What Are Purchased Goods and Services Emissions?

Purchased goods and services emissions refer to the greenhouse gas (GHG) emissions associated with the production, transportation, and disposal of goods and services that an organisation buys to support its operations.

Purchased goods and services emissions fall under Scope 3, indirect emissions, and can represent a substantial part of a company's overall carbon footprint!

While these emissions are not directly produced by the organisation, they are crucial to consider as they encompass the entire supply chain of the purchased items, from raw material extraction to manufacturing, packaging, and distribution. Understanding purchased goods and services emissions is vital for organisations looking to manage their overall environmental impact comprehensively.

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Examples of Purchased Goods and Services Emissions

Purchased goods and services emissions are relevant across virtually all sectors, particularly:

• Office-Based Organisations: For companies with office-based operations, purchased goods and services emissions may come from office supplies (like paper, ink, and stationery), IT equipment (such as computers, printers, and servers), and services (such as outsourced cleaning or consultancy).
• Retailers: Retail businesses have a significant carbon footprint from the goods they purchase to sell, including clothing, electronics, food, and packaging materials. The production and transportation of these items contribute to Scope 3 emissions.
• Manufacturers: For manufacturing companies, emissions associated with purchased goods and services might include raw materials like metals, plastics, and textiles, as well as components and machinery used in the production process.
• Food and Beverage Companies: Restaurants, cafes, and food manufacturers incur emissions from purchased ingredients, packaging materials, kitchen equipment, and outsourced services like delivery or cleaning.
• Healthcare Providers: Hospitals and clinics purchase a wide range of goods and services, such as medical supplies, pharmaceuticals, equipment, and outsourced services like laundry and waste management, all of which contribute to their Scope 3 emissions.

Tip: Don't confuse purchased goods and services with capital goods. Purchased goods and services refer to items that an organisation buys regularly and consumes as part of its daily operations while capital goods are assets that an organisation acquires to use over a long period. These are typically durable items that are capitalised on the balance sheet and have a lifespan of more than one year. Emissions related to capital goods fall under a different Scope 3 category.

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Benefits of Measuring Purchased Goods and Services Emissions

Measuring emissions from purchased goods and services offers several key advantages for organisations. By understanding and tracking these emissions, organisations can identify opportunities for footprint reductions and operational improvements.

Measuring emissions from purchased goods and services helps organisations identify high-impact areas in their supply chain, enabling them to target efforts for reducing emissions. This could involve switching to more sustainable suppliers, choosing products with a lower carbon footprint, or engaging with existing suppliers to improve their sustainability practices. For many companies, these steps can lead to substantial reductions in their overall emissions.

Beyond reducing emissions, measuring this category can also uncover opportunities for cost savings and efficiency gains. Organisations may identify inefficiencies in their supply chain, such as excess packaging, unnecessary transportation, or wasteful production processes. Addressing these inefficiencies not only reduces emissions but can also lower costs, improve logistics, and streamline operations, creating a win-win situation for both the environment and the business.

Moreover, actively managing purchased goods and services emissions can enhance an organisation’s reputation. As stakeholders, including customers, investors, and partners, become more conscious of environmental responsibility, they increasingly expect transparency and action on sustainability. Demonstrating a commitment to measuring and managing Scope 3 emissions can build trust and strengthen relationships, positioning the organisation as a leader in sustainability.

Understanding and managing these emissions is also vital for meeting climate goals and regulatory requirements. Many organisations have set ambitious targets, such as achieving net-zero emissions, and addressing the emissions from purchased goods and services is essential for reaching these goals.

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How FutureTracker Can Help

FutureTracker provides comprehensive support for organisations in every aspect of measuring and managing their emissions, including purchased goods and services emissions. Our emissions calculator and guidance library simplifies the process, making it easy for your organisation to identify sources of emissions, quantify their impact, and develop targeted strategies to reduce them effectively.

If you’d like to learn more about FutureTracker, get in touch with us at enquiries@futuretracker.com or learn more about our plans and pricing here.