How to Estimate Purchased Goods and Services Emissions

Introduction

For many small and growing businesses (SMEs), the largest part of their carbon footprint comes not from energy use or travel, but from purchased goods and services — materials, packaging, professional services, and subcontracted work.

Under the Corporate Sustainability Reporting Directive (CSRD) and ESRS E1 (Climate Change), these fall under Scope 3, Category 1 emissions. The VSME Standard (EFRAG, 2024) confirms that SMEs can use reasonable estimates or industry averages where primary supplier data is unavailable.

This guide explains practical methods to estimate purchased goods and services emissions, how to prioritise suppliers, and how to disclose your results proportionately.

For a detailed overview of subcontractor reporting, see Do I Need to Report Subcontractor Emissions?.

1. Understanding Category 1 (Purchased Goods and Services)

Category 1 includes all upstream emissions from the production, processing, and transport of goods and services you purchase — from office supplies to raw materials and outsourced services.

Examples:

• Office furniture and electronics
• Raw materials or packaging
• External manufacturing or fabrication
• Marketing, consulting, or cleaning services

Essentially, anything your company pays for that supports operations but isn’t energy or capital goods.

These emissions are indirect — you don’t produce them, but you are responsible for the demand that drives them.

2. Choosing an Estimation Method

SMEs can choose between three practical estimation methods depending on data availability:

For most SMEs, start with spend-based calculations and gradually move toward supplier-based reporting over time.

3. Using Spend-Based Estimation (Most Common for SMEs)

The spend-based method multiplies your spend per purchase category by an emission factor representing average CO₂e per euro spent.

Formula: Emissions (kg CO₂e) = Spend (€) × Emission factor (kg CO₂e/€)

Typical emission factors (EU averages from EEA/DEFRA 2024):

The higher-intensity categories (metals, chemicals, food, machinery) tend to dominate total purchased-goods emissions for manufacturing and construction businesses. Service businesses will typically see professional services and IT as their largest categories — both with lower intensity.

Example — Construction company:

€80,000 spent on construction materials × 0.45 = 36,000 kg CO₂e (36 tCO₂e) €20,000 on office supplies × 0.25 = 5,000 kg CO₂e (5 tCO₂e) → Total = 41 tCO₂e

Example — Professional services firm (20 employees):

€60,000 on IT equipment × 0.50 = 30,000 kg CO₂e (30 tCO₂e) €40,000 on IT services × 0.08 = 3,200 kg CO₂e (3.2 tCO₂e) €30,000 on professional services (external consultants) × 0.05 = 1,500 kg CO₂e (1.5 tCO₂e) €15,000 on marketing and printing × 0.20 = 3,000 kg CO₂e (3 tCO₂e) → Total = 37.7 tCO₂e

This illustrates an important pattern: for service businesses, hardware and equipment dominate Scope 3 Category 1, even when spend on services is larger.

Round results sensibly (1–2 decimals for tonnes) and disclose sources for all factors used.

For broader data estimation guidance, see How to Estimate Missing Data for CSRD Reporting.

4. Activity-Based Estimation (If Quantity Data Is Available)

If you know the amount of material purchased (e.g. kilograms or units), multiply that by a material-specific emission factor.

Example: You purchase 12 tonnes of steel. Emission factor: 1.9 tCO₂e/tonne (EU average). → 12 × 1.9 = 22.8 tCO₂e

Common material factors (EEA 2024):

• Aluminium: 9.2 tCO₂e/t
• Plastic packaging: 2.5 tCO₂e/t
• Cardboard packaging: 1.0 tCO₂e/t
• Concrete: 0.15 tCO₂e/t

If quantities are partial or mixed, you can combine spend- and activity-based approaches for different suppliers.

5. Supplier-Based Estimation (For Advanced SMEs)

If your key suppliers track their own carbon data, you can request supplier-specific emission factors. This improves accuracy and builds alignment along your value chain.

Ask suppliers to provide:

• Carbon footprint per product or service (kg CO₂e/unit or €)
• Boundary definitions (Scope 1–3 coverage)
• Data source or certification (e.g. ISO 14064, GHG Protocol)

Suppliers’ verified data should gradually replace generic factors in your calculations.

6. Disclosing Purchased Goods and Services Emissions

Under ESRS E1-6 and VSME B7, disclose:

1. Total estimated emissions for purchased goods and services.
2. Estimation method(s) used (spend-, activity-, or supplier-based).
3. Emission factor sources (EEA, DEFRA, ADEME, etc.).
4. Plans for improvement in data quality.

Example disclosure:

“Scope 3 Category 1 emissions were estimated at 85 tCO₂e in 2025 using spend-based methods. Emission factors were sourced from DEFRA (2024) and applied to supplier spend data by category. Supplier-specific data collection will begin in 2026 for top material suppliers.”

This satisfies CSRD’s requirements for transparency, traceability, and proportionality.

7. Improving Accuracy Over Time

As your data maturity grows:

• Request emission data from your top 5–10 suppliers.
• Categorise spend by material type (e.g. metals, packaging, IT).
• Automate spend mapping via accounting or ERP software.
• Review emission factors annually.

By your second or third reporting year, you should have a mix of spend-based and supplier-based data, aligning with limited assurance expectations.

8. Year 2 and Beyond: How This Gets Easier

Your first Scope 3 Category 1 estimate will likely rely entirely on spend-based methods. That’s fine — it’s a legitimate starting point. As you build a second and third year of reporting, the process improves:

What changes in Year 2:

• You have a prior-year baseline, which makes year-on-year comparison possible and adds credibility to your disclosure.
• You can identify which spend categories drive the most emissions, and focus data quality improvements on those.
• You can begin requesting emission data from your top 3–5 suppliers, reducing reliance on generic factors for high-spend categories.

Tracking improvement: Compare total Category 1 emissions against spend (your “emissions intensity per euro spent”). If your emissions intensity falls year on year, even if total spend grows, that’s a meaningful indicator of supply chain improvement.

Updating emission factors: If new EEA or DEFRA factors are published, update and document the change in your methodology. Keep the previous year’s factors on record so auditors can verify comparability.

By Year 3, most small businesses that started with spend-based estimation are ready to move at least their top material categories to activity- or supplier-based data, which is what limited assurance providers will expect to see.

Frequently Asked Questions

Do I need to include all suppliers?

No. Focus on those representing 80–90% of total spend or emissions. Low-value purchases can be estimated collectively using a catch-all spend category and a blended emission factor. Which Scope 3 Categories Do SMEs Actually Need to Report? has more detail on prioritisation.

What if my suppliers are outside the EU?

Include them — geographic location doesn’t exempt the emissions. Use region-appropriate factors where available, or EU averages as a reasonable proxy. Note the approach in your methodology disclosure.

Should I separate goods and services?

Yes, where possible. Goods (materials, products) usually dominate emissions, while services (consulting, cleaning, IT) have lower intensity. Keeping them separate makes your disclosure more transparent and helps identify where the biggest reduction opportunities lie.

How do I handle a supplier who provides both goods and services?

Allocate spend to whichever category better represents the primary value delivered. A supplier who manufactures components and also offers installation services should be split if you can apportion the invoice; if not, use the higher-intensity factor (goods) as a conservative assumption and document your reasoning.

What if my spend data has currency fluctuations?

Convert all spend to euros using the average exchange rate for the reporting year (published by the European Central Bank). Use a consistent conversion approach year on year and document the rate source. Currency fluctuation doesn’t materially affect the emission calculation for most businesses, but documenting the approach avoids queries from assurance providers.

Can I use the same emission factors every year?

Yes, with an annual review. If new factors are published (e.g. EEA or DEFRA update their figures), update your methodology and note the change in your disclosure. Keeping prior-year factors on record allows year-on-year comparison to remain valid.

Key Terms

• Scope 3 Category 1 – Indirect emissions from purchased goods and services.
• Spend-based estimation – Using financial spend multiplied by an emission factor.
• Activity-based estimation – Using quantities purchased multiplied by material factors.
• Supplier-specific data – Emissions reported directly by suppliers.
• VSME Standard – Simplified sustainability reporting standard for SMEs.

Conclusion

Estimating emissions from purchased goods and services is one of the most impactful steps in your Scope 3 reporting. Start with spend-based data, improve over time with supplier input, and disclose transparently.

This practical, proportionate approach aligns with both CSRD and VSME expectations, helping SMEs report credibly without overcomplicating data collection.

For a full overview of Scope 3 reporting priorities, see Which Scope 3 Categories Do SMEs Actually Need to Report?.