Reporting on Scope 3 emissions — those not generated by a company itself, but instead produced upstream and downstream in its value chain — is a critical part of sharing sustainability metrics with stakeholders, customers, and partners. In fact, Scope 3 emissions are often the largest source of emissions for an organization. Identifying and quantifying these emissions enables companies to reduce them, thereby helping them achieve their sustainability goals. Yet, the process of identification and quantification is often complicated, and it requires visibility into an organization’s entire value chain.

To improve supply chain visibility, it’s essential to implement traceability — the identification and tracking of materials and their provenance, as well as the transportation process and waste generated during these steps along the supply chain. With traceability comes transparency for reporting and accountability, enabling responsible sourcing decisions.

“Data collection for Scope 3 reporting is inherently challenging because it often relies on third-party data,” says Vivian Tai, Director of Innovation at GS1 US, the leading not-for-profit information standards organization. “If businesses implement traceability practices into their supply chain, they have their own first-hand data, rather than trying to retrofit that data collection,” she says.

The value of visibility

Before any data can be tracked and recorded, organizations need a clear picture of what is actually moving through their supply chain. Traceability with unique identifiers is the foundation of this visibility. 

For example, Global Trade Item Numbers (GTINs) and Global Location Numbers (GLNs) from GS1 provide unique identifiers for products and their manufacturing and shipping locations. When captured and shared through a standardized framework such as Electronic Product Code Information Services (EPCIS), these identifiers provide complete visibility into the “who, what, where, when, and how” of products across the supply chain. 

This includes details such as material composition — for instance, the percentage of recycled versus virgin materials in a product. Transportation and logistics data also play a critical role in Scope 3 reporting. By using unique identifiers, organizations can accurately track the distance a product travels, along with its weight and size, to calculate emissions and fuel consumption.

Traceability with unique identifiers even extends to the farms at the heart of crop and food production. GTINs and GLNs can be associated with individual animals and crop bushes, enabling organizations to track water consumption, animal feed amounts, fertilizer usage, and many other metrics that affect the environmental impact of agricultural production.

To truly capture end-to-end data of a product’s lifecycle, traceability practices should extend to end-of-life processes. Are certain products recyclable? What happens to packaging made with materials like flexible plastic films, which typically cannot be recycled in residential waste streams? These metrics play an important role in Scope 3 reporting, and this comprehensive view of the lifecycle is based on tracing each product through the entire supply chain.

Actionable data drives improvement

With this data, organizations can more accurately complete their sustainability reporting. As we’ll see, this reporting is valuable for numerous reasons, but beyond the reporting itself, this visibility drives more environmentally friendly decision-making. 

“Traceability is foundational to sustainability because if you don’t track and measure, you won’t be able to make improvements,” Tai says. “Traceability is about having that verifiable, granular data.”

Actionable data enables organizations to:

• Optimize transportation routes to reduce emissions.
• Right-size packaging for greater efficiency.
• Pack more items into fewer shipments.
• Choose packaging materials that are recyclable or compostable.

Visibility supports supplier choices as well, such as working with farms that use regenerative practices or those that implement conservation efforts. These sustainability data points are continuously tracked and measured to demonstrate progress over time, delivering meaningful benefits for organizations.

Why accurate reporting matters  

Verifiable and complete Scope 3 reporting is important for many reasons:

• Regulatory compliance: Any company with a regional or global footprint must demonstrate compliance with multiple environmental regulations. European Union regulations are generally more stringent, such as Ecodesign for Sustainable Product Regulation (ESPR) and Digital Product Passports (DPPs). In the U.S., regulations are primarily state-specific, with various extended producer responsibility (EPR) laws governing end-of-life disposal. California has also recently passed legislation requiring Scope 3 reporting by 2027 and the disclosure of climate-related financial risks starting in 2026. Traceability data informs and facilitates meeting these and other sustainability-focused regulations.

• Investor risk: As highlighted by California’s new regulations, risks associated with climate change impacts are becoming increasingly important to the investor community. Accurate reporting explains how a company is addressing risks associated with severe weather, wildfires, droughts, and other environmental hazards. It accounts for potential supply chain disruptions or legal liabilities, which are vital for building investor confidence.
• Consumer preference: There are growing expectations from customers about companies’ environmental stewardship. Consumers are even willing to pay up to 10% more for sustainable products — a valuable market opportunity for companies. Conversely, there are significant reputational risks if a company is perceived as greenwashing. Accurate and verifiable sustainability reporting can mitigate these risks. 
• Cost savings: Sustainability yields tangible benefits for organizations. From shorter transportation routes and less fuel usage to reducing waste in their production processes, greener practices simply save money. 

Transparency starts here

Businesses can achieve the very real goals of compliance, cost savings, and increased market share with quality sustainability reporting, including Scope 3 emissions. But to have reporting that stands up to public scrutiny and meets regulatory requirements, they must first invest in traceability for their entire value chain.

The good news: the tools to make this happen already exit, and many are used further downstream. Standardized solutions like unique identifiers and EPCIS provide the visibility needed to connect the dots. With these capabilities, organizations can make informed, responsible decisions that enhance the sustainability of their products and services.

Ready to take the first step toward a more sustainable supply chain? Explore these resources to start your traceability journey or reach out to Vivian Tai at [email protected].