Addressing Scope 3 emissions poses significant measurement and reduction challenges; yet technology, regulation and strategic leadership offer powerful levers for decarbonisation and value creation

A growing number of organisations now realise that Scope 3 emissions, the indirect greenhouse gases emitted across their entire value chain, account for the lion’s share of their carbon footprint, and no longer consider these merely a compliance checkbox but a strategic imperative for decarbonisation and resilience.

For many firms, Scope 3 is the ‘elephant in the room’ of climate disclosure.

Unlike Scope 1, which covers fuel burned on-site, or Scope 2, which covers purchased electricity, Scope 3 is diffuse, sprawling and dependent on third-party actors.

It is not uncommon for companies in fast-moving consumer goods, retail, or technology to find that over 90 per cent of their total footprint lies outside their direct control.

That scale forces organisations to rethink the very foundations of supply chains, product lifecycles and customer behaviour.

Consider a smartphone manufacturer. The aluminium and rare-earth minerals mined in one continent, the chip fabrication in another, and the logistics bridging them often carry a higher emissions load than the final assembly plant.

When that phone is later used by consumers for years, drawing on electricity grids of varying carbon intensity, the Scope 3 tally multiplies.

Even product end-of-life, such as recycling or landfill disposal, counts towards the manufacturer’s Scope 3 responsibility.

This complexity makes Scope 3 a powerful lens to examine corporate responsibility in the 2020s and 2030s.

Climate leadership is no longer about installing rooftop solar panels or electrifying a vehicle fleet. It is about embedding low-carbon thinking into contracts, supplier relationships, research and development, and even customer incentives.

Forward-looking firms are experimenting with buy-back schemes to control end-of-life impacts, co-funding renewable projects with suppliers, and piloting new packaging materials with dramatically reduced embodied carbon.

The rapid emergence of these initiatives signals that Scope 3 is not merely a compliance burden but also a source of innovation and competitive advantage.

Companies able to cut embedded emissions in their products can win new customers, attract sustainability-minded investors, and future-proof their business models in an era where carbon is increasingly treated as a cost.

MEASUREMENT CHALLENGES & DIGITAL DECARBONISATION

From purchased goods and services to downstream use and disposal of products, Scope 3 emissions span 15 categories, and frequently represent over 75 per cent of total emissions, though sector variance is wide.

In the digital sector, reports show Scope 3 accounts for approximately 84 per cent of total GHG emissions, underscoring the extent to which value chain emissions eclipse direct operational impacts.

Organisations still struggle with data quality and transparency: Many rely on modelling assumptions just to approximate supplier emissions; inconsistencies in methodology and limited supplier disclosure remain key barriers.

In the Netherlands, research with real companies revealed five core practical obstacles including data gaps, methodological complexity and supplier engagement limitations.

MIT Sloan has observed that global boards increasingly recognise Scope 3 as critical, yet still find the indirect nature hard to track, on average comprising 75 per cent of emissions.

Meanwhile, regulatory frameworks are tightening. Europe’s CSRD mandates Scope 3 disclosure via double-materiality assessments, requiring companies to report relevant emission categories and calculation methods.

Similarly, California’s disclosure laws and broader SEC obligations increasingly press firms to account for indirect emissions.

On the positive side, emerging technology and digitalisation offer solutions. The global digital sustainability market is projected to hit $34 billion by 2027, underlining growing investment in low-carbon IT.

Organisations are urged to overhaul procurement, optimise data centres, choose renewable-powered providers, adopt Infrastructure-as-a-Service, extend device lifespans, and enable remote-work to curb both direct and indirect emissions.

Meanwhile, in sectors like automotive, PwC finds that although 69 per cent of firms are on track for Scope 1 and 2, only 28 per cent are advancing on Scope 3, largely because the vast majority of emissions occur downstream after vehicles leave factories.

In food and agriculture, upstream sourcing of materials accounts for about 81 per cent of Scope 3, with nearly half of companies on track, thanks to certified low-impact ingredients, soil-restoring methods and packaging improvements.

Large tech firms, too, face Scope 3 challenges. Google’s Scope 3 emissions rose 22 per cent in 2024 alone, driven by supply chain activity and energy-hungry AI data-centre demands.

They are now exploring artificial intelligence (AI), as a tool for optimising energy use and solar deployment, aiming to deliver a gigaton of avoided emissions annually by 2030.

Technology is emerging not only as a challenge but as a critical enabler. AI, machine learning and blockchain solutions are increasingly used to bring greater transparency to fragmented supply chains.

Some companies now deploy digital twins of their logistics networks, modelling how changes in sourcing or transport methods ripple through carbon footprints.

This allows procurement teams to compare not just price and speed, but emissions impact when selecting suppliers.

Blockchain is also being tested to create tamper-proof records of supplier emissions data. By decentralising and verifying the reporting process, firms can avoid disputes over accuracy and reduce the risk of greenwashing.

Similarly, smart sensors embedded in factories, vehicles and even products themselves are feeding real-time energy and emissions data into central dashboards.

That creates the possibility of dynamic Scope 3 management rather than annual, retrospective estimates.

Importantly, the cost of these digital tools is falling. Cloud-based carbon accounting platforms allow even small and mid-sized enterprises to track, benchmark and disclose emissions data without massive investment.

This democratisation matters because many large corporations rely on thousands of smaller suppliers; if SMEs lack tools or skills, Scope 3 reduction efforts stall.

The rise of subscription-based platforms and shared data utilities levels the playing field, ensuring more consistent and accurate Scope 3 tracking across industries.

The next frontier lies in integrating financial and carbon data. By embedding emissions intensity directly into enterprise resource planning systems, executives can make procurement or investment decisions with carbon costs visible alongside monetary ones.

Such integration signals a cultural shift: carbon is becoming a core business metric, not an afterthought.

EQUIPPING SUSTAINABILITY PROFESSIONALS TO TACKLE SCOPE 3

For sustainability professionals, understanding and managing Scope 3 emissions begins with mapping and data strategy.

Sphera’s 2025 Scope 3 Report, based on 315 professionals across 18 industries, highlights that even mature companies still struggle with sourcing and reconciling quality data to reduce these emissions thoughtfully.

A structured approach, such as that recommended by the US EPA, suggests moving through stages: from entry-level (disclosing some categories) to advanced (full emissions accounting, supplier engagement and third-party verification).

Deloitte’s work also emphasises scanner and supplier collaboration to overcome supplier data opacity.

Crucially, governance, funding, stakeholder engagement, and product sustainability underpin meaningful progress, according to PwC’s 2025 findings.

From procurement and R&D to reporting and marketing, effective leaders integrate Scope 3 ambitions across their organisations, and align climate targets with OP and financial strategy.

Working with suppliers is vital too. Recent frameworks recommend measuring emissions, engaging and incentivising suppliers, piloting initiatives, executing plans and monitoring outcomes, not via penalties, but through collaboration.

Collaborative platforms such as Catena-X and peer-data sharing initiatives help organisations overcome data sharing barriers and reduce greenwashing risks.

And for smaller players, transparency from technology vendors is essential. However, many SMEs currently report receiving unclear or unreliable vendor emissions data, a gap they say must be addressed urgently.

Adopting science-based targets inclusive of Scope 3 and embedding decarbonisation into executive incentives also strengthen outcomes, as encouraged by the Science Based Targets initiative (SBTi).

For professionals on the ground, practical skills are as important as frameworks. Training in lifecycle assessment, familiarity with emissions factor databases, and experience in supplier engagement can differentiate an effective sustainability officer from one merely producing reports.

Increasingly, companies are embedding carbon literacy programmes across procurement and product development teams, ensuring Scope 3 awareness is not confined to a sustainability silo.

Furthermore, collaboration across industries is accelerating. Sector-based alliances, whether in fashion, aviation, or construction, are enabling competitors to share data standards and jointly pressure common suppliers to adopt lower-carbon practices.

Such collective action reduces duplication of effort and raises baseline expectations across supply chains.

For sustainability professionals, participating in these alliances offers both insight and influence, ensuring their organisations are not just reporting Scope 3, but actively shaping the ecosystem in which those emissions are produced.

By Abdulaziz Khattak