How to Calculate Scope 3 Emissions for Indian Manufacturing Companies

Scope 3 emissions are simultaneously the most important and the most technically challenging part of a manufacturing company's GHG inventory. For many Indian manufacturers, Scope 3 — which includes purchased goods, logistics, employee commuting, and customer-side product use — represents 70–85% of their total carbon footprint. Yet it's the area where most organisations have the least data maturity.

SEBI's BRSR framework requires disclosure of applicable Scope 3 categories, and the BRSR Core assurance requirement means this data will be independently verified. This guide walks through a practical approach to Scope 3 calculation for Indian manufacturers — starting with what you need to disclose and ending with how to actually get the numbers.

The 15 GHG Protocol Scope 3 Categories

The GHG Protocol organises Scope 3 emissions into 15 categories, split between upstream (related to inputs into your organisation) and downstream (related to products and services after they leave you).

#	Category	Relevance for Manufacturers	Priority
1	Purchased goods & services	Raw materials, components, packaging	High
2	Capital goods	Machinery, equipment, buildings	Medium
3	Fuel & energy (not S1/S2)	Upstream emissions from fuel production	Medium
4	Upstream transportation	Inbound freight from suppliers	High
5	Waste generated in operations	Industrial waste disposal	Medium
6	Business travel	Air, rail, road travel by employees	Low–Medium
7	Employee commuting	Daily employee transport	Low–Medium
9	Downstream transportation	Outbound freight to customers	High
11	Use of sold products	Energy used by customers to operate products	Very High
12	End-of-life treatment	Product disposal by customers	Medium

The CEPA Methodology — SEBI's Endorsed Approach

For companies that don't yet have granular supplier data or detailed activity data for all Scope 3 categories, SEBI has endorsed the Carbon and Energy Proxy Accounting (CEPA) methodology in its BRSR Core circular (SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122).

CEPA is a spend-based approach — it uses your financial data (procurement spend by category) combined with industry-level emission intensity factors to estimate Scope 3 emissions. The formula is simple:

CEPA is a good starting point — it uses readily available financial data and produces defensible estimates. However, it has limitations: it doesn't capture supplier-specific performance, and the emission factors are industry averages. As your data maturity improves, the goal is to transition from CEPA estimates to activity-based calculations using real supplier data.

Step-by-Step: Calculating Scope 3 for an Indian Manufacturer

Step 1: Identify Applicable Categories

Not all 15 Scope 3 categories will be material for every manufacturer. Start by assessing which categories are likely to be significant based on your industry and business model. For most Indian manufacturers, Categories 1 (purchased goods), 4 (upstream transport), 9 (downstream transport), and 11 (use of sold products) are typically the largest.

Step 2: Gather Financial Data for CEPA

For CEPA, you need your procurement spend broken down by commodity category for the financial year. This typically comes from your ERP or Tally accounting system. Common categories include: raw materials (steel, chemicals, plastics, textiles), energy inputs, logistics and freight, capital equipment, and services (IT, consulting, facilities).

Step 3: Apply Emission Factors

CarbonFlow applies CEPA emission factors from SEBI-aligned databases. For activity-based categories like business travel and employee commuting, CarbonFlow uses India-specific factors from IPCC and Ministry of Road Transport data.

Step 4: Document Assumptions and Exclusions

BRSR requires disclosure of your calculation methodology, key assumptions, and any excluded categories (with justification). This documentation is essential for both regulatory compliance and assurance review.

Step 5: Review and Verify

Your internal sustainability or finance team should review the calculated figures for reasonableness — particularly Category 1, which typically drives the largest numbers. CarbonFlow flags unusual values automatically and provides peer benchmarks to help with this review.

Common Challenges for Indian Manufacturers

• Supplier data availability: Most Indian Tier 1 and Tier 2 suppliers don't yet have their own GHG data. CEPA is the practical near-term solution, with supplier engagement improving data quality over time.
• ERP data quality: Procurement categorisation in Indian ERPs (Tally, SAP, Oracle) varies widely. CEPA requires clean spend data by commodity — often requiring a data cleansing exercise first.
• Multi-unit manufacturing: Companies with factories across multiple states face the complexity of different CEA grid factors for Scope 2, which affects upstream energy emission calculations for Scope 3 Category 3.
• Category 11 (product use): For manufacturers of electrical equipment, appliances, or vehicles, Category 11 can dwarf all other Scope 3 categories. This requires product-level energy consumption data and estimated usage patterns.

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