Scope 3 emissions represent the largest and most complex share of most organizations’ carbon footprints, yet they are often the least understood. This piece breaks down the five core elements of a credible Scope 3 program, from materiality assessment through supplier engagement, and what it actually takes to build one that holds up to scrutiny.
For most organizations running a sustainability program, Scope 3 emissions represent their single largest area of climate impact and their most complex to address. These are the indirect emissions generated throughout a company’s value chain: upstream in the businesses that supply raw materials and services, and downstream in how products are used and disposed of at end of life. Depending on the industry, Scope 3 can account for 70% or more of an organization’s total carbon footprint.
Organizations that invest in building a Scope 3 program will find themselves with a genuine advantage over those that haven’t. This paper draws on our experience helping complex organizations build Scope 3 programs from the ground up and offers a practical framework for doing the same.
Any organization serious about climate action has to reckon with Scope 3. It is not a peripheral concern or a future obligation; it is, for most companies, the majority of the climate picture. Purchased goods and services, employee commuting, business travel, logistics, the use and disposal of sold products all fall under Scope 3, and together they typically dwarf what a company directly controls through its own operations and purchased energy.
Understanding that reality clearly is the starting point for any meaningful climate strategy. Your upstream Scope 3 emissions are, by definition, your suppliers’ Scope 1 and Scope 2 emissions, which means addressing them requires building real relationships across your value chain to get those suppliers on board. That relational dimension is one of the things that makes Scope 3 programs both interesting and hard.
On the regulatory side, the timeline is becoming more defined. California’s Climate Corporate Data Accountability Act (SB 253) requires companies doing business in California with annual revenues above $1 billion to publicly disclose Scope 3 emissions starting in 2027. Other frameworks are following. Beyond regulation, investor expectations around value chain transparency are growing more specific, and customers are increasingly asking for emissions data as part of procurement decisions. The organizations building Scope 3 infrastructure now will be meaningfully prepared; those that wait to build it under deadline pressure will face a harder road.
A well-built Scope 3 program has five foundational elements that work together. Getting each one right and understanding how they connect is what separates programs that generate real organizational value from those that produce a number for a sustainability report and little else.
Materiality Assessment
Before measuring everything, it is worth knowing where to focus. A materiality assessment identifies which of the 15 GHG Protocol Scope 3 categories are most significant for your specific business model, in terms of both emissions volume and potential for reduction. For a product-based company, purchased goods and services and use of sold products will likely dominate. For a services company, business travel and employee commuting may rank higher. Starting with a clear materiality picture means the measurement effort that follows is targeted and proportionate.
Baseline Inventory
The inventory is the foundation. It systematically categorizes and quantifies emissions across relevant Scope 3 categories, drawing on primary supplier data where available and defensible estimation methods where not. The GHG Protocol Scope 3 Standard is the only internationally accepted methodology for this work, and building your inventory to that standard ensures it will hold up to scrutiny as disclosure requirements evolve. Quality matters here: an inventory built on shaky assumptions will require rebuilding as expectations rise. Equally important is documenting where the data is strong and where it is thin. A clear picture of your gaps is what tells you where to invest in better data next cycle.
Supplier Engagement
Because Scope 3 is generated in your suppliers’ operations, engaging those suppliers is central to the work, both for data quality and for actual emissions reduction. That means designing the collection process around the supplier’s experience. Templates or platforms should be easy to understand, easy to complete, and repeatable across future inventory cycles. Each request needs structured communication explaining what is being asked for, why, how the data will be used, and when it is due. Suppliers will also need technical assistance in locating data and interpreting requests. And especially for a first inventory, reserve substantial time to review what comes back and return to suppliers with follow-up questions. Many will not provide what was asked for on the first submission, so plan for several rounds rather than one.
Target Setting
Once the baseline is established, setting reduction targets gives the program direction and accountability. Aligning Scope 3 targets with the Science Based Targets initiative (SBTi) Corporate Net-Zero Standard provides a credible, science-backed framework for doing so. SBTi-aligned targets carry weight with investors and regulators, and the SBTi validation process itself can surface gaps in how targets have been constructed. Building interim milestones rather than relying on a long-term 2050 target alone is what makes progress visible and manageable year-to-year. Crucially, target development requires internal stakeholder engagement and buy-in, so appropriate time can pass to communicate emissions results and set mutually agreed-upon goals. Targets also have to balance ambition against reality. Because most Scope 3 reduction depends on decisions made outside your own operations, a stretch goal your suppliers have not agreed to is not yet a plan.
Reporting
A program without reporting cannot demonstrate progress. Preparing Scope 3 data for disclosure, whether for regulatory purposes or investor communications, requires the same discipline as the inventory: consistent methodology, clear documentation, and an understanding of what the audience needs. Building reporting practices early, before they are required, is one of the more practical investments a program can make. Best-practice protocols and standards should be referenced when establishing initial reporting requirements.
There is much complexity between knowing what a Scope 3 program requires and walking the path of building one.
The technical challenges, including categorizing emissions, selecting calculation methods, and dealing with gaps in supplier data, are manageable with the right methodology and tools. The harder challenges are often organizational. Scope 3 data lives across an enterprise: in procurement systems, finance records, logistics and distribution data, product design files, and supplier relationships that sit outside the sustainability team entirely. Building a Scope 3 program without reaching into those functions does not work. The sustainability team can lead the effort, but they cannot own all the data.
Our work with Revelyst, a global outdoor recreation company with more than 30 brands under its umbrella, illustrates what large-scale complexity looks like in practice. The project encompassed over 100 global sites, thousands of unique products, and a multi-brand structure that meant different supplier relationships, product categories, and data systems across the entire portfolio.
What made it work was treating the engagement as an embedded partnership. We built relationships across the organization, with procurement, finance, and operational teams, rather than limiting the work to the sustainability function. We designed systematic, replicable data collection procedures from the start, so the process could be repeated and improved in subsequent reporting cycles. Because the supplier base spanned regions and languages, support had to be available on the supplier’s terms: office hours, on-demand help with specific data requests, and materials that worked for teams whose first language was not English. And we used data visualization tools to clean, calculate, and communicate complex emissions data in ways that were legible to stakeholders who were not sustainability specialists. The result was a comprehensive Scope 1,2 and 3 inventory that has served as the foundation for ongoing emissions work. The engagement has continued, because a well-built foundation is worth building upon.
An inventory tells you where you are. A roadmap tells you where to go and how to get there. The step from one to the other is where Scope 3 work becomes genuinely strategic, and where organizations begin to realize the full value of having built a credible baseline.
The roadmap starts with identifying highest-leverage intervention points across the value chain: which suppliers, facilities, product lines, or purchasing categories account for the greatest share of emissions, and where can targeted changes make the biggest difference? This is not always clear from the raw inventory data, which is why the analysis work done during inventory development matters so much for what comes next. Knowing which parts of the inventory rest on strong primary data and which rest on estimates is part of that analysis, because it tells you where to act now and where to improve the data first.
From there, supplier tiering becomes an active management tool. High-impact suppliers already engaged in their own sustainability programs are natural partners for collaborative reduction work. High-impact suppliers earlier in their sustainability journey may need sustained technical assistance to get there, including on-demand support with data requests, recurring office hours, and communication in a language and format their teams can use. Lower-impact suppliers can be managed through standard purchasing requirements. The tiering strategy should reflect both emissions significance and practical engagement capacity.
Interim milestones keep a long-term program honest. A 2050 net-zero target, standing alone, provides little guidance for decisions being made today. Milestones at 2027, 2030, and 2035, tied to specific supply chain improvements, product category changes, or supplier engagement benchmarks, connect the long-term goal to near-term operational decisions.
The roadmap should also be treated as a living document. As data quality improves, supplier relationships deepen, and market and regulatory conditions evolve, the roadmap should evolve with them. Turning targets into meaningful action is an ongoing process with no fixed end date.
Organizations sometimes approach Scope 3 as a cost of compliance, something to address because they have to. The evidence points to a more interesting picture.
McKinsey’s research on what they call “triple outperformers,” companies that achieve stronger growth and profitability than peers while also improving their sustainability and ESG metrics, found that these companies deliver two percentage points greater annual excess total shareholder return than companies excelling only on financial metrics. Between 2017 and 2021, more than half of triple outperformers achieved annual revenue growth above 10%, compared with fewer than one in four companies overall.
The compounding effect of building early is also real in ways that resist easy measurement. The supplier relationships developed through a serious Scope 3 engagement, the data infrastructure built to support a credible inventory, the cross-functional organizational capacity that grows through the process of doing this work are genuine assets. They take time to develop and are difficult for late movers to replicate quickly. Organizations that have been doing this work for three years when a regulatory deadline arrives will be in a materially better position than those starting from scratch under pressure.
Early, credible disclosure also builds trust with investors who are incorporating supply chain emissions into their assessments, with large customers managing their own Scope 3 obligations and looking to their supply chains for data, and with employees who care whether the organization’s climate commitments are substantive.
A successful Scope 3 program shares a set of recognizable characteristics, regardless of industry or organizational scale. These serve as both a development checklist and a useful benchmark for where a program should aim over time.
These are characteristics of a program working well and continuing to improve. Getting there requires methodical effort and genuine organizational commitment, and the organizations doing it well have found that the work itself, building the data infrastructure, deepening supplier relationships, and translating inventory into strategy, is where much of the value lies.
