Scope 3 emissions are, without question, the trickiest part of any corporate carbon footprint. They cover everything that happens upstream and downstream of your own operations: the suppliers you buy from, the products customers use, the business travel your team takes. For many organizations, scope 3 can account for the vast majority of total emissions. So when European regulators started tightening reporting requirements, scope 3 was always going to be at the center of the conversation.
If you’re trying to figure out whether your organization is legally required to report scope 3 emissions under European rules, the short answer is: it depends on your size and situation. The longer answer is worth understanding properly, because the details matter a great deal for compliance planning in 2026 and beyond.
Which European regulations cover scope 3 emissions
The primary framework governing scope 3 emissions reporting in Europe is the Corporate Sustainability Reporting Directive, better known as CSRD. This directive, which builds on and replaces the earlier Non-Financial Reporting Directive (NFRD), significantly expands both the number of companies required to report and the depth of what they must disclose. Under CSRD, companies report according to the European Sustainability Reporting Standards (ESRS), and it’s within these standards that scope 3 requirements are set out, specifically under ESRS E1, which covers climate-related disclosures.
It’s worth noting that CSRD doesn’t operate in isolation. The EU Taxonomy, which classifies whether economic activities are environmentally sustainable, also interacts with emissions data. Companies disclosing under EU Taxonomy alignment often need a clear picture of their full carbon footprint, including scope 3, to assess whether their activities meet the “do no significant harm” criteria. So even where scope 3 isn’t explicitly mandated in a given standard, it tends to surface in practice.
Which companies must report scope 3 emissions under CSRD
CSRD is being rolled out in phases, and not every company is in scope at the same time. Large public-interest entities, including listed companies, banks, and insurers with more than 500 employees, were the first to fall under the rules. From there, the scope expands to other large companies meeting two of three criteria: more than 250 employees, more than €40 million in net turnover, or more than €20 million on the balance sheet. Listed SMEs are also brought in under a separate, lighter-touch standard.
For companies that do fall within CSRD’s scope, reporting on scope 3 emissions is not optional. ESRS E1 requires disclosure of total greenhouse gas emissions across all three scopes, including a breakdown of scope 3 categories. There is a limited “opt-out” mechanism for specific scope 3 categories where data is genuinely unavailable, but companies must explain why and set out a plan to collect that data in future reporting periods. This is not a loophole; it’s a temporary accommodation with accountability attached.
What scope 3 categories are required vs. optional
The Greenhouse Gas Protocol divides scope 3 emissions into 15 categories, split between upstream activities (categories 1 to 8) and downstream activities (categories 9 to 15). Under ESRS E1, companies are expected to report on all material scope 3 categories, and materiality is assessed through the double materiality process that sits at the heart of CSRD.
In practice, this means companies need to conduct a materiality assessment to determine which scope 3 categories are significant for their business. Common categories that tend to be material for most companies include:
- Category 1: Purchased goods and services – Often the largest single source of scope 3 emissions, covering the carbon footprint embedded in everything a company buys from its supply chain.
- Category 3: Fuel and energy-related activities – Emissions associated with the production of fuels and energy that a company purchases, beyond what’s already counted in scope 1 and 2.
- Category 6: Business travel – Flights, trains, hotels, and other travel taken by employees on company business.
- Category 11: Use of sold products – For manufacturers and product companies, the emissions generated when customers actually use what you sell.
- Category 15: Investments – Relevant for financial institutions, covering emissions associated with loans, equity holdings, and other investments.
Categories that a company determines to be immaterial can be omitted, but the reasoning must be documented and disclosed. The key point is that “optional” doesn’t mean you can simply skip categories you’d rather not measure. Materiality has to be genuinely assessed and justified. Together, these requirements mean that most large companies will end up reporting on a significant portion of the 15 categories, even if not all of them.
Common challenges in scope 3 data collection
Knowing what you’re required to report is one thing. Actually collecting the data is where things get complicated. Scope 3 emissions are inherently difficult to measure because the data doesn’t sit within your own systems. You’re relying on information from suppliers, customers, logistics providers, and other third parties who may have varying levels of reporting maturity.
A few challenges come up consistently for companies working through this process:
- Supplier data gaps – Many suppliers, especially smaller ones, haven’t measured their own emissions and can’t provide primary data. Companies often have to fall back on spend-based or industry-average estimates, which are less accurate and harder to defend under scrutiny.
- Boundary-setting complexity – Deciding exactly where your scope 3 boundary starts and ends requires judgment calls that can significantly affect reported totals. Getting this wrong creates risk.
- Data consistency across years – Scope 3 figures can shift substantially from one year to the next due to methodology changes rather than actual emission reductions, making year-on-year comparisons difficult to interpret.
- Internal alignment – Scope 3 data collection touches procurement, finance, logistics, and product teams. Getting those functions to prioritize sustainability data requests is often more of an organizational challenge than a technical one.
What ties all of these challenges together is that scope 3 reporting isn’t just a sustainability team problem. It requires cross-functional coordination, supplier engagement programs, and often a significant investment in data infrastructure. Companies that start treating it as a standalone compliance task tend to hit walls quickly. Those that embed it into broader procurement and supply chain processes tend to make more sustainable progress.
How a sustainability expert can accelerate compliance
Given the complexity involved, many organizations bring in external expertise to get their scope 3 reporting on track. The type of expert you need depends heavily on where you’re stuck. A CSRD reporting specialist can help you interpret the ESRS E1 requirements, structure your materiality assessment, and make sure your disclosures meet the standard. A scope 3 emissions specialist, on the other hand, focuses on the measurement methodology itself: setting boundaries, selecting emission factors, and building a defensible calculation approach.
For companies dealing with complex supply chains, a specialist with experience in supplier engagement and value chain emissions can be particularly valuable. They know how to design supplier questionnaires, interpret partial data, and apply the right estimation approaches when primary data isn’t available. This is a genuinely specialized skill set, and it’s quite different from the work of a generalist sustainability consultant or an LCA specialist, even though those roles also touch emissions data in different ways.
The practical benefit of bringing in an expert early is that it reduces the risk of building your reporting on shaky methodological foundations. Scope 3 figures that are later revised significantly can raise questions with auditors and stakeholders. Getting the approach right from the start is much more efficient than correcting it after the fact.
Ready to tackle scope 3 with the right support?
Scope 3 reporting is one of those areas where the gap between understanding the requirement and actually executing it can be significant. Whether you need someone to lead your CSRD climate disclosures, build out your scope 3 measurement methodology, or engage your supply chain, the right expert makes a real difference.
That’s exactly what we do at Dazzle. We match organizations with pre-screened sustainability freelancers who have the specific expertise you need, whether that’s a CSRD reporting specialist, a scope 3 emissions expert, or someone who bridges both. There’s no lengthy procurement process or agency overhead. You can be working with the right person within 48 hours. If you’re ready to move forward, get in touch with our team and we’ll find the right match for your project.
