Scope 3 category 1: purchased goods and services with spend-based factors

Category 1 covers the cradle-to-gate emissions of the goods and services you buy: raw materials, components, packaging, office supplies, IT, professional services and so on. For companies that buy physical products it is often the largest category in the whole footprint. Capital goods (equipment, buildings, vehicles) are reported separately in category 2. See the 15 Scope 3 categories.

The four methods

The GHG Protocol's technical guidance describes four methods, from most to least specific:

Spend-based is the fastest way to cover everything, because the data is already in your accounts payable. Its weakness is that it treats every euro spent in a sector as equal, so a supplier with low-carbon production looks the same as one without. Use it to screen and find your largest sources, then move those to average-data or supplier data.

The spend-based formula

emissions = spend in each category × emission factor per unit of currency for that category

The factor comes from an environmentally extended input-output (EEIO) model, which links economic sectors to their emissions.

The EPA supply chain factors

LCALens uses the U.S. EPA's Supply Chain Greenhouse Gas Emission Factors v1.3, which give kg CO2e per US dollar for over a thousand industries classified by six-digit NAICS codes. Key properties:

• Units: kg CO2e per 2022 US dollar.
• Price basis: purchaser price. LCALens uses the "with margins" factors, which include transport, wholesale and retail margins and so match what you actually pay.
• GWP basis: AR5, 100-year.
• Geography: US economy averages, so for purchases elsewhere they are an approximation, which you should state.

Examples from version 1.3:

Converting your spend

If you buy in euros or pounds in 2025, the spend has to be in 2022 US dollars before the factor applies:

1. Currency. Convert with an exchange rate for the period, from a published source such as your central bank, and record the source.
2. Price year. Adjust from your purchase year to 2022 prices with a price index (inflation would otherwise inflate your emissions). The EPA's documentation suggests adjusting spend to the factors' dollar year.
3. Exclude tax that is not part of the purchase value, such as recoverable VAT.

LCALens stores the exchange rate, its direction and source, and any price adjustment with each calculation, so the conversion can be audited later. You can try it without an account in the spend-based calculator.

Worked example

Annual purchases, already converted to 2022 US dollars:

Packaging is under a third of the spend but about two-thirds of the emissions, which tells you where supplier data would improve the result most.

Moving beyond spend

• Average-data: if you know the packaging weight, a factor per tonne of cardboard is more specific than a factor per dollar. LCALens's purchased materials calculator uses DESNZ factors per tonne of material.
• Supplier-specific: ask your largest suppliers for product carbon footprints and the method behind them, and record them as your own factors with the evidence.

Mapping your accounts

Map each general-ledger account or supplier to a NAICS code once, and reuse the mapping every year. Exclude items that are not purchases of goods or services (salaries, taxes, depreciation, intercompany charges), and move capital expenditure to category 2.