What Counts (and What Doesn't) in Your Scope 3 Emissions for SBTi?

Many organisations recognise that Scope 3 emissions (emissions from sources not directly owned or controlled by the company) make up the majority of greenhouse gas emissions. In some cases, this represents between 70 and 90% of an organisation’s total corporate emissions. Yet when it comes to factoring scope 3 emissions for alignment with the Science Based Targets Initiative (SBTi), there is still confusion about what actually “counts” towards an SBTi-compliant target, what can legitimately be excluded and where offsets or “avoided emissions” fit in (or don’t). Getting this wrong can delay validation, undermine credibility and leave transition plans full of blind spots.

What are Science Based Targets?

Science based targets are emissions reduction goals in line with climate science, designed to limit global temperature rise to 1.5°C. The SBTi has become the de-facto global benchmark, with more than 9,000 companies using the SBTi framework to set validated targets as of 2025. This momentum means SBTi criteria and SBTi guidance are increasingly shaping how boards think about climate risk, capital allocation and supply-chain management.

The SBTi Corporate Net-Zero Standard distinguishes between:

• Near-term targets (5 to 10 year horizons) to drive immediate cuts.
• Net-zero targets that require at least a 90% reduction in emissions by no later than 2050, with only truly residual emissions neutralised via removals.

Alongside climate, science-based targets for nature are emerging through the Science Based Targets Network (SBTN), which encourages companies to integrate nature, water and biodiversity into the same strategic conversation as net-zero emissions.

Learn More: Set Science-Based Targets for Net Zero Goals | Tunley Environmental

What are Scope 3 Emissions in Practice?

Under the GHG Protocol Corporate Value Chain Standard, Scope 3 covers all other indirect emissions that occur in the value chain, both upstream and downstream. These are split into 15 categories, including:

• Purchased goods and services
• Capital goods
• Fuel and energy-related activities not already captured in Scopes 1 and 2
• Upstream and downstream transport and distribution
• Waste generated in operations
• Business travel and employee commuting
• Upstream and downstream leased assets
• Use of sold products and end-of-life treatment of sold products
• Franchises and investments

Categories like purchased goods and services, capital goods and use of sold products dominate total scope 3 emissions for many manufacturers. The core challenge is translating them into a robust, decision-ready inventory that both meets the GHG Protocol boundary and aligns with SBTi rules on scope 3 emissions targets.

SBTi’s Minimum Expectations for Scope 3

Several SBTi criteria determine whether scope 3 emissions for SBTi are in line with its standards. Three are particularly important.

1. When a Scope 3 Target is Mandatory

The SBTi requires a scope 3 target if Scope 3 accounts for 40% or more of total Scope 1, 2 and 3 emissions. In reality, this captures “the vast majority of companies”, as value-chain emissions typically dominate a company’s carbon footprint.

2. Coverage Thresholds

Current criteria for near-term targets require that:

• Organisations must set one or more Scope 3 reduction and/or supplier/customer engagement targets.
• These targets must collectively cover at least 67% of total reported (and relevant, but temporarily excluded) Scope 3 emissions, using the minimum boundary for each category.

For net-zero (long-term) targets, recent commentary around the draft Corporate Net-Zero Standard 2.0 confirms that companies are expected to address around 90% of Scope 3 over the long term, further tightening the focus on deep decarbonisation along the value chain. In other words, it is not sufficient to cherry-pick one or two “easy” categories. A credible approach to scope 3 emissions for SBTi must cover most of the value-chain footprint and demonstrate meaningful ambition.

3. Data Quality and Improvement Over Time

SBTi allows companies to use a mix of:

• Spend-based estimates (emission factors per unit of spend)
• Activity-based data (e.g. kWh, tonnes, kilometres)
• Supplier-specific primary data, where available

However, both SBTi and wider best practice expect organisations to improve the quality of their Scope 3 data over time, moving from spend-based approximations towards more granular, supplier- and product-specific information. For many firms, this means starting with high-level coverage to meet thresholds, then systematically upgrading the integrity of scope 3 emissions for SBTi through supplier engagement, new systems and targeted data projects.

What Definitely Counts in Your Scope 3 for SBTi

From an SBTi perspective, several elements are non-negotiable when constructing a Scope 3 inventory and related targets.

Emissions within the GHG Protocol category boundaries

SBTi explicitly expects companies to use the GHG Protocol Scope 3 Standard as the basis for their calculations and to apply the minimum boundary for each relevant category.

In practice, that means:

• Including all purchased goods and services, not just direct materials. This often covers professional services, IT, marketing and more.
• Counting capital goods (e.g. machinery, buildings, infrastructure) based on embodied emissions.
• Capturing fuel and energy-related emissions beyond direct combustion and electricity (such as upstream extraction and transmission losses).
• Accounting for third-party logistics, warehousing and distribution where they are not covered in Scope 1 or 2.
• Including waste treatment emissions for operational waste.
• Treating business travel and employee commuting as in scope, where material.

For many organisations, these categories together will already exceed the 67% coverage requirement. However, SBTi expects an evidence-based rationale for which categories are considered not relevant or immaterial. Simply omitting inconvenient data does not align with SBTi guidance.

Material downstream impacts

Downstream categories are sometimes treated as optional, but they are a central part of scope 3 emissions targets in many sectors. Examples include:

• Use of sold products, especially for energy-using products (vehicles, appliances, industrial equipment, IT).
• End-of-life treatment of sold products, particularly where products are short-lived or waste-intensive.
• Downstream transport and distribution, including retail, where the company controls logistics or contracts them.
• Leased assets, franchises and investments, which are central to retail, hospitality, franchised brands and financial institutions.

For consumer goods or automotive manufacturers, use-phase emissions often dwarf operational emissions many times over. Excluding them from scope 3 emissions for SBTi would be very difficult to justify in a validation process.

Supplier engagement and transition expectations

Given that Scope 3 often represents 70–90% of total emissions, SBTi places significant importance on supplier and customer engagement:

• Criteria allow supplier engagement targets, requiring a certain percentage (often 70%) of supplier-related emissions to be covered by suppliers with their own science based targets.
• Draft Net-Zero Standard 2.0 proposals introduce requirements for larger companies (revenue above 450 million USD) to ensure tier-1 suppliers set their own net-zero targets and to publish a climate transition plan within 12 months of target validation.

These provisions effectively bring supplier decarbonisation squarely into what counts in scope 3 emissions for SBTi, even if those emissions physically sit in another company’s Scope 1 or 2.

What Does Not Count – Or Counts Differently

Equally important is understanding what the SBTi does not allow organisations to use as a shortcut in Scope 3. Several areas frequently cause confusion.

Avoided emissions and “handprint” claims

Many companies highlight “avoided emissions”, for example, a new low-carbon product that allows customers to emit less than a high-carbon alternative. While these innovations are vital, avoided emissions do not count towards meeting SBTi Scope 3 reduction requirements. SBTi is clear that targets must be based on absolute or intensity reductions in the company’s own Scope 1, 2 and 3 inventory, not on counterfactual scenarios. Avoided emissions can be reported separately as part of a broader narrative but cannot substitute for real reductions in scope 3 emissions for SBTi.

Over-reliance on carbon credits

In 2024–25, SBTi attracted global attention by signalling a potential expansion of how carbon credits might support Scope 3 decarbonisation, but subsequent statements and draft rules have held the line on offsets:

• Carbon credits are allowed only for residual emissions after deep cuts (typically around 90% reduction) have been achieved.
• They do not “count” towards the 67% coverage threshold or towards interim reductions required under scope 3 emissions targets.
• Credits should not be used to justify continued high emissions in the value chain.

For companies hoping that offsets would simplify scope 3 emissions for SBTi, recent developments reinforce that the primary route must still be genuine value-chain decarbonisation.

Emissions outside the value chain

Some activities sit outside the GHG Protocol corporate boundary altogether, such as:

• Community projects that do not relate to the organisation’s operations or value chain.
• Emissions associated purely with charitable donations or unrelated investments.

While these may contribute to climate action, they do not belong in the Scope 3 inventory and therefore do not count towards SBTi coverage or reductions.

Double counting within corporate groups

In corporate groups with multiple entities, there is a risk of double counting the same activity in group-level Scope 3. SBTi expects companies to:

• Define clear consolidation boundaries.
• Avoid counting internal transfers (e.g. products sold between subsidiaries) twice.

The underlying principle is that scope 3 emissions for SBTi should represent the value-chain footprint of the consolidated reporting entity, not the sum of every intra-group transaction.

The Bottom Line

As the SBTi framework matures and scrutiny from regulators, investors and civil society intensifies, Scope 3 is where credibility will increasingly be won or lost. For most companies, these value-chain emissions represent the majority of their climate impact, and SBTi rules now require that they are measured, managed and reduced in a disciplined, science-based way. Ultimately, companies that treat scope 3 emissions for SBTi as a strategic tool for alignment will be better placed to manage risk, unlock innovation and adhere to emerging frameworks such as science based targets for nature. Our expert sustainability scientists support organisations to assess their carbon footprint for SBTi, model reduction pathways and design credible Scope 3 strategies that align with both regulatory and investor expectations.