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.

When a large customer asks for your carbon footprint, it is usually because these purchases feed their own Corporate Sustainability Reporting Directive (CSRD) report, where they count as Scope 3, Category 1 emissions under ESRS E1 (Climate Change). The VSME Standard (EFRAG, 2024) asks for estimated GHG emissions and lets SMEs screen Scope 3 categories using appropriate estimates (VSME paragraphs 30 and 214), so average factors are a legitimate starting point where 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/€)

Spend-based factors come from environmentally extended input-output (EEIO) datasets such as EXIOBASE, ADEME’s monetary ratios, or the UK government’s spend-based emissions multipliers. The examples below are from the UK multipliers for 2023 (published June 2026), which are in kg CO₂e per £ excluding VAT, converted here to € at the 2023 ECB average rate (€1 = £0.86979):

These reflect average UK supply chains and UK prices, so treat them as a rough first estimate if you buy mainly in the EU, and say which dataset you used. Defra itself says activity data gives more robust results where you have it. Exclude VAT from spend before applying them. Freight and logistics spend belongs in Scope 3 Category 4 (upstream transportation), not Category 1.

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

Example — Construction company:

€80,000 spent on cement and concrete products × 1.810 = 144,800 kg CO₂e (144.8 tCO₂e) €20,000 on paper and office paper products × 0.582 = 11,640 kg CO₂e (11.6 tCO₂e) → Total = 156.4 tCO₂e

Example — Professional services firm (20 employees):

€60,000 on IT equipment × 0.467 = 28,020 kg CO₂e (28.0 tCO₂e) €40,000 on IT services × 0.087 = 3,480 kg CO₂e (3.5 tCO₂e) €30,000 on external management consultants × 0.071 = 2,130 kg CO₂e (2.1 tCO₂e) €15,000 on printing × 0.303 = 4,545 kg CO₂e (4.5 tCO₂e) → Total = 38.2 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 cardboard packaging (board, primary material). Emission factor: 1.20 tCO₂e/tonne (UK Government GHG Conversion Factors 2026). → 12 × 1.20 = 14.4 tCO₂e

Material factors from the UK Government GHG Conversion Factors 2026 (DESNZ), primary material production. These cover extraction, processing, manufacture and transport to the point of sale:

• Aluminium cans and foil: 9.11 tCO₂e/t
• Average plastics: 3.17 tCO₂e/t
• Steel cans: 2.86 tCO₂e/t
• Paper and board (board): 1.20 tCO₂e/t
• Concrete: 0.12 tCO₂e/t

Recycled-content materials have lower factors in the same dataset. These are UK factors; for structural steel or other products not listed, use a supplier figure or an industry-association average and name it.

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

In VSME terms, Scope 3 is not required in either module: B3 requires Scope 1 and location-based Scope 2, and the Comprehensive Module says Scope 3 disclosure “can be appropriate” depending on your activities, presented alongside B3 if you give it (VSME paragraphs 30 and 50–53). Large in-scope companies disclose gross Scope 3 emissions under ESRS E1-6. Whichever applies, disclose:

1. Total estimated emissions for purchased goods and services.
2. Estimation method(s) used (spend-, activity-, or supplier-based).
3. Emission factor sources, with dataset name and year (for example UK spend-based multipliers 2023, EXIOBASE, ADEME).
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 taken from the UK spend-based emissions multipliers for 2023 (Defra, 2026), converted to euros at the 2023 ECB average rate and applied to spend data by category, excluding VAT. Supplier-specific data collection will begin in 2026 for top material suppliers.”

A note like this makes the figure transparent, traceable and proportionate.

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, which stands up better when a customer or bank looks closely at your figures.

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: Factor sets are revised regularly (the UK spend-based multipliers are revised each year, including for past years). When you switch to a newer set, 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 detailed customer reviews tend to look for.

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 (for example an annual update to the UK conversion factors or spend multipliers), update your methodology and note the change in your disclosure. Keeping prior-year factors on record allows year-on-year comparison to remain valid.

Sources

• Spend-based emissions multipliers, 1997 to 2023 (Defra / University of Leeds, published 30 June 2026), sheet “SIC_multipliers_2023”, greenhouse gases column (kg CO₂e per £, excluding VAT); cover sheet for usage notes: https://assets.publishing.service.gov.uk/media/6a3ce5fa33bc5beefd3c4983/spend_based_emissions_multipliers_1997_to_2023.ods
• ECB euro reference exchange rate, annual average 2023: €1 = £0.86979: https://data-api.ecb.europa.eu/service/data/EXR/A.GBP.EUR.SP00.A
• UK Government GHG Conversion Factors for Company Reporting 2026 (DESNZ), flat-format file, sheet “Factors by Category”, Material use, primary material production (rows 3968, 4052, 4064, 4068, 4104): https://assets.publishing.service.gov.uk/media/6a6c9748862aaf18d9c62ac9/ghg-conversion-factors-2026-flat-format-revised.xlsx
• 2026 GHG Conversion Factors Methodology Paper (DESNZ), paragraph 12.2 (scope of material use factors): https://assets.publishing.service.gov.uk/media/6a2940543b15d05a7ce3202e/2026-GHG-conversion-factors-methodology-report.pdf
• EFRAG VSME Standard (December 2024), paragraphs 30, 50–53 and 214.

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 suits both VSME reporting and the Scope 3 data requests that come from customers reporting under CSRD, helping SMEs report credibly without overcomplicating data collection.

Once calculated, the figure keeps working for you: an ESG answer bank stores it with its methodology note, ready for the next questionnaire, and a free VSME report tool builds the finished report from those answers at no cost.

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