Key takeaway
For most companies, Scope 3 is the largest part of the carbon footprint, often 70 to 95 percent of total emissions. CDP scores Scope 3 disclosure rigorously across 15 categories, demanding category-by-category coverage, screening evidence, methodology transparency, and engagement with the reasons certain categories are or are not material. This lesson explains the 15 categories, what CDP expects per category, and the screening discipline that turns "we cannot measure Scope 3" into a Leadership-tier disclosure.
The 15 categories at a glance
The GHG Protocol divides Scope 3 into 15 categories, eight upstream and seven downstream. For category-by-category methodology depth beyond what CDP scores, see our GHG Scope 3 course; for Category 15 (financed emissions) specifically, see our Financed Emissions course.
| Category | Direction | What it covers |
|---|---|---|
| 1. Purchased goods and services | Upstream | Cradle-to-gate emissions from everything you buy, except capital goods and fuel |
| 2. Capital goods | Upstream | Cradle-to-gate emissions from machinery, vehicles, plant equipment |
| 3. Fuel and energy related activities | Upstream | Upstream emissions of fuels and electricity you purchase (T&D losses, fuel extraction) |
| 4. Upstream transportation | Upstream | Logistics from suppliers to your facilities |
| 5. Waste in operations | Upstream | Waste disposal from your operations |
| 6. Business travel | Upstream | Air, rail, hotel, ground transport for employees |
| 7. Employee commuting | Upstream | Daily commute by employees |
| 8. Upstream leased assets | Upstream | Emissions from assets you lease (only if not in Scope 1+2) |
| 9. Downstream transportation | Downstream | Logistics from your facilities to customers |
| 10. Processing of sold products | Downstream | Emissions in further processing of products you sell as intermediates |
| 11. Use of sold products | Downstream | Emissions from customer use of your products (huge for vehicles, fuel, energy) |
| 12. End-of-life of sold products | Downstream | Disposal emissions from products at end of life |
| 13. Downstream leased assets | Downstream | Emissions from assets you lease to others |
| 14. Franchises | Downstream | Emissions from franchised operations |
| 15. Investments | Downstream | Financed emissions from equity and debt investments |
Not every category is material to every company. CDP's view is that you have to screen all 15 and disclose your screening result, even if you only quantitatively report on a subset.
Why screening matters
CDP does not require you to measure all 15 categories. CDP requires you to explain why any category is excluded.
The accepted reasons for exclusion:
- Not material. Below your screening threshold (typically 1-5 percent of total Scope 3).
- Not relevant. The activity does not occur in your business (e.g., no franchises, no leased downstream assets).
- Reported elsewhere. The category is captured under another scope (e.g., upstream leased assets that are already in Scope 1+2 if you operate them).
The unacceptable reasons:
- "We do not have data." This earns a non-disclosure penalty.
- "It is too hard to measure." Same penalty.
- No reason given. Worst penalty.
A scoring-quality screening table covers all 15 categories with a status: included, excluded as immaterial, excluded as not applicable, excluded as captured elsewhere.
Analogy
Think of Scope 3 screening like a tax deduction checklist. Not every line on the form applies to you, but you have to confirm that you considered each one. Skipping the line entirely is treated as evasion. Filling it as "not applicable" with a reason is what the system expects.
The categories most companies need to disclose
For a typical large company, the categories that carry most weight:
- Category 1 (Purchased Goods and Services). Almost always material. For consumer goods, often 60-80 percent of total Scope 3.
- Category 11 (Use of Sold Products). Material for any company selling energy-using products (vehicles, electronics, fossil fuels, equipment, fertilisers). Often dominates Scope 3 for these sectors.
- Category 4 (Upstream Transportation). Material for any company with a logistics-heavy supply chain.
- Category 6 (Business Travel) and Category 7 (Employee Commuting). Small in tonnage but easy to measure; CDP rewards inclusion.
- Category 15 (Investments). Critical for financial services. The PCAF methodology is the standard.
Sectors with specific category emphasis:
| Sector | Category that dominates |
|---|---|
| FMCG / Food | Category 1, 11 (cooking energy of food products) |
| Apparel | Category 1 (raw materials), 11 (washing/drying clothes) |
| Automotive | Category 11 (lifetime fuel use), 1 (steel, batteries) |
| Steel / Cement | Category 1 (raw materials), 11 (use in construction) |
| Oil and gas | Category 11 (combustion of sold products) - usually 80-95 percent of total |
| Financial services | Category 15 (financed emissions) - dominant |
| Real estate / Construction | Category 1 (embodied carbon in materials), 11 (operational use of buildings) |
Methodology by category
Each Scope 3 category has accepted methodologies:
- Category 1 (Purchased Goods). Spend-based (activity data times emission factor by industry, e.g., USEEIO, Exiobase) or supplier-specific (where suppliers provide their own emission data). Hybrid approaches are common.
- Category 11 (Use of Sold Products). Lifetime energy consumption per unit times emission factor. Requires assumptions about product lifetime and use patterns.
- Category 4 (Upstream Transportation). Distance-based (tonne-km times emission factor for mode) or fuel-based.
- Category 15 (Investments). PCAF Standard, with attribution factor calculations per asset class.
CDP rewards methodology transparency. The Leadership-tier disclosure for any category includes: methodology used, emission factor sources, data quality grade (primary vs secondary vs estimated), and confidence interval if applicable.
Where companies leak points
The recurring patterns:
- Reporting only Category 1 and 11. This caps Scope 3 disclosure at Awareness tier. Adding Categories 4, 6, 7 (which are easier to measure) lifts to Management tier.
- Spend-based only for Category 1. Spend-based is acceptable but caps Management tier. Moving to a hybrid (spend-based default plus supplier-specific for top suppliers) is the path to Leadership.
- No screening for excluded categories. Common pattern: a response covers 6 categories with detail, ignores the other 9. The grader penalises the silence on the 9.
- Inconsistency between Scope 3 categories and Module 1 value chain description. If Module 1 claims you have full Tier 2 visibility, Module 7 needs a primary-data-driven Category 1 to match.
Worked example
SaaSFood Ltd (synthetic, FMCG India). Year 1 to Year 3 progression.
Year 1: Reports Categories 1, 4, 6, 11. Spend-based for Category 1. Total Scope 3 = 1,200,000 tCO2e. Score: Awareness tier (covered key categories but methodology is basic).
Year 2: Adds Categories 5, 7, 12. All 15 categories now screened with status. Category 1 moves to hybrid (top 50 suppliers provide primary data). Score: Management tier.
Year 3: Categories 1 (primary data for top 80 suppliers), 11 (use-phase modelling for cooked products with sensitivity analysis), 4 (primary data from logistics partners), 12 (end-of-life with packaging recovery rates). Adds verification on Categories 1 and 11. Score: Leadership tier.
The progression took three years and added incremental data infrastructure each year. The principle: do not try to do everything in Year 1. Build category coverage and methodology depth over multi-year cycles.
Verification of Scope 3
CDP rewards Scope 3 verification, but recognises it is harder than Scope 1+2. The Leadership-tier signal is verification of at least the dominant categories (typically Category 1 and Category 11 for most sectors, Category 15 for FS).
Common practice: verify Categories 1 and 11 under ISO 14064-3 Limited Assurance, with the verifier noting data limitations and assumptions. Not every category needs to be verified at the same level. The grader rewards coverage of the most material categories.
Spend-based emission factors give you a number quickly but with high uncertainty (often 30-50 percent of inventory). Primary data from suppliers gives you better numbers but requires supplier engagement. CDP's view: the act of engaging suppliers is itself climate strategy, because it pulls supplier behaviour into your ecosystem. So the move from spend-based to supplier-specific Scope 3 data scores twice: once on methodology quality, once on supplier engagement. Most companies underestimate this dual benefit.
Key Takeaways
- The 15 Scope 3 categories must all be screened, with status disclosed (included, excluded as immaterial, not applicable, captured elsewhere); silence on a category is the worst answer
- Categories 1 and 11 dominate Scope 3 for most companies, with sector-specific patterns shaping which other categories are material
- Methodology choice matters: spend-based is acceptable but caps Management tier; supplier-specific or hybrid methods unlock Leadership tier
- Three-year progression (basic categories, full screening with hybrid methods, verified primary data) is realistic and credible to graders
- Verification of dominant Scope 3 categories (typically Category 1, 11, and 15 for FS) under ISO 14064-3 is the Leadership-tier capstone
Knowledge Check
Test what you just learned
6 questions · check each one as you go
How many Scope 3 categories does the GHG Protocol define?
What is CDP's expectation for screening Scope 3 categories?
True or false: 'We do not have data' is an acceptable reason to exclude a Scope 3 category.
Which Scope 3 categories typically dominate for an automotive company?
What unlocks Leadership tier on Scope 3 methodology?
Select all that apply
Match each sector to its dominant Scope 3 category.
Match each item to its pair
FMCG / Food
Automotive
Oil and gas
Financial services