In 2024, a major Indian auto components manufacturer completed its first full greenhouse gas inventory. Their Scope 1 and Scope 2 emissions — direct combustion and purchased electricity — came to approximately 28,000 tonnes of CO₂ equivalent per year. Significant, but manageable. Then they calculated Scope 3. The number was 187,000 tonnes. Their supply chain was emitting six times more carbon than everything inside their fence line combined.
This is not unusual. It is, in fact, the norm across industrial manufacturing. And yet most Indian companies reporting on climate today have detailed data on Scope 1 and 2, and a vague estimate — or nothing at all — for Scope 3. Understanding why this matters, and what to do about it, starts with understanding what these three scopes actually mean.
Scope 1, 2, and 3: a plain-language explanation
The GHG Protocol — the global standard for greenhouse gas accounting — divides emissions into three categories based on where they originate and who controls them.
Scope 1: Direct emissions. These are emissions from sources you own or control directly. Your factory boilers burning natural gas. Your diesel generators. Your company-owned vehicles. These are typically the easiest to measure because you have direct records of fuel consumption.
Scope 2: Indirect emissions from purchased energy. These are emissions from the generation of electricity, steam, or heat that you purchase and consume. You do not own the power plant, but you are responsible for the emissions that result from your electricity use. In India, this is typically calculated using the Central Electricity Authority (CEA) grid emission factor — 0.716 tCO₂/MWh for FY 2022–23.
Scope 3: All other indirect emissions. Everything else. This includes 15 distinct categories, covering everything from your suppliers' emissions (upstream) to the use of your products by customers (downstream) to employee commuting and business travel. For most manufacturers, the dominant category is Category 1: purchased goods and services.
Typical emission split for an Indian manufacturer
Why Scope 3 Category 1 is the number that matters most
GHG Protocol Scope 3 Category 1 covers the emissions generated by your suppliers in producing the goods and services that you purchase. For a vehicle component manufacturer, this includes the steel and aluminium they buy, the cutting tools, the packaging materials, the machining sub-assemblies. Every one of those inputs has a carbon footprint — and that footprint belongs, in accounting terms, to you.
The reason Category 1 dominates for manufacturing companies is straightforward: you are buying physical goods that required energy-intensive processes to produce. Steel production is one of the most emission-intensive industrial processes globally. Aluminium smelting consumes enormous quantities of electricity. Even packaging materials — if they come from suppliers running on diesel generators — carry a meaningful carbon burden.
SEBI's BRSR Core framework explicitly requires disclosure of Scope 3 emissions, and BRSR Core assurance means those numbers must be verifiable. A Scope 3 estimate based on industry averages will not satisfy an assurer. You need supplier-specific data — and you need an audit trail to prove it.
The four approaches to Scope 3 Category 1 measurement
GHG Protocol offers four calculation approaches for Scope 3 Category 1, listed in order of accuracy:
- Supplier-specific method. The most accurate approach. You collect actual emissions data directly from each supplier — their energy consumption, fuel use, process emissions — and calculate their emission intensity per unit of output. You then multiply that intensity by your purchase volumes. This is the method that BRSR Core assurance will expect.
- Hybrid method. A pragmatic middle ground. Where you have supplier-specific data, you use it. For suppliers who cannot provide data, you use secondary data (industry averages or economic data) as a fallback. The proportion of supplier-specific data in your inventory affects the quality rating of your disclosure.
- Average-data method. You use industry-average emission factors (e.g., kg CO₂e per kg of steel) applied to your purchase volumes. Faster to calculate, but less accurate and less credible to assurers and institutional investors.
- Spend-based method. The least accurate. You apply emission intensity per unit of spend (tCO₂e per INR lakh) using economic input-output models. Useful for scoping and priority-setting, but not suitable for BRSR Core assurance or CBAM declarations.
The practical challenge for most Indian manufacturers is that the supplier-specific method — the right approach — requires collecting data from dozens or hundreds of MSME suppliers who have never measured their emissions before. This is exactly the gap that supply chain ESG platforms like Emisso are designed to close.
The calculation: how Scope 3 Category 1 emissions are actually computed
Once you have supplier data, the calculation is methodical. For each supplier, you gather their primary energy inputs (electricity in kWh, diesel in litres, LPG in kg, natural gas in SCM), apply the appropriate emission factors (CEA grid factor for electricity; IPCC/UNFCCC factors for fuels), and sum to a total Scope 1 + Scope 2 emissions figure for that supplier. You then divide by their production volume to get an emission intensity: tonnes of CO₂e per unit of output.
Your Category 1 contribution from that supplier is: your purchase volume × their emission intensity. Summed across all suppliers, this gives your Scope 3 Category 1 inventory.
A worked example
A Pune-based auto component manufacturer purchases 500 tonnes of forged steel per year from a tier-1 supplier. That supplier reports annual electricity consumption of 1.2 million kWh and diesel consumption of 40,000 litres for an annual output of 2,000 tonnes of forgings.
Electricity emissions: 1,200,000 kWh × 0.716 tCO₂/MWh = 859 tCO₂e. Diesel emissions: 40,000 litres × 2.68 kg CO₂/litre = 107 tCO₂e. Total supplier emissions: 966 tCO₂e. Emission intensity: 966 / 2,000 = 0.483 tCO₂e per tonne of forgings.
Scope 3 Category 1 allocation for this supplier: 500 tonnes × 0.483 tCO₂e/tonne = 241.5 tCO₂e. Repeat across all suppliers to build the full Category 1 inventory.
From measurement to reduction
Measuring Scope 3 is not an end in itself. The real value comes from knowing which suppliers represent your greatest emission hotspots, and working with them to reduce. A supplier with high emission intensity may be running on older, inefficient equipment, sourcing from coal-heavy grid regions, or using diesel where grid power is available. These are addressable problems — and addressing them reduces your Scope 3 footprint while often reducing the supplier's operating costs.
This is why Emisso's platform generates a Green Score (0–100) for each supplier: it gives anchor buyers a portfolio view of where the highest reduction opportunities lie, and a basis for supplier development conversations grounded in data rather than aspiration.
Scope 3 measurement is the beginning of the journey, not the destination. But you cannot manage what you cannot measure. And right now, most Indian manufacturers are trying to manage their largest emission source — their supply chain — with no data at all.