Scope 3 category 1: purchased goods and services

Ask most manufacturers, retailers or food companies where their emissions are and the answer is in what they buy. Category 1 is usually the largest part of their footprint, the one investors and customers ask about, and one of the five CARB has proposed to make mandatory under SB 253. This guide explains what category 1 covers and excludes, the four calculation methods, works through a beverage company's inventory, and covers reduction levers and common mistakes.

By Mirza Fahad Baig, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. 3 minute read.

Short answer

Purchased goods and services, category 1 of scope 3, covers the cradle-to-gate emissions of everything a company buys in the year that is not counted in another category: raw materials, components, packaging, and services such as cleaning, IT and advertising. Cradle-to-gate means all emissions from extracting, producing and transporting the materials up to the point the goods leave the supplier. Capital goods are category 2, fuel and energy are category 3, and transport the company pays for separately is category 4. Companies can measure category 1 with four methods: supplier-specific product footprints, the hybrid method, average-data factors per tonne or unit, and spend-based factors per dollar, often mixing them by purchase type. For most companies that buy physical goods, it is the largest scope 3 category. In this guide's example, a beverage company's category 1 is 105,000 tonnes, 49% of it based on supplier data.

At a glance

Covers
Everything bought
Boundary
Cradle-to-gate
Not included
Capex, fuel, freight
Methods
Four, often combined
Usually
Largest scope 3 category
SB 253
Proposed as mandatory
Scope 3 category 1: purchased goods and servicesCovers: Everything bought; Boundary: Cradle-to-gate; Not included: Capex, fuel, freight; Methods: Four, often combined; Usually: Largest scope 3 category; SB 253: Proposed as mandatory.KEY FACTS AT A GLANCEScope 3 category 1: purchased goods and servicesCoversEverything boughtBoundaryCradle-to-gateNot includedCapex, fuel, freightMethodsFour, often combinedUsuallyLargest scope 3 categorySB 253Proposed as mandatoryTax BakersScope 3 category 1: purchased goods and servicesCovers: Everything bought; Boundary: Cradle-to-gate; Not included: Capex, fuel, freight; Methods: Four, often combined; Usually: Largest scope 3 category; SB 253: Proposed as mandatory.KEY FACTS AT A GLANCEScope 3 category 1: purchasedgoods and servicesCoversEverything boughtBoundaryCradle-to-gateNot includedCapex, fuel, freightMethodsFour, often combinedUsuallyLargest scope 3 categorySB 253Proposed as mandatoryTax Bakers
Key facts at a glance, as set out in this guide.

What does purchased goods and services include?

Category 1 includes the upstream emissions of all products and services bought or acquired in the reporting year, whether direct inputs to production, such as ingredients and packaging, or indirect purchases, such as office supplies, cleaning, consultancy, software and advertising. It includes the emissions of producing them and the transport between tiers of the supply chain up to the supplier's gate. Emissions are counted in the year of purchase, not when the goods are used. See the 15 scope 3 categories.

What does category 1 exclude?

  • Capital goods: items the company treats as fixed assets in its accounts go in category 2.
  • Fuel and energy: the upstream emissions of fuel and electricity go in category 3.
  • Transport the company pays for separately: inbound freight bought from carriers goes in category 4, although transport included in the supplier's price stays within category 1.
  • Intra-group purchases: those are already in the group's scope 1 and 2.

Which methods can be used for purchased goods and services?

The GHG Protocol's guidance sets out four, from most to least specific. The supplier-specific method uses product-level cradle-to-gate footprints from suppliers. The hybrid method combines suppliers' allocated scope 1 and 2 emissions with secondary data for their inputs. The average-data method multiplies quantities, such as tonnes of sugar, by average cradle-to-gate factors from life cycle databases. The spend-based method multiplies spend by economic input-output factors. Companies usually use the most specific method available for each purchase and spend-based estimates for the rest. See supplier-specific data and the spend-based method.

Purchased goods and services: a beverage company's category 1

A soft drinks company calculates category 1 for its 2026 purchases.

PurchaseMethodTonnes CO2eShare
Aluminium cansSupplier-specific42,00040%
SugarAverage-data30,00029%
PET bottles and preformsAverage-data18,00017%
Co-packing servicesHybrid9,0009%
Marketing and IT servicesSpend-based6,0006%
Total105,000100%
Category 1 emissions by purchase (tonnes CO2e)Category 1 emissions by purchase (tonnes CO2e)42,000Cans30,000Sugar18,000PET9,000Co-packing6,000ServicesBased on supplier dataAverage or spend-based
Packaging and ingredients dominate a beverage company's category 1.

Aluminium cans are the largest item, and the can maker provides verified product footprints, so the company uses them. Sugar and plastic use average factors per tonne from life cycle databases, because suppliers do not yet give footprints. The co-packer provides its allocated scope 1 and 2 emissions, with secondary data added for the ingredients it buys. Marketing and IT services are estimated from spend. In total, 49% of category 1 rests on supplier data, which the company discloses. Its levers are clear: higher recycled content in cans, which have much lower emissions per tonne, lighter PET bottles and lower-carbon sugar sourcing.

What mistakes are common in category 1?

Counting freight twice, in category 1 and category 4; putting capital items into category 1, or the reverse, in a way that does not match the accounts; including intra-group purchases; mixing purchase-year and use-year timing; applying spend-based factors without adjusting for inflation or currency; and using supplier figures that cover only the supplier's scope 1 and 2 as if they were full cradle-to-gate footprints. A reconciliation from total purchases in the ledger to the purchases covered by the inventory helps show completeness to assurance providers. See sustainability assurance.

What do the rules require for category 1?

IFRS S2 and ESRS E1 require category 1 where it is relevant or significant, which it is for almost every company that buys physical goods. CARB has proposed category 1 as one of the five mandatory categories under SB 253 from 2027, with spend-based and average-data methods allowed and the share of primary supplier data disclosed. See SB 253 scope 3 from 2027 and IFRS S2.

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Questions people ask

What is scope 3 category 1?

Purchased goods and services: the cradle-to-gate emissions of all goods and services a company buys in the year, other than capital goods, fuel and energy, and separately paid transport.

What is the difference between category 1 and category 2?

Category 1 covers goods and services expensed or held as inventory; category 2 covers capital goods treated as fixed assets.

Which methods can be used for category 1?

Supplier-specific, hybrid, average-data and spend-based, often combined by purchase type.

Is category 1 required under SB 253?

CARB has proposed category 1 as one of five mandatory scope 3 categories from 2027.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. GHG Protocol Corporate Value Chain (Scope 3) Standard
  2. Ropes & Gray: CARB fleshes out proposed SB 253 reporting and assurance requirements for 2027 and beyond, July 2026
  3. Morgan Lewis: CARB extends SB 253 deadline and previews 2027 reporting rules, August 2026
  4. IFRS Foundation: IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2)

Rules and fees change. If you are reading this long after October 10, 2026, confirm the figures with the source before you rely on them.

SustainabilityThe 15 scope 3 categoriesSustainabilityScope 3: using supplier-specific dataSustainabilityScope 3: the spend-based method

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