Chapter 6 — GHG Protocol Scope 3 Standard

6.4 Downstream Emissions

6.4.1 Category 9 — Downstream Transportation and Distribution

6.4.1.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 9 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 36

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions

Category	Category Description	Minimum Boundary
9. Downstream transportation and distribution	Transportation and distribution of products sold by the reporting company in the reporting year between the reporting company’s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company)	The scope 1 and scope 2 emissions of transportation providers, distributors, and retailers that occur during use of vehicles and facilities (e.g., from energy use) Optional: The life cycle emissions associated with manufacturing vehicles, facilities, or infrastructure[17]

The minimum boundary of Category 9 includes Scope 1 and Scope 2 emissions of transportation providers, distributors, and retailers that are involved in the use of vehicles and facilities (other than those within the reporting company’s organizational boundary) for transportation and distribution of sold products after the point of sale. Category 9 includes those emissions only if the activity (e.g., transportation or storage) is not paid for by the reporting company. Conversely, Category 4 includes emissions related to transportation and distribution if the activity is paid for by the reporting company.

The graphic below, which is reproduced from Figure 9.1 of the Scope 3 Technical Guidance, illustrates the differences in the accounting for emissions from the transportation and distribution of sold products.

Scope 3 Technical Guidance, Category 9, “Downstream Transportation and Distribution,” Page 103

Figure 9.1 Accounting for Emissions From Transportation and Distribution of Sold Products

The Scope 3 Standard lists the following examples of transportation and distribution activities that may produce Category 9 emissions:

“Storage of sold products in warehouses and distribution centers.”
“Storage of sold products in retail facilities.”
“Air transport.”
“Rail transport.”
“Road transport.”
“Marine transport.”

While this list is not all-inclusive, it represents the most common methods for transporting and distributing sold products.

Connecting the Dots

Under the Scope 3 Standard, reporting companies are required to calculate Category 9 emissions related to storage in warehouses, distribution centers, and retail facilities, such as emissions from fuel and energy use and fugitive emissions from air conditioning or refrigeration. Accordingly, if Company A, a manufacturer, produces goods that are distributed to and stored in Company B’s distribution center and retail locations, A would report emissions related to the storage of its products in B’s distribution center and retail locations by using either the site-specific method or the average-data method, both of which are discussed below. Under the site-specific method, if emissions from B’s distribution center and retail locations total 100 kilograms of CO2 equivalent and A’s stored products represent 25 percent of the volume of those sites, A would report Category 9 emissions from B’s sites in the amount of 25 kilograms of CO2 equivalent.

Reporting companies have to consider whether the product sold is an intermediate product or a final product. An intermediate product is any product that is used to manufacture, or will be included in, a final product. Whereas a final product is already fit for use by the end consumer, an intermediate product requires additional processing before the end consumer can use it. If a reporting company sells an intermediate product, it will capture emissions from the transportation and distribution of the product between the point of sale and either the end consumer (if the eventual end use of the product is known) or the business customer (if the eventual end use of the product is unknown).

Connecting the Dots

All GHG emissions generated during the reporting year must be reported. However, as discussed in Section 6.2, certain Scope 3 categories also require companies to report emissions for future years because the activities that took place in the reporting year have long-term impacts on emissions. Category 9 is one of the Scope 3 categories in which companies must report emissions that are expected to be generated in future years as a result of the current year’s activities.

6.4.1.2 Technical Calculation Guidance

6.4.1.2.1 Calculating Emissions From Transportation

To calculate Category 9 emissions from transportation, reporting companies use the same calculation methods as those that apply to Category 4 emissions from transportation, which are described in Section 6.3.4. That is, the fuel-based, distance-based, and spend-based methods are all acceptable approaches, although reporting companies are advised to select the method that provides them with the most precise result on the basis of the data available to them.

To compute transportation emissions, reporting companies will need transportation data. While upstream suppliers generally have such data readily available for reporting companies upon request, the same cannot be said for downstream customers and transportation companies. As a result, reporting companies may need to use the distance-based method, as opposed to the fuel-based method or spend-based method, to calculate Category 9 emissions. If a reporting company is using the distance-based method and actual distances are unknown, it can estimate distances by using government, academic, or industry publications, online maps and calculators, and published port-to-port travel distances individually or in combination.

6.4.1.2.2 Calculating Emissions From Distribution

To calculate Category 9 emissions from distribution, reporting companies use the same calculation methods as those that apply to Category 4 emissions from distribution, which are described in Section 6.3.4. However, while a reporting company may use either the site-specific method or the average-data method to calculate Category 9 emissions from distribution, the average-data method is more likely to be used because of the same data limitation that reporting companies often face when calculating Category 9 emissions from transportation.

6.4.1.2.3 Additional Resources

The GHG Protocol Web site has a database of third-party resources that may be useful for calculating Category 9 emissions.

6.4.1.3 Practical Example

Example 9.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 9 emissions from downstream transportation.

Scope 3 Technical Guidance, Category 9, “Downstream Transportation and Distribution,” Page 105

Example 9.1 Calculating Emissions From Downstream Transportation

As previously noted, the calculation methods for Category 9 are the same as those as Category 4. See Section 6.3.4.3 for additional practical examples.

6.4.1.4 Optional Reporting for Category 9

Companies that choose Category 9’s optional reporting boundary would capture their share of the GHG emissions associated with manufacturing or constructing transportation and distribution equipment or facilities in addition to reporting emissions from the operation of such equipment or facilities as required under the Scope 3 Standard. Companies also have the option to report GHG emissions from customers traveling to retail stores, which may be significant for owners and operators of retail facilities.

6.4.2 Category 10 — Processing of Sold Products

6.4.2.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 10 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 36

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions . . .

Category	Category Description	Minimum Boundary
10. Processing of sold products	Processing of intermediate products sold in the reporting year by downstream companies (e.g., manufacturers)	The scope 1 and scope 2 emissions of downstream companies that occur during processing (e.g., from energy use)

Category 10 captures emissions from the processing of products that occur after the reporting company sells the products. Intermediate products require further processing, transformation, or inclusion into another product before they can be used as final products. Multiple intermediate products, or other material inputs, may be processed at one time to be brought to their final stage. In these instances, the emissions arising from the processing of the products are allocated among the products. See Section 6.5 for further discussion on allocating emissions.

Although Category 10’s minimum reporting boundary includes Scope 1 and Scope 2 emissions that occur during manufacturers’ processing of intermediate products, emissions from the processing of a sold intermediate product may be excluded from Category 10 if the reporting company does not know the eventual end use of the intermediate product. In this case, the reporting company must appropriately justify its conclusion and make the required disclosures associated with the exclusion, which are discussed in Section 6.2.

Connecting the Dots

All GHG emissions generated during the reporting year must be reported. However, as discussed in Section 6.2, certain Scope 3 categories also require companies to report emissions for future years because the activities that took place in the reporting year have long-term impacts on emissions. Category 10 is one of the Scope 3 categories to which this requirement applies. Therefore, Category 10 emissions that are expected to be generated in future years as a result of the sale of products in the current year must be reported in the current year.

6.4.2.2 Technical Calculation Guidance

Reporting companies may not need to collect data from customers or partners in their value chain to calculate Category 10 emissions.

The Scope 3 Technical Guidance describes acceptable methods for calculating Category 10 emissions as follows:

Scope 3 Technical Guidance, Category 10, “Processing of Sold Products,” Page 107

Calculating Emissions From Processing of Sold Products . . .

Site-specific method, which involves determining the amount of fuel and electricity used and the amount of waste generated from processing of sold intermediate products by the third party and applying the appropriate emission factors
Average-data method, which involves estimating emissions for processing of sold intermediate products based on average secondary data, such as average emissions per process or per product.

The decision tree below, which is adapted from Figure 10.1 of the Scope 3 Technical Guidance, can help reporting companies select a method for calculating such GHG emissions.

A reporting company’s choice of calculation method will depend on its business goals and its ability to collect data from its value chain partners. When data cannot be collected from downstream value chain partners, the average-data method is recommended. Reporting companies are advised to select the method that provides them with the most precise result on the basis of the data available to them.

6.4.2.2.1 Site-Specific Method

When using the site-specific method, the reporting company determines the amount of fuel, electricity, and refrigerant used, as well as the amount of waste generated by the third party, and then applies the appropriate GHG emission factors for each. Alternatively, if the downstream value chain partner calculates the emissions in its process, the reporting company can directly obtain these emissions from the downstream value chain partner. Category 10 includes emissions for all processing steps of the intermediate product to bring it into its final product form.

To calculate emissions under the site-specific method, the reporting company will need the following data:

Type of intermediate goods sold.
Quantity of intermediate goods sold.
Site-specific quantities of energy consumed during the process.
Emission factors associated with the types of energy consumed (e.g., electricity and fuel).
Site-specific mass of waste generated in the process (if applicable).
Emission factors associated with the waste generated (if applicable).
Site-specific data associated with noncombustion emissions such as industrial processes or fugitive emissions (if applicable).
Emission factors associated with the noncombustion emissions (if applicable).

The formula for calculating Category 10 emissions under the site-specific method is shown below.

Scope 3 Technical Guidance, Category 10, “Processing of Sold Products,” Page 109

Calculation Formula 10.1 Site-Specific Method

The activity data listed above can be obtained from internal records (e.g., number of units purchased from an internal system, utility bills, meter readings) or directly from downstream value chain partners that are a part of the processing. Sources from which reporting companies can obtain emission factors include:

The GHG Protocol Web site.
Company-developed, manufacturer-developed, or industry-developed lists of emission factors.
The 2006 IPCC guidelines for national GHG inventories.

In jurisdictions where applicable, the U.S. Environmental Protection Agency’s (EPA’s) compilation of emission factors may also be used.

6.4.2.2.2 Average-Data Method

Under the average-data method, emissions are estimated on the basis of average secondary data (e.g., emissions per process or emissions per product). Reporting companies that choose this method collect data on the types of processing involved in transforming the intermediate product into a final product and then apply an industry-specific average emission factor. The average-data method is typically used when it is not possible to collect the primary data necessary under the site-specific method.

To calculate emissions under the average-data method, a reporting company needs to understand and collect data on the processes involved in transforming or processing the intermediate product it sold into a usable final product. In addition, if the process or transformation involves multiple goods or other material inputs, the reporting company would have to collect the information necessary to allocate emissions, such as mass or economic value. The reporting company would also need to apply the relevant emission factors. See Section 6.4.2.2.1 for sources of emission factors.

The formula for calculating Category 10 emissions under the average-data method is shown below.

Scope 3 Technical Guidance, Category 10, “Processing of Sold Products,” Page 112

Calculation Formula 10.2 Average-Data Method

6.4.2.3 Practical Examples

Example 10.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 10 emissions under the site-specific method.

Scope 3 Technical Guidance, Category 10, “Processing of Sold Products,” Page 110

Example 10.1 Calculating Emissions From Processing of Sold Products Using the Site-Specific Method

Example 10.2 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 10 emissions under the average-data method.

Scope 3 Technical Guidance, Category 10, “Processing of Sold Products,” Page 112

Example 10.2 Calculating Emissions From Processing of Sold Products Using the Average Data Method

6.4.3 Category 11 — Use of Sold Products

6.4.3.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 11 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 36

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions . . .

Category	Category Description	Minimum Boundary
11. Use of sold products	End use of goods and services sold by the reporting company in the reporting year	The direct use-phase emissions of sold products over their expected lifetime (i.e., the scope 1 and scope 2 emissions of end users that occur from the use of: products that directly consume energy (fuels or electricity) during use; fuels and feedstocks; and GHGs and products that contain or form GHGs that are emitted during use Optional: The indirect use-phase emissions of sold products over their expected lifetime (i.e., emissions from the use of products that indirectly consume energy (fuels or electricity) during use)[18]

Emissions in Category 11 arise from the use of goods and services sold by the reporting company. This category is intended to capture the total expected lifetime emissions from all relevant products. The accounting for emissions from individual products is outlined in the Product Standard.

The minimum boundary of Category 11 includes the direct use-phase emissions of sold products that are expected to be generated over the products’ lifetimes. Direct use-phase emissions are generated from (1) products that directly consume fuels and electricity (“energy”) during use, (2) fuels and feedstocks, and (3) GHGs and products that contain or form GHGs that are emitted during use. Common examples include the following:

Products that directly consume energy during use — Transportation, power plants, buildings, appliances, lighting, electronics, Web-based software, and data centers.
Fuels and feedstocks — Petroleum products, natural gas, coal, biofuel, and crude oil.
GHGs and products that contain or form GHGs that are emitted during use — The seven GHGs that are subject to the GHG Protocol’s reporting requirements (CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3), refrigeration and air conditioning equipment, industrial gases, fire extinguishers, and fertilizers.

Connecting the Dots

All GHG emissions generated during the reporting year must be reported. However, as discussed in Section 6.2, certain Scope 3 categories also require companies to report emissions for future years because the activities that took place in the reporting year have long-term impacts on emissions. Category 11 is one of the Scope 3 categories to which this requirement applies. Therefore, Category 11 emissions that are expected to be generated in future years as a result of the sale of products in the current year must be reported in the current year.

6.4.3.2 Technical Calculation Guidance

Category 11 emission calculations are based, in part, on (1) product design specifications and (2) assumptions about how business customers and end consumers will use the reporting company’s products. While companies may need to estimate product usage, real-time data on product usage may be available given the rise of the Internet of Things and smart products. Reporting companies are required to disclose the assumptions and methods they used in their calculations.

The Scope 3 Technical Guidance allows reporting companies to group similar products together and use average statistics for a typical product group if (1) a large selection of products is sold or (2) multiple products have similar use phases.

6.4.3.2.1 Calculation for Direct Use-Phase Emissions From Products That Directly Consume Energy During Use

To calculate direct use-phase emissions from products that directly consume energy during use, the reporting company (1) multiplies the lifetime number of uses of each product sold in the reporting year by the amount sold and the corresponding emission factor and (2) aggregates the direct use-phase emissions of all of the products.

The formula for calculating these direct use-phase emissions is shown below.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 117

Calculation Formula 11.1 Direct Use-Phase Emissions From Products That Directly Consume Energy (Fuels or Electricity) During Use

To calculate the emissions, the reporting company will need to compile the following data:

From (1) the reporting company’s internal records, (2) surveys, or (3) industry associations:
- Total lifetime expected uses of products.
- Quantities of products sold.
- Fuel used per use of product.
- Electricity consumption per use of product.
- Refrigerant leakage per use of product.
From (1) the GHG Protocol Web site, (2) industry associations, or (3) company and/or supplier-developed sources:
- The life cycle emission factors (for energy consumed).
- The GWP (for refrigerants).
Reporting companies need to ensure that they are obtaining emission factors relevant to the region in which the products are used. If a product is used globally, an average emission factor may be used.

6.4.3.2.2 Calculation Method for Direct Use-Phase Emissions From Fuels and Feedstocks

A reporting company that produces fuels and/or feedstocks calculates direct use-phase emissions from those products by multiplying the quantities of the products (which are obtained from the reporting company’s records) by the products’ respective emission factors. For fuels and feedstocks that are not combusted during the use phase, no emissions will be reported. Only the combustion emissions are reported in Category 11; upstream emissions related to the fuels and feedstocks are excluded from the category.

The formula for calculating these direct use-phase emissions from combusted fuels and feedstocks is shown below.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 119

Calculation Formula 11.2 Direct Use-Phase Emissions From Combusted Fuels and Feedstocks

6.4.3.2.3 Calculation Method for Direct Use-Phase Emissions From GHGs and Products That Contain or Form GHGs Emitted During Use

To calculate direct use-phase emissions from GHGs and products that contain or form GHGs during use, the reporting company first multiplies the quantities of the products sold in the reporting year by the percentage of GHG released per unit of GHG contained in the product over the lifetime of the product. The reporting company then multiplies this result by the GWP of the specific GHG released from the product.

Once the reporting company performs the above calculation for each GHG in a product, it aggregates the results across all products sold during the year. When multiple GHGs are contained or formed in a sold product, the Scope 3 Technical Guidance recommends reporting the total CO2 equivalent, adding that a breakdown of those GHGs may be reported separately.

The formula for calculating direct use-phase emissions from GHGs and products that contain or form GHGs emitted during use is shown below.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 120

Calculation Formula 11.3 Direct Use-Phase Emissions From Greenhouse Gases and Products That Contain or Form Greenhouse Gases That Are Emitted During Use

6.4.3.2.4 Calculation Method for Sold Intermediate Products

When reporting Category 11 emissions, a company is required to calculate the direct use-phase emissions of a sold intermediate product that are attributable to the end user. Although reporting companies are not required to report indirect use-phase emissions of sold intermediate products, they have the option to do so, as discussed in Section 6.4.3.4.

In a manner consistent with the reporting of Category 10 emissions, if the reporting company does not know the eventual end use of the sold intermediate products, it may exclude the direct use-phase emissions of those products from Category 11. In this case, the reporting company will need to appropriately justify its conclusion and make the required disclosures associated with the exclusion, which are discussed in Section 6.2.

To calculate the direct use-phase emissions of an intermediate product that are attributable to the end user, the reporting company will need to (1) understand the final product(s) produced from the intermediate product, (2) know the percentage of the reporting company’s intermediate product sales that goes into each type of final product, and (3) compile the activity data required to calculate the use-phase emissions of the final product.

The formula for calculating use-phase emissions of sold intermediate products is shown below.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 123

Calculation Formula 11.5 Use-Phase Emissions From Sold Intermediate Products

6.4.3.3 Practical Examples

Example 11.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 11 direct use-phase emissions from products that directly consume energy during use.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Pages 117–118

Example 11.1 Calculating Direct Use-Phase Emissions From Products That Directly Consume Energy (Fuels or Electricity) During Use

Example 11.3 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 11 use-phase emissions from sold intermediate products.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 124

Example 11.3 Calculating Use-Phase Emissions From Sold Intermediate Products

6.4.3.4 Optional Reporting for Category 11

While direct use-phase emissions must be included in Category 11, reporting indirect use-phase emissions in Category 11 is optional. However, the Scope 3 Standard recommends including in Category 11 the indirect use-phase emissions of a sold product when those emissions are expected to be significant over the product’s lifetime. The Scope 3 Standard and Scope 3 Technical Guidance give reporting companies the option of including indirect use-phase emissions in Category 11 regardless of whether the sold products are final or intermediate.

Indirect use-phase emissions are generated by products that indirectly consume energy during use. Such products include apparel that requires washing and drying, pots and pans used to cook and refrigerate food, and soap to wash dishes with heated water.

To calculate indirect use-phase emissions from a product that indirectly consumes energy during use, reporting companies need to understand the typical use-phase profile of the product over its lifetime. Activity data related to that profile include the average number of uses of the product over its lifetime, fuel consumed during use, electricity consumed during use, refrigerants leaked during use, and any GHGs indirectly emitted during use. A scenario analysis may be necessary when (1) there is a potential range of values or (2) energy use varies depending on how the product is used. If a scenario analysis is performed, the weighted average of the scenarios may be used. Although reporting companies may obtain primary activity data through their own research, they may also need to gather secondary activity data from industry-recognized benchmarking, emission studies, or consumer studies.

Once the activity data are known, a reporting company performs the indirect use-phase emission calculations by applying emission factors, each of which is representative of the geographic area in which a given product is sold and used. The formula for calculating indirect use-phase emissions is shown below.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 121

Calculation Formula 11.4 Indirect Use-Phase Emissions From Products That Indirectly Consume Energy (Fuels or Electricity) During Use

Example 11.2 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate indirect use-phase emissions from products that indirectly consume energy during use.

Scope 3 Technical Guidance, Category 11, “Use of Sold Products,” Page 122

Example 11.2 Calculating Indirect Use-Phase Emissions From Products That Indirectly Consume Energy (Fuels or Electricity) During Use

6.4.4 Category 12 — End-of-Life Treatment of Sold Products

6.4.4.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 12 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 36

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions . . .

Category	Category Description	Minimum Boundary
12. End-of-life treatment of sold products	Waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life	The scope 1 and scope 2 emissions of waste management companies that occur during disposal or treatment of sold products

The minimum boundary of Category 12 emissions includes the Scope 1 and Scope 2 emissions of the waste management companies that are involved in the end-of-life disposal or treatment of products sold by the reporting company.

Connecting the Dots

All GHG emissions generated during the reporting year must be reported. However, as discussed in Section 6.2, certain Scope 3 categories also require companies to report emissions for future years because the activities that took place in the reporting year have long-term impacts on emissions. Category 12 is one of the Scope 3 categories to which this requirement applies. Therefore, Category 12 emissions that are expected to be generated in future years as a result of the sale of products in the current year must be reported in the current year.

6.4.4.2 Technical Calculation Guidance

The end-of life treatment methods used for sold products (Category 12) are consistent with those used for waste generated in operations (Category 5); see Section 6.3.5 for more information. Because estimates and assumptions related to end-of-life treatment methods are used to calculate Category 12 emissions, a reporting company is required to disclose a description of those estimates and assumptions in its GHG report.

The calculation methods used for Category 12 are generally consistent with those used for Category 5 (which are outlined in Section 6.3.5). However, the Scope 3 Technical Guidance indicates that while Category 5 emission calculations call for the collection of “data on total mass of waste generated in operations,” Category 12 emission calculations rely on “data on total mass of sold products (and packaging) from the point of the sale by the reporting company through the end of life after use by consumers.” As further noted in the Scope 3 Technical Guidance, a reporting company that is calculating Category 12 emissions will also need to obtain (1) data on the “[p]roportion of this waste being treated by different methods (e.g., percent landfilled, incinerated, recycled)” and (2) the “[a]verage [waste-treatment-specific] emission factors based on all waste treatment types.”

The formula for calculating Category 12 emissions under the waste-type-specific method is shown below.

Scope 3 Technical Guidance, Category 12, “End-of-Life Treatment of Sold Products,” Page 127

Calculation Formula 12.1 Waste-Type-Specific Method

A reporting company may find it more challenging to obtain reliable waste activity data for Category 12 than for Category 5. As noted in the Scope 3 Technical Guidance, “[a]lthough the reporting company may know the [components of the products it sold], it may not know how the waste-disposal behavior of consumers and retailers varies across geographic regions.”

Often, the total waste equals the total products sold in the reporting year. However, if any of the products are depleted in consumption (e.g., food and drink products) or combusted to generate energy, the total waste will most likely be lower. Regarding food and drink products, the Scope 3 Technical Guidance recommends that a reporting company “refer to [the] average proportion of food/drinks wasted.” To understand the waste treatment of various products, a reporting company is permitted under the Scope 3 Technical Guidance to refer to:

Its “own research and internal data on how products are treated after consumption.”
“Specific government directives on waste treatment of certain products.”
“Industry associations or organizations that have conducted research into consumer disposal patterns of specific products.”
“Average data on waste treatment from the point that the products are sold by the reporting company through to the end of life after consumer use.”

The European Union, EPA, and Waste and Resources Action Programme all publish resources that can be used to help companies calculate Category 12 emissions.

6.4.4.3 Practical Example

Example 12.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 12 emissions.

Scope 3 Technical Guidance, Category 12, “End-of-Life Treatment of Sold Products,” Page 127

Example 12.1 Calculating Emissions From the End-of-Life Treatment of Sold Products

6.4.5 Category 13 — Downstream Leased Assets

6.4.5.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 13 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 36

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions . . .

Category	Category Description	Minimum Boundary
13. Downstream leased assets	Operation of assets owned by the reporting company (lessor) and leased to other entities in the reporting year, not included in scope 1 and scope 2 — reported by lessor	The scope 1 and scope 2 emissions of lessees that occur during operation of leased assets (e.g., from energy use). Optional: The life cycle emissions associated with manufacturing or constructing leased assets[19]

The Scope 3 Standard defines the minimum boundary of Category 13 emissions as the “scope 1 and scope 2 emissions of lessees that occur during operation of leased assets (e.g., from energy use).” The lessor’s selected consolidation approach and the lease type inform whether the lessor reports GHG emissions from a leased asset in Category 13. If the lessor determines that those emissions are from a leased asset within its organizational boundary and therefore do not qualify for inclusion in Category 13, it would report them in Scope 1 (direct GHG emissions) and Scope 2 (indirect GHG emissions). For an illustration of this concept, see Table 7-3 in Section 7.4 of this Roadmap. For discussion of a lessee’s accounting for upstream GHG emissions in Scope 3, Category 8, see Section 6.3.8.

If an asset was leased for only part of a reporting year, only emissions for the portion of the year in which the asset was leased are included in emissions from leased assets.

The Scope 3 Standard permits reporting companies that prefer not to distinguish between products sold and products leased to customers (e.g., companies from which customers routinely buy and lease products such as vehicles and personal electronics) to account for Scope 3 emissions from products leased to customers as if the emissions were from the use of products sold to customers. Companies choosing to do so would (1) account for the leased assets in Category 11 rather than Category 13, (2) report all expected lifetime emissions from a leased product in the year in which the product is first leased, and (3) disclose their accounting choice as a policy election.

6.4.5.2 Technical Calculation Guidance

A reporting company’s access to Category 13 activity data will vary depending on the type of asset leased. For example, a reporting company that leases vehicles to customers may have to obtain fuel or mileage data from those customers before it can calculate Category 13 emissions.

The calculation methods for Category 13 are the same as those for Category 8; see Section 6.3.8 for more information. If a reporting company’s lessees use the asset-specific method to calculate Category 8 emissions and aggregate their Scope 1 and Scope 2 emission data, the reporting company may need to obtain additional data from the lessees so that it can appropriately allocate Category 13 emissions to the leased assets (e.g., buildings without submetering) and calculate them. For more information about allocating Scope 3 emissions, see Section 6.5.

6.4.5.3 Practical Example

Example 13.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate GHG emissions from downstream leased assets.

Scope 3 Technical Guidance, Category 13, “Downstream Leased Assets,” Page 129

Example 13.1 Calculating the Emissions From Downstream Leased Assets

6.4.5.4 Optional Reporting for Category 13

Reporting companies have an option to report life cycle emissions associated with the manufacturing or construction of assets they lease to others. If a reporting company chooses to report these emissions, it would be required to calculate emissions throughout the value chain that are associated with the manufacturing or construction process, depending on the types and sources of emissions produced.

6.4.6 Category 14 — Franchises

6.4.6.1 Description and Minimum Boundary

Table 5.4 of the Scope 3 Standard describes Category 14 and its minimum boundary as follows:

Scope 3 Standard, Chapter 5, “Identifying Scope 3 Emissions,” Page 37

Table 5.4 Description and Boundaries of Scope 3 Categories . . .

Downstream Scope 3 Emissions . . .

Category	Category Description	Minimum Boundary
14. Franchises	Operation of franchises in the reporting year, not included in scope 1 and scope 2 — reported by franchisor	The scope 1 and scope 2 emissions of franchisees that occur during operation of franchises (e.g., from energy use) Optional: The life cycle emissions associated with manufacturing or constructing franchises[20]

A franchise is a business that operates under a license agreement to sell or distribute goods or services of another company (the “franchisor”). Category 14 is meant for franchisors to account for Scope 3 emissions from the operation of franchises. The minimum boundary for Category 14 is the Scope 1 and Scope 2 emissions of a franchisee (i.e., a company that operates a franchise and pays fees to a franchisor) that are not already included in the reporting company’s (i.e., the franchisor’s) Scope 1 and Scope 2 inventories. The reporting company’s determination of whether to include the emissions of its franchisee in Category 14 rather than in its Scope 1 and Scope 2 inventories depends on its selected organizational boundary.

Connecting the Dots

Although Category 14 emissions are related to franchises and franchisees, the concepts underlying Category 14 also apply to licensors and licensees.

6.4.6.2 Technical Calculation Guidance

The Scope 3 Technical Guidance describes acceptable methods for calculating Category 14 emissions as follows:

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 130

Calculating Emissions From Franchises . . .

Franchise-specific method, which involves collecting site-specific activity data or scope 1 and scope 2 emissions data from franchisees
Average-data method, which involves estimating emissions for each franchise, or groups of franchises, based on average statistics, such as average emissions per franchise type or floor space.

Reporting companies are advised to select the calculation method that provides them with the most precise result on the basis of the data available to them.

6.4.6.2.1 Franchise-Specific Method

As its name suggests, the franchise-specific method is used when the reporting company collects site-specific activity data from franchisees. The reporting company may be able to obtain such data from Scope 1 and Scope 2 inventory reports prepared by franchisees that are provided directly to the reporting company or are made publicly available. When franchisees’ Scope 1 and Scope 2 inventory reports are not available, the Scope 3 Technical Guidance recommends that the reporting company collect site-specific fuel, energy, and fugitive emission (if applicable) data from individual franchisees — specifically, from utility bills, meter readings, IT systems, or other similar data sources. The reporting company would then collect site-specific or regionally specific emission factors for the energy sources used, including emission factors for any fugitive emissions.

If a franchisee performs business for others in addition to the reporting company, the franchisee or the reporting company would allocate the emissions (see Section 6.5 for considerations related to the allocation of Scope emissions). In addition, reporting companies would include in Category 14 any significant upstream emissions resulting from franchisees’ purchases of goods and services.

A formula for calculating Category 14 emissions under the franchise-specific method is shown below. Note that the Scope 1 and Scope 2 emissions of all franchises are aggregated in this calculation formula.

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 132

Calculation Formula 14.1 Franchise-Specific Method

If a franchise operates in a portion of a building in which energy use is not separately submetered, the reporting company may use the calculation formula below to estimate the franchise’s energy consumption on the basis of the franchise’s share of the building’s total floor space and total energy use.

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 132

Calculation Formula 14.2 Allocating Emissions From Franchise Buildings That Are Not Sub-Metered

In addition, if there are a large number of franchises, reporting companies may use an appropriate sampling method (e.g., simple random, systematic, stratified) to calculate Category 14 emissions; see Appendix A of the Scope 3 Technical Guidance for more information about sampling methods. Reporting companies may also classify franchises into separate groups for data collection on the basis of distinct characteristics, such as expected emission intensities, location, building type, financial turnover, product volume, floor space, and customer numbers.

The formula for extrapolating emissions from sample groups of franchises is shown below.

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 133

Calculation Formula 14.3 Extrapolating Emissions From Sample Groups

6.4.6.2.2 Average-Data Method

Under the average-data method, emissions are estimated for each franchise, or group of franchises, on the basis of average statistics (e.g., average emissions per building type, floor space, or franchise type). The Scope 3 Technical Guidance recommends using this method when certain franchise-specific data are not available. Because this method relies heavily on secondary data, reporting companies that use it will not be able to track performance of GHG reduction actions as effectively as they would if they used the franchise-specific method.

To calculate Category 14 emissions under the average-data method, a reporting company would collect some or all of the following activity data and emissions factors described in the Scope 3 Technical Guidance:

Activity data:
- “Floor space of each franchise, by floor space.”
- “Number of franchises, by building type.”
- “Number of franchise assets that give rise to GHG emissions.”
Emission factors:
- “Average emission factors by floor space, expressed in units of emissions per area per time period.”
- “Average emission factors by building type, expressed in units of emissions per building per time period.”
- “Emission factors by asset type, expressed in units of emissions per asset type per time period.”

A reporting company may use either of the calculation formulas below, depending on the asset type and the availability of floor space data.

Scope 3 Technical Guidance, Category 14, “Franchises,” Pages 134–135

Calculation Formula 14.4 Average Data Method for Leased Buildings (If Floor Space Data Is Available)

Calculation Formula 14.5 Average Data Method for Other Asset Types or for Leased Buildings Where Floor Space Data Is Not Available

6.4.6.3 Practical Examples

Example 14.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 14 emissions under the franchise-specific method.

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 133

Example 14.1 Calculating the Emissions From Franchises Using the Franchise-Specific Method

Example 14.2 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 14 emissions under the average-data method.

Scope 3 Technical Guidance, Category 14, “Franchises,” Page 135

Example 14.2 Calculating the Emissions From Franchises Using the Average Data Method

6.4.6.4 Optional Reporting for Category 14

A franchisor that chooses Category 14’s optional reporting boundary would capture the franchisor’s share of the emissions generated in the manufacturing or construction of the franchise in addition to reporting emissions from the operation of the franchise as required under the Scope 3 Standard.

Although the Scope 3 Standard’s discussion of Category 14 mainly addresses reporting by franchisors, it also addresses optional reporting by franchisees. In that discussion, the Scope 3 Standard recommends that franchisees “include emissions from operations under their control in this category if they have not included those emissions in scope 1 and scope 2 due to their choice of consolidation approach.” The Scope 3 Standard also notes in its discussion of Category 14 that a franchisee has the option to report the franchisor’s Scope 1 and Scope 2 emissions in Scope 3, Category 1 (purchased goods and services, an upstream category). See Section 6.3 for discussion of upstream Scope 3 emissions, including the methods used to calculate them.

6.4.7 Category 15 — Investments

6.4.7.1 Description and Minimum Boundary

As described in the Scope 3 Standard, Category 15 includes emissions from the “[o]peration of investments (including equity and debt investments and project finance) in the reporting year, not included in scope 1 or scope 2.” It is applicable to investors (which are generally what the Scope 3 Standard describes as “companies that make an investment with the objective of making a profit”) and companies that provide financial services.

Category 15 emissions are allocated to the reporting company (i.e., the investor) on the basis of the reporting company’s proportional share of (1) total investment in the investee or (2) the total project costs (i.e., debt and equity). Acknowledging that investment portfolios often change, the Scope 3 Standard recommends that companies “identify investments by choosing a fixed point in time, such as December 31 of the reporting year, or using a representative average over the course of the reporting year.”

The table below, which is adapted from Table 5.9 of the Scope 3 Standard, describes the types of investments included in Category 15’s minimum boundary.

Table 6-5 Accounting for Emissions From Investments Within Category 15’s Minimum Boundary

Type of Investment	Description
Equity investments	Equity investments that the reporting company makes by using its own capital and balance sheet, including: Equity investments in subsidiaries or group companies when the reporting company has financial control. Equity investments in associate companies or affiliated companies when the reporting company has significant influence but not financial control. Equity investments in JVs, partnerships, operations, or other structures when the partners have joint control. When the reporting company has neither financial control nor significant influence over the emitting entity.21
Debt investments with known use of proceeds	In general, corporate debt holdings, including corporate debt instruments (e.g., bonds, convertible bonds before conversion) or commercial loans when the use of proceeds is designated for a particular project
Project finance	In general, the reporting company’s long-term financing of projects as either an equity investor (sponsor) or a debt investor (financier)

Connecting the Dots

The Partnership for Carbon Accounting Financials (PCAF) developed additional guidance to enable financial institutions to consistently measure and disclose GHG emissions. PCAF engaged with various stakeholders, organizations, policymakers, and consultants to develop this guidance, which the GHG Protocol organization has determined to be consistent with the Scope 3 Standard’s treatment of Category 15 emissions. As of the issuance of this Roadmap, the PCAF’s guidance is the only industry-specific guidance that the GHG Protocol organization has reviewed.

A reporting company’s determination of whether to account for GHG emissions from investments in Category 15 or in Scopes 1 and 2 depends on the consolidation approach it selects to define its organizational boundary. For example, if the reporting company selects the equity share approach to consolidate GHG emissions from equity investments, it would account for the percentage of emissions from an investee that corresponds to the reporting company’s equity share in the investee in Scopes 1 and 2 rather than Scope 3, Category 15. Similarly, if the reporting company selects the financial control approach to consolidate GHG emissions from equity investments and has financial control over an investee (or selects the operational control approach to consolidate those emissions and has operational control over an investee), it would account for emissions from the investee in Scopes 1 and 2 and would not include them in Scope 3, Category 15.

6.4.7.2 Technical Calculation Guidance

6.4.7.2.1 Calculating Emissions From Equity Investments

The Scope 3 Technical Guidance describes acceptable methods for calculating Category 15 emissions from equity investments as follows:

Scope 3 Technical Guidance, Category 15, “Investments,” page 140

Calculating Emissions From Equity Investments . . .

Investment-specific method, which involves collecting scope 1 and scope 2 emissions from the investee company and allocating the emissions based upon the share of investment . . .
Average-data method, which involves using revenue data combined with EEIO data to estimate the scope 1 and scope 2 emissions from the investee company and allocating emissions based upon share of investment.

The decision tree below, which is adapted from Figure 15.1 of the Scope 3 Technical Guidance, can help reporting companies select a method for calculating Scope 15 emissions from equity investments.

Reporting companies are advised to select the method that provides them with the most precise result on the basis of the data available to them.

The Scope 3 Standard and Scope 3 Technical Guidance note that a financial intermediary’s involvement in a reporting company’s equity investment does not preclude accounting for the investee’s Scope 1 and Scope 2 emissions in Category 15 as recommended. In addition, the Scope 3 Technical Guidance recommends including the investee’s Scope 3 emissions in Category 15 if they are significant in comparison with the investee’s Scope 1 and Scope 2 emissions. Instead of establishing a threshold for determining when to include those Scope 3 emissions in Category 15, the Scope 3 Technical Guidance encourages reporting companies to establish their own thresholds, adding that EEIO data could help them assess the relative significance of investees’ Scope 3 emissions.

Connecting the Dots

Reporting companies may or may not be required to report GHG emissions from equity investments depending on whose capital they are investing. For example, asset managers must report such emissions when they are investing their own capital, subject to any significance threshold they may establish. However, reporting is optional when the asset managers are investing capital on behalf of their clients.

Further, the methods for calculating Category 15 emissions that are discussed in the Scope 3 Technical Guidance are not meant to apply to mutual funds and other funds managed on behalf of clients. As of the issuance of this Roadmap, no guidance on calculating Category 15 emissions related to such funds has been developed.

6.4.7.2.1.1 Investment-Specific Method

To calculate total GHG emissions from equity investments under the investment-specific method, a reporting company will need to obtain its investees’ Scope 1 and Scope 2 emissions, as well as their Scope 3 emissions to the extent that those emissions are deemed significant. The reporting company will also need to know its proportional share of equity in each investee. Since the equity investees would have already calculated their emissions, no further calculations to determine the underlying emissions are required.

The formula for calculating Category 15 emissions from equity investments under the investment-specific method is shown below.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 142

Calculation Formula 15.1 Investment-Specific Method for Calculating Emissions From Equity Investments

6.4.7.2.1.2 Average-Data Method

Under the average-data method, a reporting company uses EEIO data to estimate its investees’ Scope 1 and Scope 2 emissions. To apply this method, the reporting company would obtain the amount of revenue generated by each investee and multiply that figure by an EEIO emission factor (available from one of the third-party databases listed on the GHG Protocol Web site) that reflects the economic sector — and, if possible, the geographic area — in which the investee operates. The reporting company would then multiply the result by its proportional share of equity in the investee.

The formula for calculating Category 15 emissions from equity investments under the average-data method is shown below.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 144

Calculation Formula 15.2 Average-Data Method for Calculating Emissions From Equity Investments

The inherent limitation of using the average-data method is that EEIO emission factors represent average emissions within a sector and therefore do not differentiate among emissions from individual investments. While EEIO emission factors can help a reporting company identify sectors with a high level of emissions, only investment-specific data will enable the company to identify the magnitude of emissions from a particular investment.

In addition, EEIO emission factors include all Scope 3 upstream emissions as well as equity investees’ Scope 1 and Scope 2 emissions. Therefore, if the reporting company wishes to report only the Scope 1 and Scope 2 emissions of an equity investee, it would have to disaggregate the selected EEIO emission factor to remove the upstream Scope 3 emissions. However, it may not have sufficient information to do so. In such a case, the Scope 3 Technical Guidance recommends using the full EEIO emission factor and clearly disclosing that the EEIO emission factor includes all upstream Scope 3 emissions in addition to the investee’s Scope 1 and Scope 2 emissions.

The Scope 3 Technical Guidance also recommends that a reporting company account for the effects of exchange rates and inflation over time.

6.4.7.2.2 Calculating Emissions From Project Finance and Debt Investments With Known Use of Proceeds

Both the Scope 3 Standard and the Scope 3 Technical Guidance provide that “[f]or each year during the term of the investment, companies should account for proportional share scope 1 and scope 2 emissions of relevant projects that occur in the reporting year.” They define relevant projects to “include those in GHG-intensive sectors (e.g., power generation), projects exceeding a specific threshold (defined by the company or industry sector), or projects that meet other criteria developed by the company or industry sector.” A financial intermediary’s involvement in the project financing or debt investments does not preclude accounting for emissions from GHG-emitting projects as the Scope 3 Standard and Scope 3 Technical Guidance recommend. Further, the Scope 3 Technical Guidance recommends accounting “for proportional Scope 3 emissions of projects that occur in the reporting year” when the projects’ Scope 3 emissions are significant in comparison with their Scope 1 and Scope 2 emissions (e.g., the Scope 3 emissions resulting from traffic on highways and bridges far exceed the Scope 1 and Scope 2 emissions generated during the operational phase of those infrastructure projects).

The Scope 3 Technical Guidance describes acceptable methods for calculating Category 15 emissions from project finance and debt investments with known use of proceeds as follows:

Scope 3 Technical Guidance, Category 15, “Investments,” Page 146

Calculating Emissions From Project Finance and From Debt Investments With Known Use of Proceeds . . .

Project-specific method, which involves collecting scope 1 and scope 2 emissions for the relevant project(s) and allocating these emissions based on the investor’s proportional share of total project costs (total equity plus debt)
Average-data method, which involves using EEIO data to estimate the scope 1 and scope 2 emissions from the investee company and allocating emissions based on share of total project costs (total equity plus debt).

The decision tree below, which is adapted from Figure 15.2 of the Scope 3 Technical Guidance, can help reporting companies select a method for calculating such GHG emissions.

Further, the Scope 3 Technical Guidance recommends that initial sponsors or lenders of projects (1) “also account for the total projected lifetime scope 1 and scope 2 emissions of relevant projects financed during the reporting year” and (2) “report those emissions separately from scope 3.” For more information, see Section 6.4.7.2.2.3.

6.4.7.2.2.1 Project-Specific Method

Under the project-specific method, a reporting company collects from the investee the Scope 1 and Scope 2 emissions related to each relevant project and then allocates those emissions on the basis of the reporting company’s proportional share of the total project costs, which comprise debt and equity.

The formula for calculating Category 15 emissions from project finance and debt investments with known use of proceeds under the project-specific method is shown below.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 148

Calculation Formula 15.3 Project-Specific Method for Calculating Emissions From Project Finance and Debt Investments With Known Use of Proceeds

6.4.7.2.2.2 Average-Data Method

To calculate Category 15 emissions from project finance and debt investments with known use of proceeds under the average-data method, a reporting company generally would first multiply (1) the total project costs for projects in the construction phase by an EEIO emission factor of the relevant construction sector and (2) the total revenue for projects in the operational phase by an EEIO emission factor of the relevant operating sector. It would then multiply each result by the reporting company’s proportional share of the total project costs. Ideally, the EEIO emission factors used would reflect each project’s geographic location and would be adjusted, if possible, for exchange rates and inflation.

The formula for calculating such emissions under the average-data method is shown below.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 150

Calculation Formula 15.4 Average-Data Method for Calculating Emissions From Project Finance and Debt Investments With Known Use of Proceeds

Since the EEIO emission factors applied under the average-data method represent average emissions within a sector and therefore do not differentiate among emissions from individual projects, the Scope 3 Technical Guidance recommends using the average-data method only if project-specific data are not available. In addition, reporting companies are advised to clearly disclose the methods and assumptions they used to calculate their Category 15 emissions.

Note that EEIO data cannot be used to estimate GHG emissions from the operational phase of projects when no revenue is generated during that phase. In such cases, reporting companies may use other data or assumptions (e.g., from industry partners or government studies of similar projects).

6.4.7.2.2.3 Total Projected Lifetime Emissions

As previously noted in Section 6.4.7.2.2, the Scope 3 Technical Guidance recommends that initial sponsors or lenders of projects (1) “also account for the total projected lifetime scope 1 and scope 2 emissions of relevant projects financed during the reporting year” and (2) “report those emissions separately from scope 3.” Such emissions are reported in the initial year of the financing; consequently, they are not reported, amortized, or discounted in future years.

The formula for calculating projected total lifetime emissions from project finance and debt investments with known use of proceeds is shown below.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 152

Calculation Formula [15.522] Method for Calculating Projected Total Lifetime Emissions From Project Finance and Debt Investments With Known Use of Proceeds

This emission calculation formula is less prescriptive than others because (1) the data required to develop estimates of total lifetime emissions may vary by project type and (2) the calculations will generally be based on assumptions about each project’s operation and expected lifetime.

To develop their estimates, reporting companies are advised to consider collecting data on each project’s (1) expected average annual emissions (which, in the case of a power plant, can be derived from the plant’s capacity and heat rate, the carbon content of its fuel, and its projected capacity utilization) and (2) expected lifetime. If a reporting company is uncertain about a project’s expected lifetime, it may report a range of likely values, in which case it would disclose the assumptions it used to estimate the total expected lifetime emissions.

When project financing does not occur on a regular basis, there may be fluctuations in the emissions being reported. In such cases, the Scope 3 Standard and Scope 3 Technical Guidance recommend disclosing the appropriate context of the project financing.

6.4.7.3 Practical Examples

Example 15.1 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 15 emissions from equity investments under the investment-specific method.

Scope 3 Technical Guidance, Category 15, “Investments,” Pages 142–143

Example 15.1 Calculating Emissions From Equity Investments Using the Investment-Specific Method

Example 15.2 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 15 emissions from equity investments under the average-data method.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 145

Example 15.2 Calculating Emissions From Equity Investments Using the Average-Data Method

Example 15.3 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 15 emissions from project finance and debt investments with known use of proceeds under the project-specific method.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 148

Example 15.3 Calculating Emissions From Project Finance and Debt Investments With Known Use of Proceeds Using the Project-Specific Method

Example 15.4 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate Category 15 emissions from project finance and debt investments with known use of proceeds under the average-data method.

Scope 3 Technical Guidance, Category 15, “Investments,” Pages 150–151

Example 15.4 Calculating Emissions From Project Finance and Debt Investments With Known Use of Proceeds Using the Average Data Method

Example 15.5 of the Scope 3 Technical Guidance, which is reproduced below, illustrates how a reporting company may calculate projected total lifetime emissions from project finance and debt investments with known use of proceeds.

Scope 3 Technical Guidance, Category 15, “Investments,” Page 152

Example 15.5 Calculating Projected Total Lifetime Emissions From Project Finance and Debt Investments With Known Use of Proceeds

6.4.7.4 Optional Reporting for Category 15

The table below, which is adapted from Table 5.10 of the Scope 3 Standard, describes the types of investments included in Category 15’s optional boundary.

Table 6-6 Accounting for Emissions From Investments Within Category 15’s Optional Boundary

Type of Investment	Description
Debt investments without known use of proceeds	General-corporate-purpose debt holdings
Managed investments and client services	In general, investments managed on behalf of clients (using clients’ capital) or services provided to clients, including: Investment and asset management (equity or fixed-income funds managed on behalf of clients, using clients’ capital). Corporate underwriting and issuance for clients seeking equity or debt capital. Financial advisory services for clients seeking assistance with mergers and acquisitions or requesting other advisory services.
Other investments or financial services	Other investments, financial contracts, or financial services not included above (e.g., pension funds, retirement accounts, securitized products, insurance contracts, credit guarantees, financial guarantees, export credit insurance, credit default swaps)

As of the issuance of this Roadmap, the GHG Protocol organization has not provided any guidance on calculating emissions from investments in Category 15’s optional boundary. Check the GHG Protocol Web site for any updates.

6.4.8 Applicability of Downstream Scope 3 Categories to Emissions Associated With Final and Intermediate Products Sold by the Reporting Company

Whereas upstream Scope 3 categories make no distinction between final and intermediate products purchased by the reporting company, the applicability of a particular downstream Scope 3 category to emissions associated with products sold by the reporting company may vary depending on whether the sold products are final or intermediate. The table below, which is adapted from Table 5.11 of the Scope 3 Standard, summarizes the applicability of downstream Scope 3 categories to emissions associated with sold final and intermediate products, respectively.

Table 6-7 Applicability of Downstream Scope 3 Categories to Final and Intermediate Products Sold by the Reporting Company

Downstream Scope 3 Category	Applicability to Emissions Associated With Sold Final Products	Applicability to Emissions Associated With Sold Intermediate Products
9. Downstream transportation and distribution	Emissions generated between the point of sale by the reporting company and the end consumer, including retail and storage.	Emissions generated between the point of sale by the reporting company and either (1) the end consumer (if the end use of the intermediate product is known) or (2) business customers (if the end use of the intermediate product is unknown).
10. Processing of sold products	N/A	Processing of sold intermediate products by customers.
11. Use of sold products	Required — Direct use-phase emissions of sold final products by end users (i.e., emissions resulting from the use of sold final (1) products that directly consume fuel or electricity during use, (2) fuels and feedstocks, and (3) GHGs or products that contain GHGs released during use). Optional — Indirect use-phase emissions of sold final products.	Required — Direct use-phase emissions of sold intermediate products by end users (i.e., emissions resulting from the use of sold intermediate (1) products that directly consume fuel or electricity during use, (2) fuels and feedstocks, and (3) GHGs or products that contain GHGs released during use). When an intermediate product becomes part of a final product, only the direct use-phase emissions applicable to the intermediate product need to be captured (e.g., the emissions resulting from the use of a vehicle’s motor, as opposed to those resulting from the use of the vehicle as a whole). Optional — Indirect use-phase emissions of sold intermediate products.
12. End-of-life treatment of sold products	Emissions from disposing of sold final products at the end of their lives.	Emissions from disposing of sold intermediate products at the end of their lives.
13. Downstream leased assets	Fully applicable (the distinction between final products and intermediate products is irrelevant to this category).
14. Franchises	Fully applicable (the distinction between final products and intermediate products is irrelevant to this category).
15. Investments	Fully applicable (the distinction between final products and intermediate products is irrelevant to this category).

Note that when the reporting company does not know the eventual end use of a sold intermediate product and is unable to reasonably estimate the actual or average end use of that product, downstream emissions associated with the product may be excluded from the reporting company’s Scope 3 inventory. However, the reporting company must disclose the exclusion and provide an appropriate justification for it, as discussed in Section 6.7.

Footnotes

See Section 6.4.1.4 for discussion of Category 9’s optional boundary.

See Section 6.4.3.4 for discussion of Category 11’s optional boundary.

See Section 6.4.5.4 for discussion of Category 13’s optional boundary.

See Section 6.4.6.4 for discussion of Category 14’s optional boundary.

For situations in which the reporting entity has neither financial control nor significant influence over the emitting entity, the reporting company has the option to establish a threshold below which equity investments are excluded from the reporting company’s GHG inventory. If this option is elected, it must be appropriately justified and disclosed.

The Scope 3 Technical Guidance contains two calculation formulas numbered as 15.4. For clarity, we have renumbered the second of those formulas, as reproduced, as 15.5.