The Evolving Landscape of Scope 3 Emissions Reporting (2025)
Most big companies now know that their Scope 3 emissions — the ones from their value chains — are often far larger than the emissions from their own operations. In many industries, Scope 3 makes up 70% to 90% of total emissions. Yet for years, these emissions went mostly unreported. That’s quickly changing. Investors, regulators, and customers across the U.S., U.K., and E.U. are demanding more clarity. And a web of new standards is turning Scope 3 disclosure from a nice-to-have into a must-do.

Understanding Scope 3
The Greenhouse Gas Protocol divides emissions into three buckets: Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions across a company’s value chain). More details: GHG Protocol Scope Definitions.

Who’s Driving Scope 3 Reporting?

• GHG Protocol: The gold standard for emissions accounting. It defines 15 categories of Scope 3 emissions and is used by nearly every major disclosure framework. Updates due by 2027 will push for stricter rules, better data, and fewer generic estimates (GHG Protocol Updates).
• TCFD: Since 2017, it’s encouraged companies to disclose emissions in all three scopes where material. The U.K. and Japan have made TCFD reporting mandatory for large firms (TCFD Recommendations).
• ISSB (IFRS S2): A global baseline for climate disclosure, it requires Scope 3 reporting. CDP, one of the largest environmental disclosure platforms, has aligned its questionnaires with ISSB, making Scope 3 disclosure more routine (IFRS S2 Climate Disclosure).
• GRI: It has long required Scope 3 reporting under GRI 305 and updated its climate standards in 2025 to align with the GHG Protocol and ISSB (GRI Climate Standards).
• SBTi: Any company seeking science-based targets must measure and reduce Scope 3 if it makes up more than 40% of their total footprint. Over 5,000 companies have joined (SBTi Criteria).
• EcoVadis: Popular with procurement teams, it scores suppliers on how they manage their emissions, including Scope 3 (EcoVadis Carbon Rating).

From Voluntary to Mandatory
Governments are stepping in:

• U.S.: The SEC backed off from mandating Scope 3, but California didn’t. Starting in 2027, companies with $1B+ revenue operating in California must report Scope 3 emissions. There’s a grace period until 2030 for data accuracy (California SB 253 Overview).
• U.K.: After years of encouraging Scope 3 reporting, the country is preparing to mandate it through new UK Sustainability Disclosure Standards (UK SRS), aligning with ISSB. Full Scope 3 disclosure is expected by FY2027 (UK SRS Draft).
• E.U.: The most aggressive. Under the Corporate Sustainability Reporting Directive (CSRD) and its ESRS standards, Scope 3 reporting is mandatory for many companies starting in 2025. Companies must also provide data quality assessments and obtain limited assurance from auditors (ESRS E1 Standard).

What’s Changing on the Ground?

• Data Quality: Frameworks are cracking down on vague estimates. Companies are moving toward primary, supplier-specific data. Tools like ERP modules, blockchain, and platforms like PACT are making this easier (PACT Initiative).
• Supplier Engagement: Firms are training suppliers, setting climate expectations, and forming industry coalitions to cut emissions.
• Standard Convergence: With GRI, CDP, and ISSB aligning, companies can often use the same data to meet multiple requirements.
• Global Consistency Pressure: Multinational firms must meet the strictest standards across jurisdictions. Many are treating EU-style Scope 3 reporting as the global benchmark.

Challenges
Getting Scope 3 right isn’t easy. Data gaps, supplier cooperation, and overlapping rules can overwhelm teams. But most Scope 3 emissions come from a few key areas (like purchased goods or product use). Targeting those first makes a big difference. Frameworks recommend starting with best estimates and improving over time.
The Bottom Line
In 2025, Scope 3 reporting is no longer optional. It’s fast becoming a core part of corporate climate strategy. Companies that don’t get a grip on their value-chain emissions risk falling behind on investor expectations, legal compliance, and customer trust. The tools are here. The standards are aligned. The time to act is now.