The Greenhouse Gas Protocol sets the standard for greenhouse gas accounting. It divides the Scope of a company’s emissions into three categories. Scope 1 and Scope 2 are relatively easy for most people to understand and measure. But Scope 3 emissions can be more confusing. They pose a challenge for companies trying to assess their impacts and for concerned consumers evaluating the companies they choose to support. However, we need to understand the Scope 3 emissions because they often represent the most significant impact.

Climate concerns are now driving corporate accountability, and a new landscape of emissions reporting is emerging that will fundamentally change how consumers understand the environmental impact of their purchases. While recent regulatory developments have shifted the reporting landscape, Scope 3 emissions remain the most significant component of most companies’ carbon footprints—and the most directly connected to consumer choices.

Scoping Emissions

The first two categories, Scope 1 and Scope 2 emissions, refer to direct and indirect greenhouse gas emissions, respectively. Scope 1 accounts for the emissions generated by the factories that make a company’s products, the furnaces that heat their offices, and the vehicles that they operate in the course of their work. Companies do not directly generate Scope 2 emissions, but they have some control over them through their energy consumption. Scope 2 provides an inventory of emissions from the power source that supplies a company’s electricity, heating, and cooling needs.

Scope 3 Emissions

The final category, Scope 3 emissions, is even more indirect than Scope 2. A company does not have direct control over Scope 3 emissions. It is, however, complicit in their generation. Suppliers and customers generate Scope 3 emissions. The supplier that provides raw materials for a company’s products produces greenhouse gas (GHG) emissions during harvesting and delivering those materials. The company performing the inventory does not have control over those processes. But by creating demand for the materials, it has contributed to the supplier’s emissions.

By the same token, when a customer uses a product manufactured by the company performing the inventory, it is the customer, not the company, that generates emissions. The product design affects how efficiently the product operates, and if the company didn’t make the product, the customer would not have been able to generate those emissions at all.

For most businesses, Scope 3 emissions account for more than 70% of their total carbon footprint, according to consulting firm Deloitte. These emissions fall into 15 categories defined by the Greenhouse Gas Protocol, including purchased goods and services, business travel, employee commuting, and—most relevant to consumers—the use of sold products. When you buy a smartphone, drive a car, or even purchase clothing, you’re contributing to Scope 3 emissions throughout that product’s lifecycle.

Major Regulatory Shifts in 2024-2025

SEC Removes Scope 3 Requirements

In a significant departure from earlier proposals, the U.S. Securities and Exchange Commission finalized climate disclosure rules in March 2024 that eliminated mandatory Scope 3 emissions reporting for public companies. The final SEC rule only requires large accelerated filers and accelerated filers to report material Scope 1 and Scope 2 emissions, removing what would have been the most comprehensive value chain emissions disclosure requirement at the federal level.

This change means that while companies must report direct emissions from their operations (Scope 1) and emissions from purchased electricity (Scope 2), they are not required to disclose the upstream and downstream emissions that most directly impact consumers. The SEC’s decision was the result of extensive corporate lobbying, which complained about the difficulty and cost of tracking complex supply chain emissions.

California Leads with Comprehensive Requirements

While federal requirements have been scaled back, California is moving forward with the most ambitious corporate climate disclosure laws in the United States. Senate Bill 253 (SB 253), the Climate Corporate Data Accountability Act, requires companies with annual revenues exceeding $1 billion that conduct business in California to publicly disclose all Scope 1, 2, and 3 emissions starting in 2026.

This law affects thousands of companies nationwide, with an estimated 5,400 entities, because California’s economy is the fifth-largest in the world. The California Air Resources Board (CARB) will oversee implementation, with Scope 3 emissions reporting required to begin in 2027 for data from 2026.

For consumers, this means unprecedented transparency into the full carbon footprint of products from major companies selling in California, creating a potential model for corporate disclosure nationwide.

The EU’s Digital Product Passport Revolution

While the U.S. debates environmental responsibility, the most significant development in emissions transparency is the European Union’s Digital Product Passport (DPP) initiative, which began implementation in 2024 under the Ecodesign for Sustainable Products Regulation (ESPR).

Starting in 2026, textiles and footwear sold in the EU must include a digital passport—accessible via QR codes or RFID tags—containing comprehensive environmental information, including carbon footprint data. This digital record will provide consumers with:

• Product-specific carbon footprint from raw material extraction through manufacturing
• Supply chain transparency and sourcing information
• Guidance on repairability, reusability, and recyclability
• Instructions for responsible end-of-life disposal

The DPP represents a fundamental shift toward “measure once, report everywhere” transparency, giving consumers direct access to the environmental impact data of their purchases. Companies like XD Connects are already implementing lifecycle assessment tools that calculate and publish carbon emissions for each product in their catalogs.

How Consumers Drive Scope 3 Emissions

Understanding your role in Scope 3 emissions helps explain why corporate reporting matters for individual environmental impact. Every purchase decision contributes to emissions in multiple categories.

Purchased Goods and Services

When companies buy materials and services to create products, those embodied emissions, the result of extracting raw materials and making the parts and components of a final product, become part of their Scope 3 inventory. Consumer demand drives this category, as companies source materials based on anticipated sales.

Use of Products

How you use a product, especially one that requires fuel or electricity, makes a big difference to its total impact. This category of Scope 3 emissions reflects consumer behavior. For electronics, this includes electricity consumption during use. For vehicles, it’s the fuel burned while driving. The EPA has developed online tools to help retailers benchmark these emissions and project reductions based on the sale of energy-efficient products.

End-of-Use

How consumers dispose of products—whether through recycling, landfilling, or incineration—creates emissions that companies must now account for. This creates incentives for companies to design products with circularity in mind and provide clear guidance on disposal.

Why Companies Inventory Scope 3 Emissions

A previous article on emissions scoping looked at two recent sustainability reports from giants in their respective industries: the winery E. & J. Gallo and the cruise line Carnival Corporation. Neither report presented strategies to reduce Scope 3 emissions. Even companies making significant changes to reduce their impact will often delay addressing Scope 3 emissions because they are the most challenging to measure and change. Even though Scope 3 frequently contributes the lion’s share to a company’s total emissions territory, it makes sense to focus initial efforts on things directly under a company’s control.

A company performing an emissions inventory cannot harvest raw materials in place of its supplier or dictate the customer’s use of its products. However, companies are not powerless to affect Scope 3 emissions. There are opportunities to influence both upstream and downstream processes to reduce emissions. A company can stipulate relevant, sustainable certifications in its sourcing contracts or pursue vertical integration of operations to expand its control over upstream processes. It can design new products or redesign old ones for energy-efficient operations and recyclability at the end of use.

Understanding emissions scoping makes it easier to distinguish between a meaningful sustainability report and one that’s simply greenwashing. With enhanced regulatory scrutiny and increased consumer awareness, companies are being held increasingly accountable for the impact of their entire value chain.

Reducing Scope 3 Emissions

Despite having only indirect control, Scope 3 emissions present the greatest opportunity for change. In its 2023 sustainability report, Carnival Cruise Line stated that Scope 3 emissions contributed half of its total emissions inventory. Although Carnival did not publish the details, it’s easy to guess some of the categories and methods the company could use to make a difference. For example, it could reduce upstream Scope 3 emissions by sourcing its food from organic growers. Downstream Scope 3 emissions could be reduced by arranging or promoting offshore excursions powered by electric vehicles (EVs) instead of diesel buses.

These indirect actions can make a huge impact. Although the Gallo report did not address Scope 3 at all, a study of wineries in Germany found that glass bottles purchased by a winery (whose manufacture generates Scope 3 emissions) were a major factor in the carbon footprint of wine production. By reusing glass bottles, wineries could reduce their total emissions by nearly a third.

When companies prioritize low-carbon products, they respond by demanding better emissions data and reduction commitments from their suppliers. Recent surveys indicate that 83% of businesses now evaluate vendors based on sustainability metrics, driven partly by consumer expectations.

The Consumer Opportunity

With enhanced transparency brought about by regulations such as California’s SB 253 and the EU’s Digital Product Passport, consumers will gain unprecedented access to information on their carbon footprints. This creates several opportunities to make a difference when shopping, in the community, and as a citizen.

Market Transformation

Organizations like Harvard University are leveraging their purchasing power to drive market transformation, prioritizing six Scope 3 categories, including construction, food, and information technology, based on where their purchasing decisions can have the largest global impact.

What to Expect in 2025 and Beyond

The regulatory landscape for Scope 3 emissions is evolving fast, with significant implications for consumer access to carbon footprint information:

• July 2025: California’s CARB must finalize regulations implementing SB 253, providing clarity on reporting requirements
• 2026: First digital product passports launch for EU textiles and footwear
• 2027: California Scope 3 emissions disclosures begin, affecting thousands of major companies

While federal requirements have been scaled back, the combination of state-level mandates and international regulations, such as the EU’s DPP, is creating a new era of supply chain transparency. Companies operating globally face increasing pressure to provide consistent emissions data across all markets.

Emissions 3 and Me

Understanding emissions scoping makes it easier to tell the difference between a meaningful sustainability report and one that’s simply greenwashing. However, it’s also valuable for consumers to remember that the use phase of a product’s lifecycle often has a greater environmental impact than manufacturing.

To reduce your emissions, pay attention to product design when you shop. Choose products that are designed to be reused, repaired, or recycled over those that can only be replaced. When shopping for items like appliances or power tools, look for ones that have energy-efficient options or use less-polluting fuels. And let companies know you are paying attention – you can encourage companies to be more sustainable.

As more Scope 3 emissions data becomes available, consumers can use this information to:

1. Compare products based on lifecycle carbon footprints, not just purchase price
2. Support companies that demonstrate supply chain transparency and reduction commitments
3. Make informed decisions about product use and disposal to minimize personal contributions to Scope 3 emissions
4. Advocate for stronger disclosure requirements in regions without comprehensive regulations

Mandatory Scope 3 disclosure represents more than a new regulatory compliance requirement. We are seeing a fundamental change in how companies account for their environmental impact. While the path forward varies by state and across nations, greater transparency in supply chain emissions will give consumers unprecedented insight into the true carbon impact of their purchases.

 Editor’s Note: Originally published on May 18, 2023, this article was substantially updated in June 2025.