GHG accounting for small and mid-sized suppliers

Why does GHG accounting for suppliers matter now?

A supplier's scope 1 and 2 emissions are part of its customers' scope 3, category 1, purchased goods and services. Customers reporting under the CSRD, IFRS S2 or, from 2027, SB 253's scope 3 rules, and those with science-based targets, want supplier-specific data to replace rough spend-based estimates and to track suppliers' progress. Some customers set supplier targets or prefer suppliers that report, which puts pressure on SMEs that have never measured their emissions. See scope 3 supplier-specific data.

Where should a small supplier start?

1. Define the boundary: the sites and vehicles the company owns or controls.
2. List scope 1 sources: gas, oil and other fuels burned on site, company vehicles, refrigerants in air conditioning and refrigeration, and any process emissions.
3. List scope 2 sources: purchased electricity, heat, steam and cooling.
4. Collect a year of quantities from invoices, meter readings and fuel cards.
5. Multiply by published emission factors, such as government conversion factors, recording the source and year.
6. Report scope 2 location-based, and market-based if the company buys renewable electricity with certificates.
7. Calculate an intensity figure, such as tonnes per million of revenue, and keep the evidence.

See calculating scope 1 and 2 emissions.

GHG accounting for suppliers in practice: a packaging maker

A packaging maker with 80 employees and revenue of EUR 12 million calculates its first inventory, using illustrative factors.

Electricity is 63% of the total, so a renewable electricity contract with certificates would cut market-based scope 2 sharply. The intensity is 29.6 tonnes per EUR million of revenue. Its largest customer buys 30% of output by weight, so the supplier allocates 106 tonnes to that customer, explaining the allocation basis. See location-based and market-based scope 2.

What can customers ask for?

For financial years starting on or after 1 January 2027, the CSRD's value chain cap means a reporting company may not require a company in its value chain with 1,000 employees or fewer to provide information beyond the datapoints listed in the voluntary standard, with a shorter list for companies with ten or fewer employees. The basic module of the voluntary standard, based on the VSME, covers energy use and scope 1 and 2 emissions, among other topics. The cap covers requests for CSRD reporting, not those made under other laws or by customers outside its scope, such as US companies reporting under SB 253. See the value chain cap and the voluntary standard.

When does a supplier need product footprints?

When customers want emissions per product they buy, rather than a share of the company total. The PACT methodology, from the WBCSD's Partnership for Carbon Transparency, sets rules for calculating and exchanging cradle-to-gate product carbon footprints, consistent with the GHG Protocol's product standard and ISO 14067. A simpler first step is to allocate company emissions to products by mass, units or machine hours, and explain the basis. See purchased goods and services.

Does a small supplier need scope 3?

Not to start with. The voluntary standard treats scope 3 as optional for smaller companies, and most customers ask first for scope 1 and 2. When a supplier does add scope 3, the largest categories are usually its own purchased materials and transport, which it can estimate with a spend-based method and refine later. See the spend-based method.

What tools and support are available?

Government emission factor sets, free calculators such as the SME Climate Hub's, industry association tools, and customers' supplier programmes, which sometimes fund data collection. A spreadsheet with clear sources is enough for a first inventory; what matters is consistent boundaries, documented factors and evidence that can be shown to customers or an assurance provider. See building a GHG inventory.

This guide is general information. It is not tax or legal advice for your situation.