Author: Azim Khan

Managing transport emissions that everyone uses…and no-one really owns!

If Scope 3 Category 1 is uncomfortable, Categories 4 and 9 are awkward.

What are Scope 3 Category 4 and Category 9 transport emissions?

They sit in that familiar ESG grey area: emissions you rely on, influence indirectly, and are expected to report — but don’t directly control. Transport happens because your business exists, yet responsibility for its carbon footprint is fragmented across suppliers, carriers, contracts and routes that rarely line up neatly.

This playbook sets out how leading organisations approach Scope 3 Categories 4 and 9 — not as an exercise in logistics perfection, but as a manageable, defensible discipline that improves over time.

What Categories 4 & 9 Actually Cover

Category 4 captures upstream transportation and distribution — the movement of goods from suppliers to your operations. Category 9 covers downstream transportation and distribution — the movement of goods from your business to customers, retailers or end points not owned or controlled by you.

In theory, that sounds simple. In practice, transport emissions are scattered across freight forwarders, shipping lines, last-mile carriers and third-party logistics providers, each with their own data standards and priorities.

One supply chain manager described it neatly: “The emissions are everywhere, but the data is nowhere.”

Why Transport Emissions Are So Difficult to Pin Down

Transport emissions are defined by movement — distance, weight, mode, route, utilisation. That means data often lives in operational systems designed to move goods efficiently, not to explain carbon impact.

In many organisations, logistics data is optimised for cost and service levels. Carbon is an afterthought, if it’s captured at all.

We’ve seen teams attempt to reconstruct a year of transport emissions using invoices, shipment records and best guesses. The result is usually a heroic spreadsheet, a very tired analyst, and a number everyone agrees not to look at too closely.

The Reality of Estimates in Categories 4 & 9

Most organisations start with distance- or spend-based estimates for Categories 4 and 9. And, as with Category 1, that’s entirely reasonable.

Estimates provide coverage. They allow organisations to understand scale and direction. They surface which transport modes matter most — air freight rarely hides for long.

The risk comes when estimates are presented without context.

One logistics lead summed it up bluntly: “We know this isn’t precise, but we don’t know how wrong it is.” That uncertainty is what undermines confidence, not the use of estimates themselves.

When Carrier Data Complicates Things

As logistics providers begin supplying emissions data, a new challenge emerges.

Carrier-reported emissions often use different assumptions, allocation methods and boundaries. One provider reports well-to-wheel emissions. Another reports tank-to-wheel. A third reports something in between.

Without standardisation, organisations can end up stitching together numbers that look sophisticated but don’t quite add up.

More data arrives. Confidence doesn’t necessarily follow.

What Good Looks Like for Categories 4 & 9

Leading organisations take a pragmatic approach.

They start by establishing a clear baseline using consistent assumptions. They identify the transport modes, routes or regions that drive the majority of emissions. They focus engagement on the logistics partners that matter most, rather than attempting to extract perfect data from everyone.

One global manufacturer shared that once they focused on air freight lanes alone, they unlocked more insight in three months than they had in the previous two years.

Progress came from focus, not volume.

Clarifying Ownership Across the Organisation

Transport emissions sit at the crossroads of sustainability, supply chain, finance and operations — which makes ownership particularly easy to avoid.

Successful organisations are explicit. ESG defines the methodology. Supply chain teams provide operational insight. Finance ensures governance and consistency. Logistics providers supply data where available.

When those roles are clear, Categories 4 and 9 stop drifting between functions and start moving forward.

From Disclosure to Decision-Making

The turning point comes when transport emissions inform decisions.

That might mean reviewing air freight policies, re-evaluating distribution networks, or understanding the carbon impact of service-level commitments. The aim isn’t to eliminate trade-offs, but to make them visible.

A supply chain director put it simply: “Once we could see the carbon cost of speed, conversations changed.” That’s when Categories 4 and 9 start to matter.

What This Means for You

If You’re in Supply Chain or Logistics

Categories 4 and 9 don’t require you to become a carbon accountant. They require clarity.

A structured approach allows you to understand which routes, modes and decisions drive emissions, without drowning in data requests. Carbon becomes another operational lens — not a distraction, but a tool to support better network and service-level decisions.

If You’re an ESG or Sustainability Manager

Transport emissions are rarely perfect, but they can be credible.

This playbook approach gives you a defensible baseline, a clear improvement pathway, and a way to explain uncertainty without undermining trust. It shifts the conversation from “Is this exact?” to “Is this directionally right — and are we acting on it?”

If You’re a CFO or Finance Leader

Categories 4 and 9 often sit outside traditional financial controls — which is exactly why governance matters.

A structured methodology ensures the numbers you sign off are consistent, explainable and auditable. More importantly, it links emissions back to operational and commercial decisions, where oversight actually makes a difference.

If You’re a CSO or Board Sponsor

Transport emissions are visible, emotive and increasingly scrutinised.

A pragmatic, transparent approach shows stakeholders that the organisation understands where its logistics footprint sits, acknowledges uncertainty, and has a credible plan to improve over time. That combination builds confidence far more effectively than precision theatre.

What This Looks Like in Horizon ESG

Horizon ESG’s ESG reporting platform supports this journey by helping organisations establish consistent baselines, layer in carrier-specific data where it adds value, and track data quality over time. Emissions can be linked to routes, modes and partners, making transport a manageable part of the Scope 3 picture.

The Playbook Mindset

Scope 3 Categories 4 and 9 are uncomfortable because they expose the hidden mechanics of how goods actually move.

But they also reveal opportunity.

Organisations that approach transport emissions with focus, transparency and realism don’t just report better — they make smarter operational decisions.

And that’s the point. Book a demo to see how Horizon ESG can help.

Scope 3 Category 1 – Turning Purchased Goods & Services into a Manageable Discipline

Scope 3 Category 1 is where most ESG programmes quietly lose momentum.

What are Scope 3 Category 1 purchased goods and services emissions?

Not because organisations lack ambition, but because Purchased Goods & Services sit at the uncomfortable intersection of responsibility and control. The emissions are yours to report, but they sit deep inside supply chains you don’t own, data you didn’t create, and systems you can’t dictate.

This playbook sets out how leading organisations approach Category 1 in practice — not as a one-off reporting obligation, but as a capability that matures over time.

Step 1: Accept the Reality of Category 1

For most organisations, Category 1 represents the largest share of their carbon footprint. Sometimes uncomfortably so.

The first and most important shift is accepting that imperfect data is inevitable at the start. Waiting for perfect supplier data before acting usually leads to delay, frustration, and lost credibility.

One sustainability lead described their first Category 1 calculation as “accurate enough to be honest, but not enough to be proud of.” That’s exactly where most organisations begin — and that’s fine. The goal at this stage is transparency and coverage, not precision.

Step 2: Build a Defensible Baseline

Spend-based methods are often the only practical way to establish an initial Category 1 baseline. They’re structured, auditable, and allow organisations to move quickly without overloading suppliers.

Used properly, spend-based data provides a common language across ESG, finance and procurement. It allows teams to understand scale, direction, and relative impact — even if the numbers are broad.

The mistake is mistaking this baseline for the final answer.

As one CFO put it during a board review: “I can stand behind this number, but I wouldn’t want to manage a strategy off it.” That instinct is correct. A baseline exists to be improved upon, not defended indefinitely.

Step 3: Focus Where It Matters Most

Category 1 becomes manageable the moment organisations stop treating all suppliers equally.

Leading teams identify the suppliers and categories that drive the greatest share of emissions or risk, and focus their effort there first. This approach reduces noise and creates space for more meaningful engagement.

A procurement team once shared that when they narrowed their supplier engagement from hundreds to a focused group of twenty, conversations shifted almost overnight — from generic questionnaires to genuine discussions about materials, processes and alternatives.

Progress accelerated, not because the data was perfect, but because attention was finally in the right place.

Step 4: Improve Data Quality Gradually…and Openly

As supplier-specific data begins to replace estimates, confidence doesn’t automatically increase.

Supplier data often arrives with gaps, mixed methodologies and varying levels of assurance. Without visibility into how figures were produced, organisations can find themselves with more numbers but less trust.

Best practice organisations make data quality explicit. They track how much of Category 1 is estimated, how much is supplier-specific, and how methodologies evolve over time. Improvement becomes visible. Conversations become grounded. Assurance becomes far less adversarial.

Step 5: Clarify Ownership Across the Organisation

Category 1 stalls fastest when ownership is vague.

Successful organisations are clear: ESG teams define methodology and targets, finance ensures governance and spend integrity, and procurement enables supplier engagement. Each function plays a distinct role, and accountability is explicit.

One organisation described its early Category 1 efforts as “everyone agreeing it mattered, but no one knowing who owned it.” Once roles were clarified, progress followed — not because the data suddenly improved, but because decisions finally had owners.

Step 6: Move From Reporting to Managing

The real value of Category 1 emerges when emissions stop being something explained once a year and start becoming something used.

That shift happens when carbon data is linked to suppliers, categories and decisions, and appears alongside cost, risk and performance metrics. Not as a moral signal, but as operational intelligence.

A sourcing lead summed it up simply: “The moment carbon appeared next to price, behaviour changed.” That’s when Category 1 stops being theoretical and starts influencing outcomes.

What This Means for You

If You’re in Procurement

A structured Category 1 approach replaces scattergun sustainability requests with focused, strategic engagement.

Instead of asking every supplier for everything, procurement teams can prioritise the relationships that matter most and use carbon data to support smarter sourcing decisions. Carbon becomes another lens on supplier performance — not an administrative burden, but a practical input into negotiations and long-term partnerships.

If You’re an ESG or Sustainability Manager

This playbook removes the pressure to achieve perfection too early.

It provides a defensible baseline, a clear improvement pathway, and a way to talk openly about uncertainty without undermining credibility. By making data quality visible, the conversation shifts from “Are these numbers right?” to “Are these numbers improving, and are they driving action?”

That shift is often what sustains momentum year after year.

If You’re a CFO or Finance Leader

Category 1 may never feel comfortable, but it can become governable.

A structured approach ensures the numbers you sign off are transparent, consistent and auditable — even when estimates are involved. More importantly, it creates a clear line of sight between emissions, spend and decision-making.

That’s what turns ESG from a compliance obligation into a performance conversation the board can engage with.

If You’re a CSO or Board Sponsor

Category 1 is where credibility is built.

Stakeholders increasingly understand that Scope 3 is complex. What they look for now is honesty, control and progress. A playbook-led approach demonstrates that the organisation understands its biggest impacts, acknowledges data limitations, and has a clear plan to improve over time.

That combination — transparency plus direction — is what builds trust.

What This Looks Like in Horizon ESG

Horizon ESG’s ESG reporting platform is designed to support this journey end to end.

Organisations can establish a clear baseline, layer in supplier-specific data where it adds value, track data quality over time, and link emissions directly to suppliers, categories and decisions. Assumptions are explicit, confidence is visible, and progress is measurable.

Most importantly, Category 1 becomes something teams can work with — not work around.

The Playbook Mindset

Scope 3 Category 1 is uncomfortable because it exposes complexity and dependence. But it’s also where the greatest opportunity for impact sits.

Organisations that treat Purchased Goods & Services as a living capability — not a static disclosure — don’t just report better. They operate better, make stronger decisions, and build credibility that stands up to scrutiny.

That is what good looks like. Book a demo to see how Horizon ESG can help.

What are the challenges of Scope 2 emissions reporting?

Scope 2 emissions are often treated as the simplest category in a GHG Protocol inventory. Purchased electricity goes in, an emission factor comes out, and the number lands in a report. In practice, Scope 2 is where methodology choices, data gaps, and procurement decisions intersect in ways that catch even experienced sustainability teams off guard. The dual reporting requirement alone introduces a layer of complexity that most organisations underestimate until they are mid-way through their first assurance cycle.

If you have already worked through your Scope 1 reporting challenges, you may assume Scope 2 will be more straightforward. This article explains why that assumption rarely holds, and what to do about it.

What are Scope 2 emissions?

Scope 2 covers indirect emissions from the generation of purchased energy that the reporting organisation consumes. This includes electricity, steam, heating, and cooling. Unlike Scope 1 emissions, which arise from sources the organisation owns or controls, Scope 2 emissions occur at the power station or district heating plant — not on your premises. What makes them yours is the act of purchasing and consuming that energy.

The GHG Protocol Scope 2 Guidance (2015) established that companies must report Scope 2 using two methods: location-based and market-based. This dual requirement is the source of most of the complexity that follows.

Location-based vs market-based: why dual reporting creates confusion

The location-based method multiplies energy consumption by the average grid emission factor for the region or country where consumption occurs. It reflects the physical reality of the grid that serves your sites. The market-based method, by contrast, uses emission factors drawn from contractual instruments — supplier-specific data, energy attribute certificates (EACs), power purchase agreements (PPAs), or, where none of these exist, the residual mix factor for the relevant market.

In theory, both methods answer the same question: what are the emissions associated with your electricity use? In practice, they can tell very different stories. A company that procures renewable energy certificates may show a significant reduction under the market-based method while its location-based figure remains flat or even increases as grid factors are updated. This divergence is not an error — it reflects the difference between contractual claims and physical grid reality — but it creates awkward questions from investors, auditors, and internal stakeholders who expect one clear number.

The confusion deepens when teams must decide which figure to use for target-setting, which to feature in annual reports, and how to explain the gap between the two. Frameworks such as the CSRD and ESRS standards have their own preferences, and SBTi requires market-based for tracking progress against approved targets. Getting this wrong does not just affect one number — it cascades through every downstream disclosure.

The renewable energy procurement trap

Renewable energy procurement is the primary mechanism for reducing market-based Scope 2 emissions. But the landscape of instruments is layered and not every claim survives scrutiny.

Unbundled energy attribute certificates — such as Guarantees of Origin (GoOs) in Europe, REGOs in the UK, and I-RECs in other markets — are the most common route. They are also the most scrutinised. An unbundled certificate is purchased separately from the underlying electricity, meaning the buyer has no direct relationship with the generating asset. Critics argue that unbundled certificates do little to drive new renewable capacity. From a reporting standpoint, they are currently accepted under the GHG Protocol’s Scope 2 Guidance quality criteria, but their credibility is under increasing pressure from assurance providers, ESG rating agencies, and forthcoming updates to reporting standards.

Power purchase agreements (PPAs) — both physical and virtual — represent a stronger claim. A physical PPA delivers electricity from a specific asset to the buyer. A virtual (or financial) PPA is a contract for difference that does not deliver physical power but does generate bundled certificates. PPAs are operationally complex, require long-term commitments, and introduce financial risk, but they are increasingly viewed as the gold standard for credible renewable procurement.

Green tariffs offered by energy suppliers sit somewhere in between. Some are backed by dedicated generation assets and bundled certificates; others simply pass on unbundled certificates as part of the supply contract. The quality varies significantly, and sustainability teams need to interrogate the underlying instruments rather than relying on a supplier’s marketing claims.

The practical risk is clear: a company that reports zero market-based Scope 2 emissions on the strength of unbundled certificates may face challenges during limited or reasonable assurance engagements. Auditors will ask for certificate evidence, check retirement records, confirm temporal and geographic matching, and assess whether the instruments meet the GHG Protocol’s quality criteria. Any gap in the evidence trail can result in qualified findings or material restatements.

Multi-site and multi-country challenges

Scope 2 reporting becomes substantially harder as the number of sites and jurisdictions increases. Each country — and in some cases, each sub-national grid region — has its own grid emission factor. Organisations operating across Europe, Asia, and North America may need to source and apply dozens of different factors, each with its own update cycle, data provider, and methodology.

Grid factor sourcing is the first hurdle. The IEA publishes country-level factors, but many jurisdictions offer more granular data. Using the wrong factor — or the right factor from the wrong year — introduces errors that compound across a large portfolio. Teams must also decide whether to use generation-based or consumption-based factors, and whether to apply national or regional values where sub-national data exists.

Data collection from landlords and shared buildings is a persistent operational challenge. Many organisations lease office space in multi-tenant buildings where electricity is included in the service charge. In these cases, metered consumption data may not be available, and teams resort to estimated splits based on floor area, headcount, or contracted capacity. These estimates are acceptable when clearly disclosed, but they weaken the precision of the overall inventory and are flagged routinely during assurance.

Estimated vs metered consumption is a data quality issue that runs through the entire Scope 2 calculation. Where actual meter readings exist, the figure is defensible. Where estimates are used — whether from billing data, benchmarks, or pro-rata allocation — the uncertainty increases. Best practice is to track and disclose the proportion of Scope 2 data that is metered versus estimated, giving report users a clear picture of underlying data quality.

Year-on-year comparability issues

One of the most underappreciated challenges in Scope 2 reporting is maintaining comparability across reporting periods. Several factors can cause year-on-year fluctuations that have nothing to do with actual changes in energy consumption or operational efficiency.

Grid factor updates are the most common culprit. When a country updates its grid emission factor — reflecting changes in the national generation mix — every location-based Scope 2 figure for that country shifts, including the base year. If the reporting organisation does not restate its baseline, the trend line becomes misleading. A company might appear to have increased emissions simply because the grid factor was revised upward, even though its actual electricity consumption fell.

Contract renewals affect the market-based method. A company that held a PPA or green tariff in one year but switched to a standard grid supply the next will see its market-based figure jump — not because of any operational change, but because of a procurement decision. Conversely, signing a new renewable energy contract can collapse market-based emissions overnight. Both scenarios require clear narrative disclosure to avoid misleading readers.

Restating historical data is sometimes necessary but always uncomfortable. The GHG Protocol’s base year recalculation policy applies to Scope 2 just as it does to Scope 1, but the triggers are more frequent: acquisitions, disposals, changes in grid factors, or methodological corrections can all require restating prior years. Organisations that lack a clear base year policy — or that restate without adequate disclosure — risk undermining the credibility of their entire emissions trajectory.

What good Scope 2 reporting looks like

Strong Scope 2 reporting does not require perfection. It requires transparency, methodological consistency, and a clear evidence trail. The following checklist reflects what assurance providers and informed stakeholders expect to see:

• Dual reporting — both location-based and market-based figures presented separately, with clear labels and no conflation of the two methods.
• Emission factor disclosure — sources, vintage, and geographic scope of all grid factors and market-based instruments used, documented and version-controlled.
• Renewable energy evidence — certificate retirement records, PPA contract references, or green tariff documentation retained and audit-ready for every market-based claim.
• Data quality indicators — the proportion of consumption data that is metered vs estimated, disclosed at site level or aggregated with explanation.
• Base year policy — a written policy defining when and how the base year is restated, applied consistently and disclosed in the report.
• Narrative context — explanation of significant year-on-year changes, including whether variances are driven by activity changes, factor updates, or procurement decisions.
• Multi-site consistency — a single methodology applied uniformly across all geographies, with deviations documented where local data constraints require them.
• Alignment with frameworks — confirmation of which GHG Protocol guidance version is followed, and how the Scope 2 figures feed into CSRD, SBTi, CDP, or other disclosure commitments.

Meeting this standard consistently across reporting cycles is not trivial, particularly for organisations with large, distributed property portfolios or complex energy procurement strategies. But it is achievable with the right systems, processes, and governance in place.

How Horizon ESG simplifies Scope 2 reporting

Scope 2 reporting does not have to be a quarterly scramble of spreadsheets, landlord emails, and manually applied emission factors. Horizon ESG’s carbon reporting platform is built to handle the specific challenges outlined in this article: dual-method calculations, multi-country grid factor management, renewable energy instrument tracking, and automated base year recalculation.

The platform maintains an up-to-date library of location-based and market-based emission factors across all major jurisdictions, applies them automatically based on site location and contract data, and generates the audit trail that assurance providers require. For organisations managing Scope 2 across dozens or hundreds of sites, this replaces fragmented manual processes with a single, consistent workflow.

If your team is spending more time assembling Scope 2 data than analysing it, that is a process problem with a technology solution. Explore the carbon module or read more about best practice ESG reporting software to see how it fits into your broader reporting workflow.