Estimating your Scope 3 footprint from spend data

Scope 3 covers the emissions in your value chain that you don't produce yourself: the materials and services you buy, the freight you pay for, the use and disposal of the products you sell. For a manufacturer or distributor these can easily outweigh your own direct emissions, and the purchased goods and services category is typically the place to start.

Larger customers are the most likely to ask for this information. In the UK, the government published the final UK Sustainability Reporting Standards in February 2026. While this is voluntary for now and includes reliefs that let companies defer Scope 3 reporting, the FCA has consulted on requiring listed companies to report against them, and the government expects to hold ongoing consultation on whether to extend requirements further through its Modernising Corporate Reporting programme. If you supply listed or large businesses, their Scope 3 is partly your footprint, and they will ask you for numbers.

The spend-based method is the easiest way to produce those numbers from data you already have.

What the spend-based method is

The GHG Protocol's technical guidance for Scope 3 describes four ways to calculate emissions from purchased goods and services. Supplier-specific data is the most specific. The spend-based method is the least specific, and the guidance positions it as the option to use when the others aren't feasible. It works like this: take what you spent on each type of goods or service, and multiply it by an emission factor expressed in kilograms of CO2 equivalent per pound or dollar spent. Add up the results.

The factors come from environmentally extended input-output models, which estimate the average emissions behind a unit of spend in each sector of the economy. Two widely used public sources are:

• Defra's spend-based emissions multipliers, published alongside its annual UK and England carbon footprint statistics. The latest update, in June 2026, covers 1997 to 2023. The government's own guidance says these multipliers are mainly intended to compare carbon intensity across categories of UK demand, but can give an initial estimate of supply chain emissions where activity data isn't available.
• The US EPA's Supply Chain Greenhouse Gas Emission Factors, version 1.3, which gives factors for 1,016 commodities in kilograms of CO2e per 2022 US dollar, with and without margins.

Don't confuse these with the government's annual greenhouse gas conversion factors for company reporting, the latest set of which came out in June 2026. Those are mostly activity-based (per litre of fuel, per kWh, per tonne-kilometre). They are what you use when you have physical quantities, and you should switch to them wherever you can.

A worked example

The spend figures and emission factors below are illustrative only. They are round numbers chosen to show the arithmetic, not values taken from Defra, the EPA or any other dataset. Use the published factors for your own calculation.

Imagine a small food manufacturer with £8m of annual third-party spend. Step one is to group the purchase ledger into categories that match the factor set you're using.

Even with made-up factors, the shape is instructive. The two ingredient lines account for about three quarters of the total. That is where supplier engagement and better data will matter most. The professional services line, despite being an eighth of spend, barely registers.

Getting it right

A few practical points make the difference between a defensible estimate and a misleading one.

Match the price basis. EPA factors are in 2022 US dollars at purchaser prices. If you use them for a 2026 sterling ledger, you need to convert currency and adjust for inflation, as the GHG Protocol guidance notes. Whichever source you use, align the factor year with the year of your ledger.

Exclude what isn't a purchase. Strip out VAT, payroll, tax, depreciation, intra-group charges and financing costs before you start. Capital purchases belong in a separate category.

Classify carefully. The single biggest source of error is lumping spend into the wrong category. An afternoon with the person who knows the suppliers is worth more than any software.

Know the weakness. A spend-based figure moves with price. If your supplier raises prices by 10% while making exactly the same product the same way, your estimated emissions rise by 10%. That is why the method is a starting point, not a target-setting tool. If you set a reduction target against a spend-based baseline, you could hit it by negotiating harder rather than decarbonising.

Write down your method. The government's guidance asks users to state which methods they've used. Record your factor source, its year, your category mapping and any exclusions, so next year's figure is comparable.

Most suppliers, when first asked for Scope 3 data, send a sustainability brochure or a company-wide carbon figure. What the customer actually needs is a figure per product or per tonne. A simple spend-based estimate, explained clearly, would have served them far better than a brochure.

Where to go next

Once the hotspots are clear, replace spend-based estimates with better data category by category. Ask your largest ingredient and packaging suppliers for product-level footprints. Use the government's activity-based conversion factors for freight and energy where you know the quantities. Over two or three reporting cycles, the share of your Scope 3 that rests on spend-based factors should shrink.

The free Supply Chain Carbon Snapshot gives you a first spend-based view, and Waterfront Advisory can help build a fuller footprint and reduction plan.