Upstream and downstream emissions, explained

Sustainability

2. Jan 2023

Eline Wajon

Head of Climate Strategy

Headshot of Evan Farbstein

Evan Farbstein

Content manager

The Greenhouse Gas Protocol divides scope 3 emissions into upstream and downstream sources.

Eline Wajon

Head of Climate Strategy

Headshot of Evan Farbstein

Evan Farbstein

Content manager

Read bio

If your business is like most others, scope 3 is responsible for the majority of your carbon footprint.

Scope 3 – also called value chain emissions – accounts for around 90% of the average business’s climate impact.

To comprehensively report and reduce your business’s emissions, you need to know your full scope 3 emissions – and to achieve that, you will need to calculate your upstream and downstream emissions sources. 

What are upstream and downstream emissions?

The Greenhouse Gas Protocol – the most widely-used framework for calculating business carbon emissions – divides scope 3 emissions into upstream and downstream sources.

Upstream emissions come from the production of your business’s products or services, while downstream emissions come from their use and disposal.

The infographic below displays a business’s upstream and downstream activities, as well as the 15 categories of scope 3 emissions defined by the Greenhouse Gas Protocol:

Upstream emissions

Upstream emissions occur during the production of goods or services that a business purchases or uses.

For example: if your retail business uses plastic to produce its products, the emissions resulting from the production and transportation of that plastic would be upstream emissions.

Upstream emissions occur during production

The table below contains a simplified version of the eight upstream emissions categories defined by the Greenhouse Gas Protocol:

CategoryDescription
Purchased goods and services Extraction, production, and transportation of goods and services purchased or acquired by the company
Capital goodsExtraction, production, and transportation of capital goods purchased or acquired by the company
Fuel- and energy-related activities
Extraction, production, and transportation of fuels and energy purchased or acquired by the company which are not already accounted for in scope 1 or scope 2
Upstream transportation and distributionTransportation and distribution of products purchased by the company, as well as other transportation and distribution services like inbound logistics, outbound logistics, and transpiration between company facilities
Waste generated in operationsDisposal and treatment of waste generated in the company’s operations, in facilities not owned or controlled by the company
Business travelTransportation of employees for business-related activities in vehicles not owned or operated by the company
Employee commutingTransportation of employees between their homes and their worksites in vehicles not owned or operated by the company
Upstream leased assetsOperation of assets leased by the company and not included in scope 1 and scope 2

Refer to the Greenhouse Gas Protocol’s Technical Guidance for Calculating Scope 3 Emissions for a more detailed breakdown of the categories.

How Flying Tiger calculated and reduced its scope 3 emissions

The global retailer used Normative to discover an unexpected emissions hotspot in its upstream activities.

Downstream emissions

Downstream emissions result from the use or disposal of a business’s products or services.

For example: if your company manufactures machinery, the emissions that result from the use of that machinery would be considered downstream emissions.

Downstream emissions occur during use

CategoryDescription
Downstreamtransportationand distribution Transportation and distribution of products sold by the company between the company’s operations and the end consumer
Processing of sold productsProcessing of intermediate products sold by downstream companies 
Use of sold products
End use of goods and services sold by the company
End-of-life treatment of sold productsWaste disposal and treatment of products sold by the company, at the end of the products’ lives
Downstreamleased assets Operation of assets owned by the company and leased to other entities
FranchisesOperation of franchises in the reporting year, not included in scope 1 and scope2
InvestmentsOperation of investments, including equity and debt investments and project finance

Refer to the Greenhouse Gas Protocol’s Technical Guidance for Calculating Scope 3 Emissions for a more detailed breakdown of the categories.

Why classify emissions in this way?

By dividing its scope 3 carbon footprint into upstream and downstream sources, a business can better focus its emissions calculation and reduction efforts.

A company’s business model will provide clues to its likely sources of emissions hotspots.

For instance, retailers will often have large upstream emissions due to the production of the goods they sell. While businesses in financial services, on the other hand, often find their carbon footprint concentrated in downstream sources due to their investments.

How to manage your upstream and downstream emissions

To manage your upstream and downstream emissions, you first need to measure them. But calculating these emissions manually is a time-consuming process, and one that’s prone to human error. 

Carbon accounting is key to managing emissions

Instead of manual calculations, businesses can use software-based carbon accounting to calculate, report, and reduce their upstream and downstream emissions.

Carbon accounting, like financial accounting, quantifies the impact of an organization’s business activities – though instead of financial impact, it measures climate impact.

By using a comprehensive, automated, and science-backed carbon accounting provider, you empower your business to efficiently calculate its full carbon footprint, including the upstream and downstream emissions in your business’s value chain.

You can then use these calculations to identify hotspots, implement reduction measures, and track your progress.

Upstream and downstream emissions calculations with industry-leading accuracy

Normative’s automated, Greenhouse Gas Protocol-based emissions calculations empower businesses to calculate, report, and reduce their carbon footprint.

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