Upstream vs Downstream Scope 3: What Suppliers Need to Know
The 15 Categories of Scope 3
The GHG Protocol Corporate Standard divides Scope 3 emissions into 15 categories, split between two groups:
Upstream activities (Categories 1–8): emissions related to purchased goods and services, activities that feed into your business Downstream activities (Categories 9–15): emissions related to products and services you sell, activities that leave your business
Understanding which side of the line each activity sits on is essential for accurate reporting — and for understanding which categories your clients are asking about when they send you a supplier questionnaire.
Upstream Scope 3 Categories (1–8)
| Category | Description | Typical materiality |
|---|---|---|
| ---------- | ------------- | --------------------- |
| 1. Purchased goods & services | Emissions embodied in everything you buy | Very high for manufacturers |
| 2. Capital goods | Emissions from equipment, buildings, machinery purchased | Medium for asset-heavy businesses |
| 3. Fuel & energy (WTT) | Upstream extraction of fuels you combust | Auto-calculated from Scope 1 data |
| 4. Upstream transport | Transport of goods you buy, from suppliers to you | High for distribution companies |
| 5. Waste in operations | Disposal of waste generated at your sites | Low-medium, easy to calculate |
| 6. Business travel | Flights, hotels, rail for employee work travel | High for service companies |
| 7. Employee commuting | Transport between home and regular workplace | Medium for most companies |
| 8. Upstream leased assets | Emissions from assets you lease but don't own | Medium for building tenants |
Downstream Scope 3 Categories (9–15)
| Category | Description | Typical materiality |
|---|---|---|
| ---------- | ------------- | --------------------- |
| 9. Downstream transport | Delivery of your products to customers | High for product companies |
| 10. Processing of sold products | Emissions when customers process your product | High for ingredient suppliers |
| 11. Use of sold products | Emissions when customers use your product | Very high for fuel, vehicle manufacturers |
| 12. End-of-life treatment | Disposal of your products after customer use | Medium for packaging, electronics |
| 13. Downstream leased assets | Emissions from assets you lease to others | Property, equipment lessors |
| 14. Franchises | Emissions from franchisee operations | Franchise businesses only |
| 15. Investments | Emissions from investee companies | Financial services only |
Which Categories Apply to SME Suppliers?
Most SME suppliers are asked to report upstream categories — specifically what flows *into* their business. Here is the practical guide by company type:
Service companies (consultancy, IT, finance): - Priority: Categories 1, 2, 3, 6, 7 - Category 11 (use of sold products) is near-zero — services have minimal downstream emissions
Manufacturing SMEs: - Priority: Categories 1, 2, 3, 4, 5, 6, 7 - Category 11 may be material depending on what you manufacture
Logistics and distribution: - Priority: Categories 1, 3, 4, 6, 7, 9 - Category 4 and 9 often the largest — transport is both upstream input and downstream output
Food processors and ingredient suppliers: - Priority: Categories 1, 3, 5, 6, 7, 10 - Category 1 (agricultural raw materials) usually dominant
Why Buyers Focus on Your Upstream Categories
When your enterprise client sends you a supplier questionnaire, they are building their own Scope 3 Category 1 inventory — the emissions embedded in their purchased goods and services. Your total Scope 1 + 2 + key Scope 3 emissions are what sits in *their* Category 1.
- This is the fundamental cascade of CSRD Scope 3:
- Large company measures its Category 1 using your data
- They send you a questionnaire to get your verified Scope 1 + 2 + 3 total
- Your total becomes an input to their Category 1 spend-based or supplier-specific model
Understanding this cascade explains why buyers ask for your *complete* GHG inventory — not just your energy bills.
The Boundary Question: What Is In and Out of Scope 3?
The GHG Protocol requires companies to include all material Scope 3 categories. Materiality is assessed relative to total corporate emissions — a category representing less than 1% of total Scope 1+2+3 may be excluded with justification.
- For most SMEs, the practical approach is:
- Calculate Categories 3, 5, 6, and 7 (easiest, covered by DeCarbonOPS)
- Add a spend-based estimate for Category 1 if feasible
- Note any material downstream categories specific to your sector
- Clearly state which categories are included and which are excluded with reasons
A well-documented partial Scope 3 inventory with clear methodology is more credible than a claimed-complete inventory with weak data.
Frequently Asked Questions
What is the difference between upstream and downstream Scope 3?
Upstream Scope 3 (Categories 1–8) covers activities and purchases that feed into your organisation — what you buy, who you employ, how they travel, what you discard. Downstream Scope 3 (Categories 9–15) covers what flows out of your organisation — products sold, downstream transport, how customers use and dispose of your products. The boundary is your organisational gate.
Which Scope 3 categories do SME suppliers most often need to report?
Most supplier questionnaires request upstream categories: Category 1 (purchased goods), Category 3 (upstream fuel WTT), Category 5 (waste), Category 6 (business travel), and Category 7 (commuting). DeCarbonOPS calculates Categories 3, 5, 6, and 7 automatically. Category 1 requires spend data; Categories 9–15 are rarely requested from SME suppliers unless they are product manufacturers with significant downstream emissions.
Why do enterprise buyers want to know my total Scope 1+2+3 emissions?
Your total Scope 1+2+3 emissions sit in your buyer's Scope 3 Category 1 (purchased goods and services). When they calculate what proportion of their Scope 3 comes from their supply chain, your verified total is one of the inputs. This is the cascade mechanism behind CSRD Scope 3 reporting — large companies need accurate supplier data to report their own Category 1 under ESRS E1.
Do I need to report all 15 Scope 3 categories?
No. The GHG Protocol requires you to include all material Scope 3 categories but allows exclusion of immaterial ones with justification. For most SMEs, a complete inventory covers Categories 1, 3, 5, 6, and 7 as a minimum. Categories 9–15 (downstream) are only material if you manufacture products with significant downstream use-phase emissions (Category 11) or high downstream transport volumes (Category 9).
What does 'Category 3 — upstream fuel and energy' mean and how is it calculated?
Category 3 covers the well-to-tank (WTT) emissions from extracting, processing, and transporting the fuels you combust in Scope 1. DEFRA 2023 publishes WTT factors: natural gas 0.376 kgCO2e/m³, diesel 0.641 kgCO2e/litre, petrol 0.587 kgCO2e/litre. DeCarbonOPS calculates Category 3 automatically from your Scope 1 fuel inputs — no extra data entry required.
Ready to get your Carbon Passport?
Generate a verified carbon report in 20 minutes — free for your first annual report. Accepted by SAP Ariba, Coupa, and enterprise procurement teams across the EU.
Get started free