CSRD and Scope 3 Emissions: What SMEs Really Need to Report

Introduction

Under the Corporate Sustainability Reporting Directive (CSRD), companies must disclose not just their own emissions, but also the indirect ones that occur across their value chain — known as Scope 3 emissions. These are often the largest share of a company’s carbon footprint and, for small and growing businesses (SMEs), also the most challenging to track.

The good news: SMEs are not expected to measure everything from day one. The VSME Standard and CSRD principles both apply proportionality — meaning you can start with what’s material and feasible. This guide explains what Scope 3 covers, what SMEs really need to report, and how to approach it step by step.

What Are Scope 3 Emissions?

Scope 3 emissions are all indirect greenhouse gas (GHG) emissions that occur outside your direct operations and purchased energy (Scopes 1 and 2). They include emissions from your suppliers, logistics, customers, and even employee travel.

The GHG Protocol defines 15 Scope 3 categories, grouped into two areas:

• Upstream (before your operations): Purchased goods and services, transport, waste, business travel.
• Downstream (after your operations): Product use, end-of-life treatment, distribution, investments.

For most SMEs, a few categories — such as purchased goods, transport, and waste — account for most of their Scope 3 footprint.

Why Scope 3 Matters for SMEs

Even if your SME is not directly covered by CSRD, you may be part of the supply chain of a larger company that is. Those clients need your emissions data for their own reporting. Being able to estimate and share this information helps you:

• Strengthen client relationships and win new contracts;
• Prepare for future sustainability regulations;
• Identify efficiency and cost-saving opportunities.

Under VSME Module B3 (Energy and GHG), SMEs are encouraged to report Scope 1 and 2 emissions, and to include Scope 3 if feasible. This aligns with CSRD’s emphasis on transparency and gradual data improvement.

Step-by-Step: How SMEs Can Approach Scope 3 Reporting

Step 1: Map Your Value Chain

Start by mapping your main upstream and downstream activities. Identify where emissions are likely to occur — for example:

• Suppliers of materials or products;
• Freight and logistics providers;
• Waste management companies;
• Customer product use or disposal.

See how to map your value chain for CSRD →

Step 2: Identify Material Categories

You don’t need to report all 15 categories. Focus on the ones most relevant to your operations and stakeholders. For many SMEs, these include:

• Purchased goods and services
• Fuel and energy-related activities (not in Scopes 1 or 2)
• Upstream and downstream transport
• Waste generated in operations
• Business travel

The double materiality principle applies here — report only those categories that are significant either for environmental impact or financial relevance.

Learn how to identify material topics →

Step 3: Estimate Emissions Using Available Data

Exact measurement is rarely possible for SMEs at the start. Instead, use activity data and standard emission factors:

• Multiply your spend on goods or services by published emission factors (e.g. kg CO₂e per euro spent);
• Use mileage data for transport;
• Estimate employee commuting using average distances.

Free tools like the GHG Protocol calculator or DEFRA conversion factors can help.

If data is missing, disclose this transparently — CSRD encourages honesty over precision in early stages.

Step 4: Engage Your Suppliers

Ask key suppliers simple questions about their energy use or certifications (e.g. renewable electricity, ISO 14001). Even partial data helps improve your estimates and demonstrates engagement.

You can include this as part of your annual supplier review or onboarding process.

See stakeholder engagement best practices →

Step 5: Document and Report Clearly

When reporting under CSRD or VSME:

• Describe your approach and data sources;
• Indicate which Scope 3 categories you’ve covered;
• Highlight improvements planned for the next year.

Transparency about limitations or assumptions is fully acceptable — regulators and clients expect gradual progress, not perfection.

Practical Example

A small IT services company identified three main Scope 3 categories:

• Business travel (flights and train travel),
• Purchased software and hardware,
• Waste from office operations.

Using invoices and travel records, the company estimated around 80 tonnes CO₂e in total Scope 3 emissions. They plan to reduce this by switching to renewable-powered data centres and limiting air travel.

This transparent, proportional approach meets both VSME expectations and client sustainability data requests.

Frequently Asked Questions

Do SMEs need to calculate all 15 Scope 3 categories?

No. Start with the categories most relevant to your business activities. Over time, you can expand coverage as your data improves.

What if I can’t get data from my suppliers?

Use average or spend-based estimates, and document your method. The CSRD and VSME allow estimated data with clear explanations.

Explore SME data collection methods →

Can service-based SMEs have Scope 3 emissions?

Yes — particularly from purchased services, IT infrastructure, and employee commuting. Even low-impact sectors should identify and disclose their main indirect sources.

Will Scope 3 reporting become mandatory for all SMEs?

Not directly. Non-listed SMEs are encouraged (not required) to report via the VSME Standard, but many will do so voluntarily to satisfy client or investor requests.

Understand whether your company falls under CSRD scope →

Key Terms

• Scope 1: Direct emissions from owned or controlled sources.
• Scope 2: Indirect emissions from purchased energy.
• Scope 3: Indirect emissions from the value chain (suppliers, customers, logistics).
• VSME Standard: Voluntary sustainability framework for SMEs.
• Double Materiality: Reporting on both impact and financial significance.

Conclusion

Scope 3 reporting is one of the more complex aspects of CSRD, but SMEs can handle it step by step. Focus first on mapping your value chain, identifying the most material categories, and using simple estimates to get started.

By documenting your approach and improving year by year, you’ll meet both regulatory expectations and client demands — building trust and positioning your SME as a responsible, forward-thinking partner in the low-carbon economy.

If business travel is one of your Scope 3 categories, use our interactive calculator to estimate your emissions:

The calculator uses standard DEFRA 2024 emission factors and provides a detailed breakdown by travel mode (flights, trains, cars, hotels) with personalized recommendations.