Value Chain Mapping is a systems-based analytical process aimed at understanding the full scope of activities involved in an organization’s operations—from production and procurement to processing, logistics, and final delivery of goods or services. The objective is to identify the key sources of greenhouse gas (GHG) emissions across the entire value chain, from upstream to downstream, with a focus on strategically significant emission hotspots.
A core insight from the global application of GHG accounting tools is that a substantial portion of an organization’s emissions often does not originate from its direct operations (Scope 1 and Scope 2), but rather from external activities in which the organization is involved or exerts influence. These include the procurement of raw materials, transportation of inputs and finished goods, product use by consumers, and end-of-life disposal—all of which fall under Scope 3 emissions, as defined by the GHG Protocol.
Scope 3 is widely recognized as the most complex and difficult category to measure and manage, as it encompasses sources not under the direct operational control of the reporting organization. However, companies can still exert significant influence through strategies such as responsible sourcing, supplier engagement, joint infrastructure investments, and strategic partnerships across the value chain. This is where Carbon Insetting plays a transformative role—leveraging the organization’s influence to implement emissions reduction projects within its own value chain, even without direct ownership or legal control.
Categorizing Activities Across All 15 Scope 3 Categories
Classifying Scope 3 emissions into 15 defined categories enables organizations to systematically identify sources of greenhouse gas (GHG) emissions beyond their direct control, while covering the entire value chain—both upstream and downstream. This structured approach forms the analytical foundation for developing targeted Carbon Insetting strategies.
Upstream Activities (Categories 1–8)
1. Purchased Goods and Services
Emissions from the production of goods and services purchased by the organization, such as fertilizers, seeds, textiles, plastics, metals, and construction services.
Highly suitable for insetting through sustainable agriculture and regenerative raw materials.
2. Capital Goods
Emissions from the production of long-term assets such as machinery, buildings, and IT infrastructure.
Can be mitigated by selecting suppliers that use low-carbon materials and manufacturing processes.
3. Fuel- and Energy-Related Activities (Not Included in Scope 1 or 2)
Emissions from the upstream processes of fuel and energy acquisition, including extraction, generation, and transport.
Insetting potential includes shifting to renewable energy sources and engaging low-emission energy suppliers.
4. Upstream Transportation and Distribution
Emissions from transporting raw materials and intermediate goods to the reporting organization via ships, trucks, or air freight.
Insetting options include using low-emission transport, electric fleets, or sourcing materials locally.
5. Waste Generated in Operations
Emissions resulting from waste disposal and treatment during the organization’s operational activities.
Mitigation can be achieved through circular waste management, composting, and landfill methane capture.
6. Business Travel
Emissions associated with employee travel for business purposes, including flights, accommodations, and ground transport.
Reduction strategies include virtual meetings and sustainable travel policies.
7. Employee Commuting
Emissions from daily transportation of employees to and from the workplace.
Organizations can reduce this through ride-sharing programs, public transit incentives, or e-mobility support.
8. Upstream Leased Assets
Emissions from the operation of assets leased by the organization, such as warehouses or vehicles.
Control measures include green leasing clauses and energy efficiency retrofits.
Downstream Activities (Categories 9–15)
9. Downstream Transportation and Distribution
Emissions from delivering goods to customers, retailers, or distributors.
Insetting opportunities include logistics network optimization and adoption of electric or low-emission vehicles.
10. Processing of Sold Products
Emissions generated when third parties process intermediate products sold by the organization.
Can be reduced by developing low-carbon input materials and collaborating with downstream processors.
11. Use of Sold Products
Emissions that occur when end users operate or consume the organization’s products—such as vehicles or electronic appliances.
Product redesign and energy efficiency improvements are key levers.
12. End-of-Life Treatment of Sold Products
Emissions from the disposal, recycling, incineration, or landfilling of products after their useful life.
Insetting can be done through product take-back schemes, recyclability-by-design, and biodegradable packaging.
13. Downstream Leased Assets
Emissions from assets owned by the organization but leased to customers—such as vehicles or office spaces.
Insetting can include designing energy-efficient leased properties and connecting them to renewable grids.
14. Franchises
Emissions from operations of franchised businesses that carry the organization’s brand.
Reduction is possible through environmental performance standards, training, and compliance systems for franchisees.
15. Investments
Emissions associated with financial investments, applicable primarily to organizations in the financial sector.
Managed through ESG-integrated portfolios, divestment from high-carbon sectors, and active ownership strategies.
This granular classification of Scope 3 categories not only clarifies the distribution of emissions but also equips organizations with a strategic lens to prioritize insetting interventions. By identifying actionable leverage points across the value chain, businesses can align their decarbonization efforts with the Science Based Targets initiative (SBTi) and broader climate frameworks—transforming their value chains into engines for credible, measurable, and lasting climate impact.