General
Why most companies get Scope 3 calculations wrong — and how to get it right
Misha Cajic
March 28, 2025
/
6
min read
For most companies, Scope 3 emissions make up the lion’s share of their total carbon footprint. According to CDP, they can account for over 75% of a company’s total emissions. Yet, despite the scale, this is where companies get it wrong most often — not because they aren’t trying, but because Scope 3 is complex by design. It reaches beyond a company’s walls, pulling in upstream suppliers, downstream customers, and everything in between.
Getting Scope 3 wrong means a false sense of progress, misaligned reduction targets, and exposure to regulatory and reputational risk. On the flip side, getting it right unlocks the kind of insight that drives serious decarbonisation and business value.
Here’s where most companies slip up — and what to do about it.
The most common misstep is relying too much on spend-based data to estimate emissions. Spend-based approaches multiply financial spend by industry-average emission factors, which can be a helpful starting point. But they don’t reflect what's actually happening in a company’s supply chain.
Why is that a problem? Because using broad financial proxies can mask carbon-intensive hotspots or understate the emissions tied to specific goods and services. Two suppliers offering the same service could have vastly different carbon footprints — and spend-based methods can’t tell the difference.
The fix is to use hybrid models. Start with spend-based data, but refine it with supplier-specific activity data or product-level emissions wherever possible. Prioritise high-impact suppliers or categories, and work your way out from there. It’s not about perfection — it’s about getting incrementally more accurate where it matters most.
Another common issue is cherry-picking categories. The GHG Protocol defines 15 Scope 3 categories, but many companies only report a handful — typically purchased goods and services, business travel, and employee commuting. Others, like use of sold products or capital goods, get ignored because they’re harder to measure.
This selective approach doesn’t just underreport emissions — it creates blind spots in decision-making. If a product’s downstream use drives emissions for years after the sale, or if capital goods like data centers or vehicles have high embedded emissions, excluding them skews the footprint and hides key levers for change.
Fixing this means mapping all 15 categories, even if some are estimated at a high level. It’s better to disclose an approximate figure with clear methodology than to leave a category out entirely. Transparency is more valuable — and more credible — than false precision.
Too often, Scope 3 is calculated once a year to meet reporting deadlines and then shelved until next time. This static view makes it impossible to track progress or respond to changes in real time — which is exactly what regulators, investors, and customers increasingly expect.
Emissions don’t stand still, and neither should your reporting. A company’s supply chain is dynamic, so Scope 3 data needs to be regularly updated and integrated into day-to-day decision-making. That includes procurement, supplier engagement, and product design.
The solution here is to treat Scope 3 as an ongoing data stream, not a snapshot. Build systems that allow for regular updates, automate data collection where possible, and connect your emissions data to operational metrics. This not only improves accuracy but turns your carbon data into a tool for strategy — not just compliance.
Scope 3 can’t be solved alone. Suppliers control a significant portion of a company’s footprint, especially in categories like purchased goods and services or transportation. But many companies don’t bring suppliers into the process early enough — or at all.
This leads to incomplete data, lack of buy-in, and missed opportunities for joint decarbonisation. If suppliers don’t understand what’s being asked, or don’t have the tools to measure their own emissions, the data will always be generic and outdated.
To fix this, start with engagement. Identify your most impactful suppliers and work with them to improve data quality. Offer training, tools, and incentives to support their decarbonisation journey. This is where collaborative platforms and supplier-specific questionnaires can really make a difference. The goal is to move from a transactional relationship to a shared commitment.
Finally, many companies present Scope 3 numbers as if they’re absolute — but in reality, the data often has significant uncertainty. That’s not a problem in itself. The issue is when uncertainty is hidden, leading to misplaced confidence in the results.
Different categories come with different levels of data quality. For example, upstream transportation data may come from detailed logistics records, while purchased goods might rely on average emission factors. Treating these two the same distorts your carbon narrative.
The fix is to be upfront about data quality and uncertainty. Use data quality scores, tiered confidence levels, or clear annotations to show where estimates are strong and where there’s room to improve. This transparency builds trust — with stakeholders, auditors, and your own teams.
Avarni helps leading companies automate, refine, and scale their Scope 3 reporting using real data from suppliers — not just financial estimates. Whether you're just getting started or refining mature emissions reporting, Avarni gives you the tools to go deeper, faster, and with confidence.
Get in touch to see how Avarni can streamline your Scope 3 data and unlock decarbonisation insights across your value chain.
