Upstream Vs Downstream - Breaking Down Scope 3 - Persefoni - Persefoni

06/02/2024, 20:55 Upstream vs Downstream: Breaking Down Scope 3 - Persefoni - Persefoni
 All / Carbon Updated: July 7, 2023 · 6 min read

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Upstream vs Downstream:
Breaking Down Scope 3
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The Greenhouse Gas (GHG) Protocol categorizes scope 3 (value chain) emissions
into two main groups: upstream and downstream emissions.
Scope 3 emissions are divided into 15 categories to help companies understand,

manage, and report on the scope 3 activities relevant to their operations. The
upstream and downstream emissions designation is based on the distinction
between the financial transactions of an organization. Upstream emissions
https://www.persefoni.com/learn/upstream-vs-downstream 1/15
everything in your value chain to produce your product, while downstream

everything in your value chain to consume your product
For many companies, value chain emissions represent the majority of their total
emissions. Therefore, understanding which categories are relevant to a
company's operations is essential for accurate carbon footprint calculations and
emission reductions. Scope 3 emissions are generally considered the most
difficult to manage, as it often involves an extensive process of collecting data and
engaging with suppliers and customers across the value chain.
 Sign up for our Scope 3 webinar to learn how engaging

suppliers for primary data collection enables precise
methods and progress toward decarbonization goals.
Products  PersefoniAI Customers Pricing Resources   Sign up free
What are
Upstream
Emissions?
What are
Downstream
Emissions?
Upstream or
Downstream?
Upstream
and
Downstream
Examples
Calculating
Upstream
and
Downstream
Emissions
What are Upstream Emissions?
How to
Reduce Upstream emissions are the indirect emissions related to a reporting company’s
Upstream
and suppliers, from the purchased materials that flow into the company to the
Downstream products and services the company utilizes. Below is a description of each of the
Emissions
eight upstream emission categories, as defined by the GHG Protocol:
Purchased goods and services: This category includes all upstream

emissions from the production of all purchased or acquired products and
services.
Capital goods: This category includes all emissions from the production of
purchased or acquired capital goods.
Fuel and energy-related activities: This category includes emissions from

fuel and energy-related purchased or consumed products or services that
aren’t covered in scopes 1 and 2.
Upstream transportation and distribution: This category includes

emissions generated from third-party transportation and distribution
services and emissions generated to transport and distribute purchased
products.
Waste generated in operations: This category includes emissions from the

treatment and disposal of the waste generated by the reporting company’s
operations. This could be solid waste and/or wastewater.
Business travel: This category includes emissions generated from employee

transportation for business-related activities in third-party-owned or
operated vehicles.
Employee commuting: This category includes emissions from employee

commutes between their workplace and home.
Upstream leased assets: This category includes emissions from the

operation of assets the reporting organization leases. This can include a
leased car used for business travel or leased heavy machinery used for a
company's construction project
What are Downstream Emissions?

Downstream emissions are the emissions related to customers, from selling
goods and services to their distribution, use, and end-of-life stages. Below is a
description of each of the seven downstream emissions categories as defined by
the GHG Protocol:
Downstream transportation and distribution: This category includes

emissions generated from transporting and distributing sold products in
vehicles that aren’t owned or controlled by the reporting organization.
Processing of sold products: This category includes emissions created

when third parties process sold intermediate products following the sale.
Intermediate products are goods used with another product before end use.
Use of sold products: This category includes emissions created from the use
of sold services and goods—encompassing the scope 1 and 2 of end users of a
sold product.
End-of-life treatment of sold products: This category includes emissions

from waste treatment and disposal of sold products at the end of their life
cycle.
Downstream leased assets: This category includes emissions generated

from the operation of owned assets leased to other entities that aren’t
included in scopes 1 or 2.
Franchises: This category includes emissions from franchise operations.

This applies to franchisors and includes scope 1 and 2 emissions from
franchisees.
Investments: This category includes investment emissions, also known as

financed emissions associated with investments. This category is mainly for
financial institutions but is relevant to all other organizations that provide
financial services.
Upstream or Downstream?
Sometimes it is difficult to determine if an emission source is upstream or
downstream. Transportation and distribution are a good case in point as they are
considered part of both the upstream and downstream value chain. To decipher
which of the two an emissions activity belongs under, consider one simple
question: a) Did my company or employees pay for the good or service, Or did my
customers or consumers pay for the good or service?
Upstream and Downstream Examples

Relevant categories for the upstream and downstream emission activities vary
between sectors, and even from company to company, depending on its
operations. Understanding each of these categories and creating operational
boundaries is the first step to calculating them. Below are descriptions of the
upstream and downstream activities of the financial and the oil and gas sectors,
respectively:
Financial Institutions:
Upstream Activities: Financial institutions will likely have emissions related

to Categories 6 and 7 as their employees often travel internationally and
commute into their offices. They will likely have emissions related to
Category 8 as well, as they may lease their offices and branches. However,
emissions from other categories will likely not be significant enough to
calculate and report.
Downstream Activities: Category 15: Investments, also known as financed

emissions, are the emissions associated with a financial institution's
investments, loans, and other financial services. For financial institutions
that report their financed emissions to the CDP, these emissions are 700x
larger than their scope 1 (direct) emissions, making up the vast majority of
their carbon footprint.
Manufacturing:
Upstream Activities: Upstream emissions from manufacturing will come

primarily from Categories 1, 2, and 4 as the transport and extraction of the
raw materials and the purchase of complex engineering infrastructure
needed to manufacture products is very emissions-intensive.
Downstream Activities: Downstream emissions for the manufacturing sector

will come mainly from Categories 9, 10, 11, and 12 as the use, distribution,
and end-of-life of manufactured products are very emissions-intensive.
Calculating Upstream and Downstream

Emissions
Upstream and downstream emissions are often cited as the most difficult to
measure due to the wide-spanning and complex nature of the necessary data
collection and calculations. However, to meet ambitious net zero emissions
commitments and comply with regulations in certain jurisdictions, organizations
must measure all of their scope 1, 2, and 3 emissions.
Companies can start by using simple spend-based data to simplify this process.
Spend-based data gives organizations a good estimate of the emissions coming
from each category and what categories are most emissions-intensive. Based on
this information, companies can select which categories should be prioritized for
more robust data collection and decarbonization strategies.
As organizations develop better methods of data collection and calculation, they

can move from the collection calculation of spend-based data to activity-based
data. Activity-based data include the capture of increasingly precise distance-
and fuel-based data to make more accurate assessments of their footprint for
each category.
How to Reduce Upstream and

Downstream Emissions
Upstream and downstream value chain emissions are considered the most
difficult to reduce because they involve adapting products and processes,
engaging with suppliers, and even instigating consumer behavior change.
However, companies can start with some low-hanging fruit, such as encouraging
workers to commute via public transportation or bicycle, reducing business
travel, or avoiding air travel altogether.
The levers for reducing emissions across the value chain differ for downstream
and upstream emissions. To minimize downstream emissions, an organization
can change its investment strategy, adopt sustainable product innovations, or
engage with customers. To reduce upstream emissions, companies can change
their procurement policies and choices; innovate their products, services, and
business models; and engage with suppliers. The Science-Based Target initiative
(SBTi) released guidance on the most appropriate ways to reduce upstream
emissions for each category, as seen below:
1. Purchased goods and services - Supplier engagement, procurement policy

and choices, product and service design, business model innovation
2. Capital goods - Supplier engagement, procurement policy, and choices,

product and service design
3. Fuel and energy-related activities - Procurement policy and choices,

product and service design, operational policies
4. Upstream transportation and distribution - Supplier engagement,

procurement policy, and choices, product and service design
5. Waste generated in operations - Product and service design, business

model innovation, operational policies
6. Business travel - Procurement policy and choices, operational policies
7. Employee commuting - Operational policies
8. Upstream leased assets - Procurement policy and choice
To help users measure their upstream and downstream emissions, Persefoni’s

Climate Management and Accounting Platform (CMAP) enables companies to
measure emissions in every category across their value chain. It offers a fully
auditable carbon accounting experience to aid regulatory compliance and
includes scope 3 emissions disclosure. Persefoni also enables companies to add
suppliers onto the platform and provide data for their portion of the company’s
scope 3 emissions categories 1-8. To better understand how Persefoni can help
measure the emissions across your value chain, reach out for a demo.
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06/02/2024, 20:55 Upstream vs Downstream: Breaking Down Scope 3 - Persefoni - Persefoni

 All / Carbon Updated: July 7, 2023 · 6 min read

Scope 3 emissions are divided into 15 categories to help companies understand,

everything in your value chain to produce your product, while downstream

 Sign up for our Scope 3 webinar to learn how engaging

Products  PersefoniAI Customers Pricing Resources   Sign up free

Purchased goods and services: This category includes all upstream

Fuel and energy-related activities: This category includes emissions from

Upstream transportation and distribution: This category includes

Waste generated in operations: This category includes emissions from the

Business travel: This category includes emissions generated from employee

Employee commuting: This category includes emissions from employee

Upstream leased assets: This category includes emissions from the

What are Downstream Emissions?

Downstream transportation and distribution: This category includes

Processing of sold products: This category includes emissions created

End-of-life treatment of sold products: This category includes emissions

Downstream leased assets: This category includes emissions generated

Franchises: This category includes emissions from franchise operations.

Investments: This category includes investment emissions, also known as

Upstream and Downstream Examples

Upstream Activities: Financial institutions will likely have emissions related

Downstream Activities: Category 15: Investments, also known as financed

Upstream Activities: Upstream emissions from manufacturing will come

Downstream Activities: Downstream emissions for the manufacturing sector

Calculating Upstream and Downstream

As organizations develop better methods of data collection and calculation, they

How to Reduce Upstream and

1. Purchased goods and services - Supplier engagement, procurement policy

2. Capital goods - Supplier engagement, procurement policy, and choices,

3. Fuel and energy-related activities - Procurement policy and choices,

4. Upstream transportation and distribution - Supplier engagement,

5. Waste generated in operations - Product and service design, business

6. Business travel - Procurement policy and choices, operational policies

7. Employee commuting - Operational policies

8. Upstream leased assets - Procurement policy and choice

To help users measure their upstream and downstream emissions, Persefoni’s

Get the latest updates straight to your inbox.

Related Articles All Posts

The 10 Best Scope 3 The 5 Best The 5 Best SEC

Product Resources Company Disclosures

Persefoni for Blog Customers SEC Climate

© 2024 Persefoni AI. All rights Do not sell or share my personal

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