Data Collection in Scope 3: Why Has It Become a Bottleneck?

In the age of climate accountability, companies are under growing pressure to measure, manage, and disclose their carbon emissions. This includes not just direct emissions (Scope 1) and emissions from purchased electricity (Scope 2), but also the often complex and elusive Scope 3 emissions—those that occur across the value chain. While Scope 3 can account for over 70% of a company’s total carbon footprint, data collection in this category has increasingly become a major bottleneck in sustainability efforts.

Let’s explore why gathering Scope 3 data is such a challenge, and why it matters more than ever in today’s sustainability-driven business landscape.

What Is Scope 3? A Quick Recap

The Greenhouse Gas Protocol divides emissions into three scopes:

Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, on-site fuel combustion).
Scope 2: Indirect emissions from the generation of purchased energy.
Scope 3: All other indirect emissions in a company’s value chain.

Scope 3 emissions include a wide array of activities such as:

Purchased goods and services
Business travel and employee commuting
Waste disposal
Use of sold products
Transportation and distribution
Investments
Leased assets and franchises

Because Scope 3 emissions are outside of a company’s direct control, they are inherently more difficult to measure, manage, and report.

Why Has Scope 3 Data Collection Become a Bottleneck?

1. Complex, Decentralized Supply Chains

Modern supply chains are sprawling and multi-tiered, often spanning continents. A single product may involve dozens of suppliers, each with their own processes, materials, and environmental practices. The further a company goes up or down the supply chain, the harder it becomes to obtain accurate emissions data.

This complexity not only makes data collection cumbersome but also leads to inconsistencies and lack of transparency, especially among Tier 2 and Tier 3 suppliers who may not be ESG-compliant or equipped to track emissions at all.

2. Lack of Standardization

Unlike Scope 1 and 2, where measurement standards are relatively well-established, Scope 3 lacks universal metrics and methodologies. Different industries use different calculation models, assumptions, and emissions factors. Even suppliers in the same sector might use varying data formats, which complicates consolidation and comparison.

Without standardized frameworks, companies often rely on estimates or averages based on spend data rather than actual activity data, leading to less accurate carbon accounting.

3. Limited Access and Engagement with Suppliers

Collecting Scope 3 data requires supplier cooperation, yet many suppliers, especially small or medium-sized enterprises (SMEs), do not have the tools, expertise, or incentive to measure and report their emissions. In some cases, suppliers are reluctant to share proprietary or operational data.

Additionally, companies may lack leverage or communication channels with indirect suppliers, making it difficult to initiate meaningful conversations about carbon tracking and reporting.

4. Inconsistent Reporting Requirements and Regulations

Regulatory pressures are increasing globally, but requirements still vary significantly across regions. For example, the European Union’s Corporate Sustainability Reporting Directive (CSRD) demands extensive ESG disclosure, including Scope 3, while in the U.S., the SEC's climate disclosure rules are still evolving.

This fragmented regulatory environment creates uncertainty for multinational companies and can delay the development of unified, global data collection strategies.

5. Resource and Cost Constraints

Collecting and validating Scope 3 emissions data is resource-intensive. It demands significant time, technology, personnel, and budget—especially if done manually or without automated platforms.

Many organizations still lack dedicated sustainability teams or tools like lifecycle assessment (LCA) software, emissions databases, and supplier portals to streamline the data collection process. As a result, ESG teams often face bottlenecks when trying to scale reporting across all Scope 3 categories.

Why It Matters More Than Ever

Despite the hurdles, accurate Scope 3 data is crucial for several reasons:

Investor Expectations: Investors increasingly factor ESG performance into decision-making. Transparent Scope 3 reporting demonstrates risk awareness and long-term sustainability.
Regulatory Compliance: As Scope 3 disclosures become mandatory in more jurisdictions, businesses that fail to comply could face penalties or reputational damage.
Target Setting: Science-based targets and net-zero pledges require companies to account for emissions across the entire value chain—not just those under direct control.
Operational Efficiency: Understanding Scope 3 hotspots enables companies to make informed decisions around sourcing, production, and logistics, potentially leading to cost savings and innovation.

Solutions: How to Overcome the Bottleneck

While the challenge is steep, several strategies can help organizations overcome the data bottleneck:

1. Supplier Collaboration and Incentives

Educating suppliers on carbon accounting and offering incentives—such as preferred vendor status or shared technology—can foster cooperation. Collaborative industry groups and platforms like CDP Supply Chain are also useful for streamlining supplier disclosures.

2. Invest in Digital Tools

Leveraging AI, machine learning, and blockchain can automate data collection, verify accuracy, and reduce human error. Platforms like Persefoni, Watershed, and SAP’s Sustainability Control Tower are already making Scope 3 tracking more feasible.

3. Start with High-Impact Categories

Rather than tackling all 15 Scope 3 categories at once, companies can prioritize high-emissions categories like purchased goods, transportation, or use of sold products. A phased approach ensures quicker wins and builds momentum for broader efforts.

4. Align with Frameworks

Following established protocols like the GHG Protocol’s Scope 3 Standard, SBTi, and industry-specific guidelines can bring more consistency and credibility to data collection efforts.

Conclusion

Scope 3 data collection remains a bottleneck—but not an insurmountable one. As supply chains evolve and sustainability becomes a business imperative, companies must push past these challenges to deliver more transparent and meaningful ESG disclosures. Doing so is not just about compliance; it’s about building resilience, trust, and long-term value in a world where carbon accountability is no longer optional.

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