CSRD and Scope 3 Emissions: Why Supply Chain Data Is No Longer Optional

For years, many companies focused their sustainability efforts on internal operations reducing energy use, installing solar panels, or switching to greener logistics. But the truth is, most emissions don’t come from what companies do directly they come from the things they buy, sell, and enable.

Now, under the Corporate Sustainability Reporting Directive (CSRD), reporting those indirect emissions known as Scope 3 emissions isn’t just a “nice to have.” It’s mandatory.

Scope 3 emissions typically represent 70–90% of a company’s carbon footprint. And starting in 2025 (for some) and expanding by 2028, thousands of EU companies will be required to disclose them as part of their sustainability reports with auditable data, traceable methods, and clear targets.

What Are Scope 3 Emissions?

Let’s break it down.

The Greenhouse Gas (GHG) Protocol, which underpins CSRD’s emissions framework, defines three categories of emissions:

‍

Scope 3 is further broken into 15 categories, including:

• Purchased goods and services
• Transportation and distribution
• Use of sold products
• End-of-life treatment
• Capital goods
• Business travel and commuting

These categories make Scope 3 broad, complex and highly variable between industries.

What CSRD Requires for Scope 3 Emissions

Under CSRD and its supporting European Sustainability Reporting Standards (ESRS), companies must:

• Disclose total GHG emissions, including Scope 1, 2, and Scope 3
• Describe the methodology, data sources, and assumptions used
• Perform a double materiality analysis: how climate affects the business, and how the business impacts the climate
• Define emissions reduction targets, including actions taken across the value chain

This goes far beyond annual CSR checklists. Scope 3 data must be:

• Structured
• Verifiable
• Linked to financial reporting
• Ready for assurance by third parties

Why Scope 3 Is So Challenging — and So Important

The Challenges:

• Data collection: Suppliers may not have emissions data or the tools to share it
• Data quality: Many companies still rely on spend-based estimates (e.g. €1,000 on steel) instead of activity-based data (e.g. 500 kg of steel)
• Traceability: Without clear methods and sourcing, emissions data may not hold up to external audits
• Complex supply chains: Especially in industries like shipping, manufacturing, or construction

Why It Matters:

• Scope 3 now affects compliance, financing, and brand reputation
• Investors are evaluating supply chain emissions for ESG ratings
• Procurement teams increasingly request product-level carbon data from suppliers
• Misreporting or underreporting can lead to penalties, reputational risk — or missed contract opportunities

How ReFlow Helps Companies Deliver Scope 3-Ready Data

At ReFlow, we specialize in activity-based, product-level carbon modeling giving companies real, verifiable data to plug into their Scope 3 reporting.

Whether you're a supplier who needs to provide Scope 3 data to customers, or a reporting entity under CSRD, we help you:

• Translate material and process data into product carbon footprints (PCFs)
• Access ISO-aligned data models for cradle-to-grave analysis
• Cover Scope 3 categories such as:
  • Purchased goods and services
  • Upstream transport and distribution
  • Use of sold products
• Generate reports aligned with CSRD, EU Taxonomy, and Greenhouse Gas Protocol
• Identify hotspots and improvement areas across your value chain

Our platform supports supplier engagement, lifecycle assessments, and full Scope 3 integration all in a digital, scalable workflow.

Frequently Asked Questions (FAQ)

Is Scope 3 reporting mandatory under CSRD?

Yes - companies in scope must disclose Scope 1, 2, and 3 emissions under ESRS E1.

When does CSRD apply?

• 2025: Large companies already covered by NFRD
• 2026–2028: Remaining large companies and listed SMEs, phased by size

Can I use spend-based estimates for Scope 3?

You can start with them, but must disclose your methodology and improve quality over time. Activity-based data is preferred for accuracy and credibility.

What if my suppliers don’t have carbon data?

ReFlow helps model emissions based on materials, weight, and process type — and offers tools to engage suppliers and improve data quality.