Understanding Scope 3 emissions is no longer optional – it’s a regulatory imperative. Under the Corporate Sustainability Reporting Directive (CSRD), companies must account for indirect emissions across the entire value chain. That means not just internal operations, but also upstream and downstream impacts. Scope 3 is complex, data-intensive, and essential for credible sustainability performance.
This article unpacks what CSRD really means for Scope 3 – and how companies can turn compliance pressure into strategic advantage.
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The Corporate Sustainability Reporting Directive (CSRD) significantly raises the bar for sustainability disclosures in the EU. It replaces and expands the previous Non-Financial Reporting Directive (NFRD), shifting from high-level narrative reports to detailed, standardized metrics across environmental, social, and governance topics.
At its core, the CSRD requires companies to report climate-related impacts across Scope 1, 2 and 3 emissions – including indirect value chain emissions (Scope 3). This marks a move from voluntary carbon tracking to mandatory, audit-ready reporting. The directive is based on the European Sustainability Reporting Standards (ESRS), which provide a unified framework for structuring and validating disclosures across industries.
As of the Simplification Omnibus Proposal published by the European Commission in February 2025, companies fall under the CSRD if they meet at least two of the following three threshold criteria:
This adjustment notably raises the bar for reporting obligations, particularly impacting medium-sized enterprises and EU subsidiaries.
While the CSRD remains active EU law, the Omnibus Proposal has postponed and phased some reporting obligations to reduce administrative burden and allow for better preparation. The revised timeline now looks as follows:
Sector-specific standards have been deferred, and simplified reporting is introduced for certain cross-border or non-EU entities. However, Scope 3 reporting remains mandatory for all companies where these emissions are material – regardless of sector or location.
Scope 3 refers to all indirect greenhouse gas (GHG) emissions that occur outside a company’s direct control – but within its value chain. The Greenhouse Gas Protocol, which underpins the CSRD’s reporting logic, defines 15 Scope 3 categories across upstream and downstream activities.
| Upstream examples | Downstream examples |
| Purchased goods and services | Product use and energy consumption |
| Capital goods and inbound logistics | Distribution and franchises |
| Business travel and waste from operations | End-of-life treatment and disposal |
Scope 3 often includes the largest emission sources – especially in sectors like manufacturing, automotive or consumer goods. While Scope 1 and 2 emissions are easier to quantify, CSRD Scope 3 reporting requires data from suppliers, customers, and recyclers. That makes Scope 3 both the most material and most difficult element of the corporate CSRD carbon footprint.
A clear understanding of these categories is essential – not only for compliance, but also for identifying emission hotspots, supply chain risks, and reduction opportunities.
Automate data collection, improve data quality, and deliver audit-ready CSRD reports with one integrated platform for corporate and product carbon accounting.
Under the CSRD, Scope 3 reporting shifts from voluntary best practice to binding requirement. Companies must disclose all relevant value-chain emissions, using the Greenhouse Gas Protocol as the methodological foundation and aligning with the CSRD’s ESRS framework – especially ESRS E1 Climate Change.
Core requirements include:
These disclosures must be audit-ready and structured according to double materiality principles – showing not just how climate affects the company, but how the company contributes to climate change.
When it comes to CSRD Scope 3 compliance, technical calculation methods are only part of the equation. The real challenge lies in operationalizing them across fragmented, global value chains.
Key friction points include:
Even large corporations struggle to gather consistent upstream figures, especially when working with SMEs or non-EU suppliers. And once collected, validating and consolidating that data into a single, CSRD-compliant Scope 3 footprint is a major operational task.
Regulators expect transparency over data limitations – but not excuses. Companies must show how they deal with gaps, engage partners, and improve year over year.
Preparation for CSRD-aligned Scope 3 reporting should begin with a structured readiness roadmap. Piecemeal efforts won’t scale – companies need systems that can grow with regulatory demands.
Steps to move from theory to action:
Smart companies combine digital infrastructure with governance – assigning internal roles, setting milestones, and investing in training. That’s how compliance becomes not just a duty, but a driver of operational resilience and transparency.
Managing CSRD Scope 3 emissions requires more than just data collection – it demands a comprehensive approach that integrates carbon accounting, life cycle assessment, and supply chain transparency. IPOINT offers a suite of solutions designed to address these challenges:
IPOINT's Carbon Footprint Software enables companies to calculate both Product Carbon Footprints (PCF) and Corporate Carbon Footprints (CCF) in accordance with international standards such as ISO 14064, ISO 14067, PAS 2050, and the GHG Protocol. This tool helps identify emission hotspots and supports the development of effective reduction strategies.
With IPOINT's LCA software, businesses can perform comprehensive analyses of environmental impacts throughout a product's life cycle. This approach ensures that sustainability efforts are not just focused on direct emissions but encompass the entire value chain.
IPOINT's solutions enhance supply chain transparency by facilitating the collection and analysis of data from suppliers. This capability is crucial for understanding and managing Scope 3 emissions, as it provides insights into upstream and downstream activities.