Scope 3 reporting has long been the most complex part of any corporate emissions disclosure. It covers everything that happens outside your own walls, from the raw materials your suppliers use to what happens to your product after a customer is done with it. Under the Corporate Sustainability Reporting Directive, that complexity doesn’t go away, but the rules around it become a lot more specific. If your organization is working through CSRD compliance, understanding exactly what’s expected on scope 3 is essential.
Following Directive (EU) 2026/470 (Omnibus I), the CSRD now applies only to companies with more than 1,000 employees and more than €450 million in net turnover. The previous thresholds of 250 employees, €50 million in turnover, and €25 million balance sheet total have been dropped, meaning roughly 80 percent of companies previously in scope now fall outside the requirement. For those that remain in scope, scope 3 reporting sits at the heart of the climate-related disclosures the directive requires. Getting it right means understanding not just what to report, but how the directive’s requirements differ from what many companies are already doing under other frameworks.
What the CSRD actually requires for scope 3
Under the CSRD, climate-related disclosures are governed by the European Sustainability Reporting Standards, specifically ESRS E1. This standard requires companies to report their gross scope 1, 2, and 3 greenhouse gas emissions. For scope 3, this means disclosing emissions across all relevant categories from the GHG Protocol’s classification system, covering both upstream and downstream activities.
Importantly, ESRS E1 doesn’t let companies opt out of scope 3 easily. Companies must disclose total scope 3 emissions and break them down by category where material. Materiality here is assessed through the CSRD’s double materiality lens, meaning you need to consider both how scope 3 emissions affect the climate and how climate-related risks affect your business. If a category is material under either perspective, it needs to be reported. That’s a higher bar than many organizations are used to.
The standard also requires companies to set and disclose targets related to scope 3 where relevant, and to explain the policies and actions in place to reduce those emissions. Reporting isn’t just a data exercise; it’s expected to connect to your broader climate strategy. Note that the previous requirement to adopt and implement a climate transition plan has been fully removed from the CSRD.
How value chain data collection works in practice
Collecting scope 3 data is where things get genuinely difficult. Your emissions footprint extends across hundreds or even thousands of suppliers, logistics partners, customers, and end-of-life processes, and most of them aren’t sitting around waiting to hand you their emissions data.
In practice, companies tend to use a combination of approaches. Primary data, meaning actual activity data collected directly from value chain partners, is the most accurate but also the hardest to get at scale. Secondary data, such as industry averages, spend-based estimates, or emission factors from databases, fills the gaps but introduces more uncertainty into your numbers.
ESRS E1 acknowledges this reality. It allows the use of estimated data where primary data isn’t available, but it expects companies to be transparent about their methodology and data quality. Over time, the expectation is that organizations will improve their data collection processes and reduce their reliance on estimates, particularly for the categories that matter most to their footprint.
Engaging suppliers directly is increasingly becoming a business priority rather than just a reporting exercise. Companies that build supplier data-sharing processes now will be better positioned as expectations tighten in future reporting cycles.
Key differences between GHG Protocol and CSRD scope 3 rules
Many companies already report scope 3 emissions voluntarily, often using the GHG Protocol’s Corporate Value Chain Standard as their guide. The CSRD builds on that foundation, but there are meaningful differences worth understanding.
- Mandatory disclosure: Under the GHG Protocol, scope 3 reporting is recommended but not required. Under the CSRD, it’s mandatory for in-scope companies where material, with no room for selective disclosure based on convenience.
- Double materiality assessment: The GHG Protocol doesn’t require a materiality assessment. CSRD does, and the double materiality approach means you’re assessing both financial and impact perspectives, which can bring categories into scope that companies might otherwise have deprioritized.
- Assurance requirements: CSRD disclosures are subject to third-party assurance, starting with limited assurance and moving toward reasonable assurance over time. GHG Protocol reporting has no built-in assurance requirement.
- Connection to strategy: CSRD expects scope 3 disclosures to link to targets and governance, and to connect to the company’s broader climate strategy. The GHG Protocol is primarily a measurement standard and doesn’t prescribe how disclosures connect to business strategy.
These differences matter because companies that have been reporting scope 3 under the GHG Protocol may still have significant gaps when it comes to CSRD compliance. The data might exist, but the governance, assurance, and strategic integration pieces often need to be built from scratch. It’s not a case of copy-pasting last year’s sustainability report and calling it done.
The revised ESRS and what it may mean for scope 3
On 3 July 2026, the European Commission adopted a revised version of the ESRS. If adopted as proposed, the number of mandatory data points would decrease by more than 60 percent, and the total number of data points by more than 70 percent. A voluntary standard for smaller companies would also be introduced. However, this revision is currently before the Parliament and the Council for scrutiny and is not yet final. Companies should monitor developments closely, as the final shape of the reporting requirements may still change before the standards enter into force.
Timeline and transitional arrangements
Directive (EU) 2026/470 was published on 26 February 2026 and entered into force on 18 March 2026. The new scope applies to financial years starting on or after 1 January 2027, with the first reports due in 2028. Member States must transpose the rules into national law by 19 March 2027 at the latest.
Companies that were already reporting under wave 1 but now fall below the new threshold may be exempted by Member States for financial years 2025 and 2026. Organizations in this position should check the position of their relevant Member State as transposition deadlines approach.
Common compliance challenges and how to address them
Even well-prepared organizations run into obstacles when tackling scope 3 under the CSRD. A few challenges come up repeatedly.
Supplier engagement is consistently one of the hardest parts. Many suppliers, especially smaller ones, don’t have their own emissions data and lack the capacity to produce it quickly. A practical approach is to prioritize engagement with your highest-impact suppliers first, rather than trying to collect data from everyone at once. Providing templates, tools, or guidance to suppliers can also improve response rates and data quality.
Data consistency across categories is another common sticking point. When different parts of the business are collecting data using different methodologies or emission factors, the consolidated numbers become hard to defend under assurance. Establishing a clear internal methodology and governance process early avoids a lot of painful reconciliation later.
Materiality assessment is also frequently underestimated. Companies sometimes treat it as a checkbox exercise, but a robust double materiality assessment takes time and requires input from across the business. Getting this right upfront saves significant rework down the line, because the materiality conclusions determine the scope of almost everything else in your CSRD report.
Finally, the connection between scope 3 data and climate targets catches many companies off guard. Reporting the numbers is one thing; showing how they feed into credible reduction targets and a coherent climate strategy is another. Starting that conversation internally early, rather than treating it as a post-reporting exercise, makes the whole process more manageable.
When to bring in a scope 3 specialist
Not every sustainability professional has deep expertise in scope 3 measurement and CSRD compliance. These are genuinely specialized areas, and there’s a real difference between a generalist sustainability consultant and someone who focuses specifically on GHG accounting, value chain emissions, or CSRD reporting.
Bringing in a specialist tends to make the most sense when the internal team has strong sustainability knowledge but limited experience with the technical side of emissions accounting. It also makes sense when you’re facing a tight reporting deadline, when your value chain is particularly complex, or when you need someone who can navigate the specific requirements of ESRS E1 rather than just general sustainability frameworks.
Scope 3 specialists can help design data collection processes, validate methodology choices, support supplier engagement programs, and ensure that disclosures meet the standard required for assurance. Some also bring experience with adjacent frameworks like CDP, which can be useful if your organization is reporting across multiple channels. The key is being clear about what you actually need before you start looking, since the right expertise depends heavily on where your specific gaps are.
Ready to move forward with scope 3 reporting?
Scope 3 under the CSRD is a serious undertaking, but it’s entirely manageable with the right expertise in your corner. Whether you need someone to design your data collection approach, lead your materiality assessment, or get your disclosures assurance-ready, finding the right specialist for your specific situation makes all the difference.
That’s exactly what we built Dazzle for. We match organizations with pre-screened sustainability freelancers who have the specialized knowledge to tackle exactly this kind of challenge, and we can connect you with the right expert within 48 hours. Whether you need short-term project support or a longer interim engagement, we work around your timeline and budget. If you’re ready to make progress on scope 3, reach out to our team and we’ll find the right fit for you.
Looking for hands-on support with this? See how our Scope 3 consultants help companies build inventories that hold up to scrutiny.
