Scope 3
Emissions
Supply chain emissions are complex, fragmented, and risky. Regulators demand disclosure. Investors demand trust. Learn how your finance team can unlock audit-ready Scope 3 data — and transform compliance into operational insight.
What Are Scope 3 Emissions?
Scope 3 emissions are defined by the GHG Protocol as all indirect emissions that occur in the value chain of the reporting company. Unlike Scope 1 and Scope 2 emissions — which cover direct operations and purchased energy — Scope 3 includes emissions from sources outside a company’s direct control.
These emissions span upstream activities, such as supplier production processes and logistics, and downstream impacts, including product use and end-of-life treatment. This breadth makes Scope 3 the most extensive — and the most challenging — component of any corporate carbon footprint.
For regulatory compliance, companies must disclose emissions across up to 15 Scope 3 categories, covering areas like purchased goods and services, capital goods, transportation and distribution, business travel, and investments. Crucially, regulators expect transparency not only in emissions data, but also in methodologies, assumptions, and data gaps.
In short: Scope 3 reporting requires a clear, defensible story of your value chain’s emissions impact — backed by verifiable data.
The Challenge: Why Most Scope 3 Reporting Fails Audit
Despite its critical importance, many companies still approach Scope 3 reporting with outdated tools and methodologies. Supplier surveys, spreadsheet models, proxy estimates, and static emissions factors dominate reporting practices — resulting in disclosures that cannot stand up to investor-grade scrutiny.
This is problematic. Under frameworks like CSRD, companies are required to obtain limited assurance over their sustainability disclosures, with a roadmap towards reasonable assurance. This elevates Scope 3 emissions from a voluntary disclosure to an auditable compliance obligation.
Auditors expect traceability. Regulators expect accuracy. Investors expect credibility.
Yet, most organizations are left patching together emissions estimates from disconnected systems — siloed from financial data, operations, and core decision-making processes. When auditors request source documentation, many teams scramble to reconstruct their emissions story from spreadsheets, emails, and unverifiable supplier claims.
At neoeco, we believe this is a fundamental infrastructure problem — not a reporting problem. Scope 3 emissions need to be tracked and managed like financial transactions: continuously recorded, independently verifiable, and integrated into core business systems.
At neoeco, we believe Scope 3 emissions data should be treated with the same rigour as financial data. This is why we designed our platform around Financially-integrated Sustainability Management (FiSM) — empowering finance teams to lead sustainability disclosures using audit-ready, transaction-level emissions data to support the following frameworks:
Corporate Sustainability Reporting Directive (CSRD)
Australian Sustainability Reporting Standards (ASRS)
Greenhouse Gas Protocol (GHG Protocol)
ISO 14064-1 & 14064-3 Standard
ISSA 5000 Standards
Organizational Life Cycle Assessment (O-LCA) Methodology
What Is the LCA Approach to Scope 3 Measurement?
In Scope 3 emissions reporting, the Life Cycle Assessment (LCA) approach offers a structured alternative to directly collecting primary supplier data. It’s particularly valuable when primary data is unavailable or impractical to gather at scale. Here's a clear, technical breakdown:
Life Cycle Assessment (LCA) is a scientific methodology for evaluating the environmental impacts of a product, process, or service across its entire life cycle — from raw material extraction to disposal.
When applied to Scope 3 emissions, LCA models can be used to estimate cradle-to-gate or cradle-to-grave emissions for purchased goods and services, product use, and end-of-life treatment. Essentially, instead of asking suppliers for their specific emissions, you use industry-average or process-based emission factors to model emissions based on product characteristics and production methods.
This approach allows companies to calculate Scope 3 emissions without relying solely on primary data, offering a systematic and scalable estimation methodology. LCA-derived emission factors can be applied to purchase volumes, material composition, or production weights, allowing emissions to be estimated even when supplier-specific data is missing.
How LCA-Based Scope 3 Reporting Works
Map Activities to Products or Processes:
Select Appropriate LCA Data Sources:
Apply Emission Factors
Calculate Total Emissions
Document Methodology and Data Sources
LCA vs. Primary Data in Scope 3 Reporting
Approach
Description
Best For
Primary Data
Actual supplier-specific emissions data collected directly from supply chain partners.
High-priority suppliers, emissions hotspots, categories material to financial and regulatory risk. Enables direct verification during audits.
LCA-Based Data
Industry-average emission factors applied via trusted LCA databases (e.g. Ecoinvent, GaBi).
Categories where primary data is unavailable. Suitable for defensible estimations, clearly disclosed as secondary data in audit processes.
neoeco's approach
Hybrid model combining supplier-specific data and LCA factors within a unified FiS ledger. Enables real-time emissions accounting, traceability, and continuous audit readiness.
Audit-ready Scope 3 reporting at enterprise scale. Enables assured, finance-owned disclosures. Designed for limited and reasonable assurance under CSRD, ISSB, and ISO 14064. Ideal for organisations requiring defensible, transparent, and regulator-compliant emissions inventories.
The Solution: Financially-Integrated Scope 3 Reporting with neoeco
neoeco transforms Scope 3 emissions reporting through a finance-led, infrastructure-first approach. We built our platform around FiSM principles to treat emissions as operational data — captured in real-time and structured for audit-readiness by default.
At the heart of neoeco is the FiS ledger — a centralized, continuously updated emissions ledger that mirrors financial accounting systems. Rather than relying on static reports and manual data aggregation, emissions data is captured, reconciled, and maintained as a living, verifiable dataset.
This allows companies to:
Move from fragmented spreadsheets to a unified data environment.
Replace proxy-heavy estimates with supplier-verified, transaction-based data wherever possible.
Maintain continuous audit readiness, with emissions traceability back to source data.
Empower finance, accounting, and sustainability teams to collaborate within a shared system.
Importantly, neoeco’s infrastructure is designed to adapt. As regulatory frameworks evolve and better supplier data becomes available, your Scope 3 reporting can be updated dynamically — without structural overhauls or system replacements.
Why Finance Teams Lead Scope 3 at neoeco
Scope 3 emissions impact financial risk. Investors evaluate supply chain emissions as part of capital allocation. Regulatory disclosures increasingly fall under CFO oversight. Assurance standards mirror those used in financial auditing.
In this environment, Scope 3 reporting must move out of isolated sustainability departments and into the domain of financial management.
With neoeco, finance teams can:
Take ownership of Scope 3 emissions reporting as part of corporate risk management.
Leverage familiar accounting workflows to manage emissions data integrity.
Provide auditors with verifiable, transaction-level emissions records.
Ensure compliance with CSRD, ISSB, UK SRS, ASRS, and other standards.
Our platform doesn’t replace sustainability teams — it equips financial leaders to integrate emissions data into corporate decision-making processes, transforming Scope 3 from a compliance burden into a source of operational intelligence.
Why Scope 3 Reporting Demands New Infrastructure
Legacy ESG platforms were designed for static reporting and basic compliance, not for real-time, verifiable emissions management. Most are locked into rigid templates, unable to adapt to evolving regulations or supplier-specific data.
neoeco represents a strategic shift:
Adaptable: Structured to evolve alongside regulations and data improvements.
Audit-Ready: Transaction-level data traceability built-in.
Financially Integrated: Emissions reporting aligned with financial reporting processes.
Composable: Open APIs for data ingestion from ERPs, supplier systems, and LCA tools.
In today’s regulatory environment, this flexibility isn’t optional — it’s essential.
Download our manifesto
And discover how to unify sustainability and finance — in one system, one ledger, and one source of truth.
