Jul 21

2026

Integrating Scope 3 emissions into your 2026 sustainability strategy

Scope 3 covers indirect greenhouse gas emissions across a company’s value chain. For many organisations, it is substantially larger than Scope 1 emissions from controlled operations and Scope 2 emissions from purchased energy. CDP and Boston Consulting Group found that reported supply-chain emissions averaged 26 times companies’ combined operational emissions, although the scale varies significantly by sector and business model.
The UK published the final UK Sustainability Reporting Standards, UK SRS S1 and S2, on 25 February 2026. They are currently available for voluntary use. The Financial Conduct Authority has separately proposed new rules for around 515 listed companies, with climate reporting beginning for accounting periods starting on or after 1 January 2027. Under the proposal, the one-year Scope 3 transition relief would end for periods beginning on or after 1 January 2028, after which Scope 3 would remain on a comply-or-explain basis. Final FCA rules are expected in autumn 2026, so the timetable is not yet confirmed.

For smaller businesses, the immediate pressure is more likely to come from customers, lenders and tenders than direct regulation. British Business Bank research found that 37% of medium-sized businesses had been asked for carbon data by customers in the previous 12 months. Our guide to ESG reporting for SMEs is a useful starting point.

What Scope 3 includes

The Greenhouse Gas Protocol divides Scope 3 into 15 upstream and downstream categories. Relevant categories depend on what the business buys, produces, sells and finances. Our note on collecting ESG data before you are asked explains how the three scopes fit together.

A professional-services firm may find purchased services, commuting and business travel material. A manufacturer may have larger emissions from raw materials, transport or customers’ use of its products. The aim is not to assume that every category is equally important, but to assess all 15 and measure those relevant to the value chain.

Who may need the information

Our guide to preparing for UK Sustainability Reporting Standards covers the proposed reporting framework in more detail.

Building Scope 3 into your plan

Start with a spend-based screening exercise across the 15 categories. Use it to identify the categories and suppliers likely to drive the largest emissions. Replace estimates with supplier-specific or activity data where this materially improves the result.

Keep a documented methodology showing source data, emission factors, boundaries, exclusions and assumptions. Consistency matters because figures may be used in tenders, financing discussions and future assurance work. Reliable management accounts and cloud bookkeeping can improve the quality of purchasing and activity data.

Set targets only after establishing a credible baseline. Then connect them to procurement, product design, travel policies and supplier engagement. Claims should be specific and supported by evidence. Where figures are disputed or cannot be traced, forensic scrutiny of the figures may be appropriate. If sustainability requirements are affecting finance or contracts, early recovery and restructuring advice can help.

The cross-border position

The EU has narrowed the CSRD’s scope and introduced a value-chain cap designed to limit the sustainability information that in-scope companies can demand from smaller suppliers for CSRD reporting. UK businesses may still receive requests where they supply an EU reporting group. Our update on the EU CSRD position for UK businesses and our cross-border accounting and tax team can help determine which requirements apply.

Start before the questionnaires arrive

Scope 3 data is becoming commercially important even where reporting is voluntary. SCC’s SME business solutions team can help you identify material categories, create an evidence trail and respond proportionately to customer requests. Speak to SCC Chartered Accountants about building a practical 2026 plan.