Scope 3 emissions are divided into upstream or downstream sources according to the Greenhouse Gas protocol. Scope 3 emissions refer to value chain, or indirect emissions and can account for up to 90% of businesses’ emissions.
For a comprehensive report of their emissions, companies should distinguish between upstream and downstream sources of scope 3 emissions. Upstream emissions originate from production of a service or product, while downstream emissions come from a product’s use or disposal.
These emissions are often considered the most difficult to measure and manage, since they often involve gathering information from third parties like suppliers or customers.
In this article, we will look at different examples of upstream and downstream emissions, and how you can start measuring them effectively.
What are upstream emissions?
Upstream emissions are all the emissions that provide a company with goods or services that it has paid for.
For instance, an employee’s commute to the office would be classified as upstream emissions, since the commute is needed to produce the company’s goods or services.
Similarly, if a company uses paper to create a product, all the emissions resulting from the production and transportation of the paper would be classified as upstream emissions.
There are eight upstream emissions categories, as defined by the Greenhouse Gas protocol:
| Upstream emissions type | Description |
|---|---|
| Purchased goods and services by your company | Extraction, manufacturing, and transportation of company-purchased or acquired items and services |
| Capital goods | The extraction, manufacturing, and transportation of purchased or acquired assets by a company |
| Fuel and energy use | The extraction, manufacturing, and transportation of fuels and energy that would not already be accounted for when measuring scope 2 or scope 3 emissions |
| Upstream transport and distribution | Transportation and distribution of a company’s purchased products, along with other logistics and transport services such as supply chain services, outbound logistics, and transportation between company facilities |
| Waste generated in company operations (external to in-house waste management facilities, if any) | The emissions produced by the disposal and treatment of waste generated in the company’s operations. These emissions do not refer to emissions in facilities owned or controlled by the company |
| Business travel | The movement of employees for business-related activities in vehicles not belonging to the company |
| Employee commuting | The movement of employees from their home to their workplace in vehicles not belonging to the company |
| Upstream leased assets | Any assets leased by the company that fall outside of scope 1 or 2 emissions |
A more technical guide on calculating scope 3 emissions can be found here.
What are downstream emissions?
Downstream emissions refer to the emissions created from using or disposing of a company’s product or service.
For instance, if a company makes cars, the emissions that result from using those cars would be considered downstream emissions.
| Downstream emissions type | Description |
|---|---|
| Downstream transportation and distribution | The emissions produced to deliver and distribute products sold by the company to the company’s operations and to consumer |
| Processing of sold products | The processing of products sold by third parties |
| Use of sold products | The final use of the goods or services sold by downstream companies |
| End-of-life treatment of sold products | The emissions produced by waste disposal or treatment of the company’s products |
| Downstream leased assets | The emissions created by the company’s leased assets to other individuals or organisations |
| Franchises | Any emissions created by the operation of franchises that were not included in scope 1 or 2 |
| Investments | The emissions created by the operation of investments, including debt investments or financing of projects |
A more technical guide on calculating scope 3 downstream emissions can be found here.
Understanding the difference
It can be difficult to determine which scope 3 emissions fall under upstream or downstream emissions.
However, classifying your emissions in this way will help a company identify the largest sources of its emissions, leading the company to target its reduction efforts more effectively.
A company can determine whether scope 3 emissions are upstream or downstream by looking at one variable: whether the company or the consumer paid for the goods or service.
Why knowing the difference between upstream emissions and downstream emissions is important
Ultimately, knowing scope 3 emissions will become more important as reporting obligations become more stringent and businesses are held more accountable.
Businesses can only reduce their carbon emissions across all operations if they include scope 3 into their plan.
However, scope 3 emissions are notoriously difficult to reduce, because this reduction depends on third parties. For instance, reducing the emissions from the transportation and distribution of a company’s purchased products depends on the third parties delivering these products.
This means that it is important for companies to selectively choose which materials or vendors they rely on for production, since these now influence the company’s own environmental reports and carbon reduction efforts. In these cases, working with sustainability consultancy teams can be beneficial as they help companies identify opportunities for better supply chain decisions.
Reporting upstream and downstream emissions
The first step to report upstream and downstream emissions is to identify the sources of the emissions and calculate them in detail. This can seem overwhelming and time-consuming for a company to do alone.
At ClearVUE.Business, we track, calculate, and report environmental data in minute detail. Our industry leading tech platform, ClearVUE.Zero, measures carbon and energy consumption and costs. This will help you cut down on bills while meeting reporting requirements.
Get in touch today to find out more.
