Scope 3 Emissions: Challenging? Yes. Impossible To Reduce? No.

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Even if the US federal government has erased all references to it, climate change is a fact of human life. It’s on the minds of corporations — even if they don’t want to admit it — and emissions mitigation activities are quietly being unveiled behind closed corporate doors. One of the most intense areas of this corporate focus has been on comprehensive supply chain monitoring, especially Scope 3 emissions hotspots.

By zeroing in on emissions hotspots, businesses can strategically plan reduction efforts. This approach helps prioritize corporate actions, save resources, and improve overall mandatory reporting.

What are Scope 3 emissions? Scope 3 emissions are those produced by a company’s customers and supply chain — both upstream (before) and downstream (after) its own operations. They typically account for around 80% of a company’s carbon footprint. In some of the most polluting industries such as oil and gas, the number can be even higher. Only 5% of US companies report their Scope 3 greenhouse gas (GHG) emissions.

Does the US government require companies to report their Scope 3 emissions? Investors have been worried about the implications of Scope 3 transparency on their portfolios for a long time. The SEC responded in 2024 with a rule about climate disclosures that was severely diluted from an initial version. The SEC now requires a baseline transparency around climate risks and emissions, yet only “large accelerated filers” and “accelerated filers” must disclose Scope 1 and 2 emissions.

What are emission hotspots? Hotspotting is the process of locating specific geographic areas, industrial facilities, or operational processes that exhibit significantly elevated concentrations or rates of pollutant emissions. Emission hotspots are locations where pollutants are released, causing particle formation and growth. These are specific locations or stages within a material’s lifecycle where there is a heightened potential for the release of nanomaterials, and they exhibit significantly higher pollutant emissions compared to their surroundings. In other words, emissions hotspotting identifies the most insidious sources of greenhouse gas emissions within a company’s operations, products, or value chain.

What areas are most likely to exhibit Scope 3 emissions? Scope 3 emissions are categorized into 15 different areas, grouped under three main buckets:

• Upstream activities such as purchased goods and services, capital goods, transportation, and waste generated in operations;
• Downstream activities including the use of sold products, end-of-life treatment, and investments; and,
• Employee-related activities such as business travel and commuting.

What are some examples of Scope 3 emissions? Everything from purchased goods and logistics to product use and end-of-life disposal likely falls into the Scope 3 emissions range.

Upstream activities include purchased goods and services; capital goods; fuel- and energy-related activities not included in Scope 1 or Scope 2; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; and upstream leased assets.

Downstream activities include downstream transportation and distribution; processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; and investments.

How does a company identify the emissions hotspots in these areas? To assess Scope 3 emissions, it takes a melange of data acquisition and integration, virtual modeling and simulation, real-time monitoring and analytics, and predictive optimization capabilities. Often supported by specialized software, the identification and management of emissions hotspots are crucial for improving air quality and reducing the impact of localized pollution sources. Systems are designed to zero in on areas with concentrated pollution.

Why is identifying emissions hotspots so important? This identification is crucial for targeted environmental management, pollution control, and public health protection within a sustainability framework. It enables the efficient allocation of resources for monitoring, regulation, and remediation efforts. Pinpointing these hotspots is a strategic step in reducing overall environmental burden.

Where can companies start to reduce their Scope 3 emissions? It’s become evident that there are hotspots in Scope 3 for every industry in certain categories. When each industry conducts a materiality analysis, companies can focus on the categories or to start analyzing emissions in these areas. A materiality analysis not only reduces the overall scope but also identifies the main emissions and allows reduction measures with high savings potential to be developed.

What steps are involved? WeForum offers a series of pragmatic steps:

1. Start with materiality and emissions hotspots.
2. Improve data quality, not just data volume.
3. Develop supplier decarbonization strategies.
4. Embed Scope 3 disclosure into procurement governance.
5. Standardize and take collective action to overcome free-riding.
6. Consider technology as an enabler, not a silver bullet.

What happens once emissions hotspots are identified? Once sectors that stand out above others as emission hotspots, corporations have a responsibility to take adequate and appropriate action to substantially reduce these emissions. Yet the dilemma is clear: corporations have less direct control of Scope E emissions that do their suppliers, who make decisions how to produce inputs, how goods are transported, how products are used, and how they are ultimately disposed of at the end of life.

What are some approaches that have been tried to reduce supply chain Scope 3 emissions? The supply chain is a central intervention point for solving the climate crisis, making corporate climate performance dependent on the activities of suppliers and partners. All too often, corporations institute authoritative interventions in buyer–supplier relationships so that power and control over others is a top-down mechanism to enact change. Other interventions that are attempted try to prompt behavioral changes in suppliers — that is, modifying their beliefs, attitudes, or willingness to reduce their emissions. Some corporations try to push operational changes like modifying products, processes, or technologies. Collaborative interventions, in which mutual trust and shared goals, seem to be a complex yet efficacious way to reduce Scope 3 emissions.

How can a corporation share what they’ve learned about Scope 3 emissions? Tackling Scope 3 emissions can include collecting stronger data, offering a helping hand to suppliers as they begin to decarbonization, linking disclosure to procurement, making reporting standardized across industries, and utilizing technology.

What does a streamlined approach look like? A streamlined action approach needs the buy-in and support of companies, suppliers, policymakers and researchers. Stakeholders can work together to share data, identify emission hotspots, and develop joint mitigation strategies, reducing overall GHG emissions. This can include establishing supplier education programs, engaging in mutual knowledge sharing, informing about future regulations, supporting renewable energy adoption, providing financial incentives, and using shadow prices in contracts with partners — showing the cost of products with and without their emissions.

Resources

“Category-specific benchmarking of Scope 3 emissions for corporate clusters.” Nadja Buchenau, et al. Renewable and Sustainable Energy Reviews. February 2025.

“From reporting to results: How companies can finally cut Scope 3 emissions.” Temidayo Akenroye and Hushneara Begum. WeForum. April 10, 2026.

“Taking academic ownership of the supply chain emissions discourse.” Andreas Wieland and Felix Creutzig. Journal of Supply Chain Management. January 9, 2025.