of an electrical appliance or a vehicle.

The category “Use of sold products” is an important aspect of Scope 3 Emissions, as customer use of products can have a significant impact on a company's overall greenhouse gas emissions. Companies can reduce these emissions by developing energy-efficient products that minimize energy consumption during use or by educating customers about sustainable usage practices.

(End-of-Life Treatment of Sold Products) includes the indirect greenhouse gas emissions that arise during the disposal and treatment of products after they have reached the end of their life.

To explain in more detail: When a company sells products and those products need to be disposed of or recycled at the end of their life, emissions are generated during the disposal and recycling process. These emissions can come from landfill gases when products are disposed of in landfills or from the incineration of waste to generate energy. Emissions can also occur during the disassembly and recycling of products.

Companies can reduce these emissions by designing products that are easily recycled or recyclable and by promoting sustainable disposal methods.

(Downstream Leased Assets) includes the indirect greenhouse gas emissions resulting from the use of tangible assets that are rented or leased by a company to other companies.

To explain it in more detail: When a company owns tangible assets such as buildings, machinery or vehicles and rents or leases them to other companies, emissions arise from the energy consumption and operation of these rented or leased assets.

Companies can reduce these emissions by renting or leasing energy-efficient equipment or by recommending energy efficiency measures for the equipment they use.

(Franchises) includes the indirect greenhouse gas emissions generated by the business activities of franchisees.

In the franchising model, a company (the franchisor) licenses its business model, brand, and intellectual property to independent entrepreneurs (franchisees) who operate their own businesses under the franchisor's brand. The emissions generated by the franchisees' activities are recorded in the GHG category "Franchises."

These emissions can be diverse and depend on the activities of the franchisees. Examples could include:

1. Energy consumption in the franchisee’s business premises (e.g. lighting, heating, air conditioning).
2. Fuel consumption for transport and delivery of goods.
3. Emissions related to the disposal of waste from business operations.
4. Emissions from travel and business trips of franchisees.

Because these emissions arise indirectly from the activities of franchisees, they may be relevant to franchisors seeking to understand and reduce their overall emissions and environmental footprint.