Beyond Scope 3: measuring true emissions
A company’s emissions do not end at the boundaries of the firm, and yet when the focus broadens to the supply chain, measurement becomes more uncertain. A study by Mariano Massimiliano Croce, Ruben Fernandez-Fuertes, Nicolas Guinez, Alejandra Inzunza Méndez, Thien Nguyen and Claudio Tebaldi addresses one of the most complex issues in sustainability: Scope 3, meaning indirect emissions along the value chain. Moreover, the model does not stop at direct suppliers, but extends the calculation to the entire global economic network.
Objective measures
European regulation increasingly requires transparency on emissions along the supply chain, but the tools available are still limited. Companies struggle to measure Scope 3 and often do so with a high degree of approximation.
This gives rise to two questions:
- Is it possible to build an objective, scalable, and verifiable measure of indirect emissions?
- And how far can we go along the network of economic relationships?
The problem is structural. Available data are incomplete, methodologies diverge, and, above all, Scope 3 usually stops at the first level of suppliers and customers. But in a globalized economy, a large share of emissions is hidden in the subsequent tiers of the supply chain: suppliers’ suppliers, subcontractors, and international logistics.
The study therefore develops a methodology to measure not only Scope 3, but all emissions embedded along the entire value chain.
A network of 50,000 firms
The researchers build a unique global-scale dataset: more than 50,000 firms with financial data, customer-supplier relationships, geographic location, and emissions information. The result is an extremely detailed network covering more than 100 countries and thousands of economic relationships.
On this basis, they develop a network model that combines:
- data on relationships between firms (who buys from whom);
- international input-output matrices;
- geographic and logistics information;
- data on direct emissions (Scope 1), which are the most reliable.
One innovative element is the integration of transport emissions. Using data on ports, shipping routes, and distances, the model estimates how much CO₂ is generated to move goods along the supply chain. For example, over a 10,000-kilometer route, transport-related emissions can increase the emissions intensity of an input by up to 20%.
The key contribution, however, is another one: the introduction of the concept of “embodied emissions.” Unlike traditional Scope 3, which stops at the first tier, this approach follows all relationships in the network, includes every intermediate step, and assigns each firm a share of emissions along the entire chain. In practice, it moves from a “limited” Scope 3 to a potentially infinite scope.
The results show that this change in perspective can profoundly alter the ranking of firms. In the case studied, the ranking based on embodied emissions differs greatly from the one based on traditional Scope 1+3: some companies that appear “virtuous” turn out to have a much greater impact once the entire supply chain is taken into account.
The analysis also shows that a large share of indirect emissions is concentrated in a few nodes of the network.
Greater accountability
Adopting this methodology would mean greater accountability: it would no longer be possible to “shift” emissions along the supply chain to improve one’s numbers. Emissions always come back, because the model reallocates them across the entire network.
For policymakers, it offers a concrete tool to strengthen the implementation of sustainability regulations. A more complete measure of Scope 3 makes it possible to design more effective policies, for example on environmental tariffs or supply-chain standards.
The model also makes it possible to estimate what happens to emissions when supply chains change. For example, a global logistics shock, such as the blockage of major maritime channels, could increase supply-chain emissions by up to 7% per year. Conversely, reallocating suppliers toward less-polluting countries could significantly reduce them, but at the cost of a substantial economic contraction.
Mariano Massimiliano Croce, Ruben Fernandez-Fuertes, Nicolas Guinez, Alejandra Inzunza Méndez, Thien Nguyen and Claudio Tebaldi, The Scope of Scope-3 (October 27, 2025). Available at SSRN. DOI: http://dx.doi.org/10.2139/ssrn.5667951.
