Scope 3 emissions are often the largest and most challenging part of carbon reporting and can feel too complex to address confidently. Scope 3 emissions are broken into 15 categories, encompassing indirect emissions from a company’s upstream and downstream supply chains, such as logistics and purchased goods and services.
Building a carbon reporting process that simplifies Scope 3 calculations and delivers meaningful business value starts with knowing where to focus. Featuring insights from our recent webinar, here are a few practical considerations to get Scope 3 calculations right, from the start.
1. Let Materiality Guide Scope 3 Priorities
Not every one of the 15 Scope 3 subcategories will be relevant to your business. Materiality is the principle that cuts through the noise—if a category contributes roughly 5% or more to total emissions, it’s likely material.
In practice, however, companies often focus on categories that feel intuitively important, such as business travel or employee commuting, rather than those that drive the largest share of emissions. The most efficient approach is to consider not only the most significant emitters but also industry benchmarks and emissions hotspots as you determine which categories make sense for your organization.
2. Be Cognizant of Common Scope 3 Reporting Mistakes
Companies new to Scope 3 calculations often run into two common challenges: misallocating resources and treating Scope 3 as a monolith. Organizations shouldn’t spend excessive time collecting data that doesn’t yet exist or may not be material.
Instead, focus efforts on the overlap between categories that are material to the business and those where data is readily available. Moreover, total Scope 3 figures are difficult to compare across years or companies unless the same subcategories are being measured using the same methodology. Analyzing emissions category by category and focusing on those most relevant to a business will produce far more defensible and useful results.
3. Start With Scope 3.1 Emissions (Purchased Goods and Services)
For many companies, Purchased Goods and Services (Scope 3.1) emissions represent the largest category of their carbon footprint, accounting for 80-90% of their total emissions. This category captures all upstream emissions associated with products and services procured to run a business, including office supplies and IT services.
Given its scale, Scope 3.1 is one of the most accessible categories for starting Scope 3 calculations. A spend-based method can pull relevant data from existing financial records, and these calculations can even surface which other Scope 3 subcategories are likely to be material, guiding future decarbonization priorities and leading to a more comprehensive carbon inventory.
4. Fill Data Gaps with Proxy Estimates—But Use Them Responsibly
When activity-based data isn’t readily available, proxy data can be useful to determine reasonable emissions estimates. Proxy data in carbon reporting refers to emissions estimates based on industry averages and spend-based emissions factors. It can offer directional insights into where emissions are likely to be concentrated and where measurement efforts should be prioritized, which are helpful for companies new to calculating Scope 3 or when direct data is unavailable.
However, estimates should be used sparingly and as a temporary measure—the goal should still be to replace proxies with granular, activity-based data over time. Transparency is also critical when using proxy data to fill gaps. Companies must clearly articulate and disclose the methodologies and assumptions used to estimate these proxies.
5. Good Documentation Supports Sustainable Reporting Processes
With carbon reporting being an annual exercise, robust documentation for complex Scope 3 calculations should not be overlooked. New systems and shifting responsibilities mean that institutional knowledge on carbon accounting may be easily lost between reporting cycles.
Documenting everything—from the collection methods used to data sources and how decisions were made—not only lays the groundwork for consistent, streamlined reporting, it also ensures your reports are audit-ready. Clear documentation leads to a repeatable, reliable reporting process, creating a foundation that can be progressively improved as systems and data mature.
6. Accelerate Carbon Reporting by Leveraging the Right Technology
Advancements in sustainability tools and carbon calculators have fundamentally changed how carbon reporting is done. Investing in the right solution for your needs will pay dividends by reducing manual work, improving data accuracy, and accelerating reporting efforts.
But technology shouldn’t completely replace human judgement and critical thinking. Decisions about materiality, data quality, and methodology still require contextual understanding of a business’ operations. Technology will continue to advance, and specialized carbon solutions, such as the Novata Carbon Navigator, can be powerful enablers for faster, accurate, and more transparent emissions reporting.
Scope 3 Reporting Doesn’t Have to Be Complex
Scope 3 emissions reporting is an iterative process that benefits from simply starting today. No first-year carbon inventory is perfect, and it doesn’t need to be. What matters is establishing your foundation with baseline calculations to build from, a process to refine, and a methodology to improve upon year after year.
If you need support with carbon reporting, Novata is here to help. Take a tour of the Carbon Navigator or learn more about how our expert advisors can support your business needs.
