Value Chain (in Carbon Accounting)
In carbon accounting, the value chain encompasses all upstream and downstream activities associated with an organization's operations — from raw material extraction and supplier manufacturing through the organization's own operations to product distribution, customer use, and end-of-life disposal. Scope 3 emissions are the GHG impacts of the value chain.
The value chain concept is central to understanding why Scope 3 emissions represent 70–90% of most companies' carbon footprint. Every product or service has a chain of activities stretching from raw material extraction to final disposal, each generating greenhouse gas emissions.
Upstream value chain activities include: raw material extraction and processing, component manufacturing, purchased services, upstream logistics, capital equipment production, and business travel. Downstream activities include: product distribution, retail, consumer use, maintenance, and end-of-life treatment (recycling, landfill, incineration).
Mapping the value chain is the first step in understanding which Scope 3 categories are material for a given organization. A manufacturing company's largest Scope 3 sources are typically purchased goods (Category 1) and upstream transportation (Category 4). A financial institution's are financed emissions (Category 15). A software company's may be employee commuting (Category 7) and use of sold products (Category 11).
Gravity's platform helps organizations map their value chain to GHG Protocol Scope 3 categories, prioritize data collection efforts based on materiality, and progressively improve data quality from spend-based estimates to supplier-specific primary data.
Frequently asked questions
What is a value chain in carbon accounting? +
The value chain encompasses all upstream (suppliers, materials, logistics) and downstream (distribution, use, disposal) activities associated with an organization's products and services. Scope 3 emissions represent the GHG impact of the entire value chain.
Related terms
Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur in an organization's value chain — both upstream (suppliers, purchased goods, business travel, employee commuting) and downstream (product use, end-of-life treatment, investments). Scope 3 typically represents 70–90% of a company's total carbon footprint.
Supply Chain Emissions
Supply chain emissions are the greenhouse gases produced throughout an organization's upstream and downstream value chain — from raw material extraction and manufacturing through distribution, product use, and end-of-life disposal. In GHG Protocol terms, these are Scope 3 emissions, and they typically represent the majority of a company's total footprint.
Carbon Accounting
Carbon accounting is the systematic process of measuring, recording, and reporting the greenhouse gas (GHG) emissions produced by an organization, product, or activity. It follows standardized methodologies — most commonly the GHG Protocol — to quantify emissions across Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain) categories, producing an auditable inventory that underpins disclosure, reduction planning, and regulatory compliance.
GHG Protocol
The GHG Protocol is the world's most widely used greenhouse gas accounting standard. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides frameworks for organizations, cities, and countries to measure and manage their emissions across three scopes.