Upstream vs Downstream Emissions
Picture a company’s own operations as a front door. Everything that flows in through that door to make what the company sells — the steel, the components, the delivery trucks, the electricity a supplier burned to smelt the metal — carries emissions that happened before the company ever touched the material. Everything that flows out after a product is sold — the fuel a customer burns using it, the energy to recycle it, the landfill it eventually reaches — carries emissions that happen after the company has let go of it.
Those two flows have names. Upstream emissions come from producing what a company buys; downstream emissions come from using and disposing of what it sells.
Upstream emissions arise from making the goods and assets a company buys; downstream emissions arise after a product is sold — its distribution, use and disposal. Both are Scope 3, split 8 upstream and 7 downstream. The dividing line is the company’s own operations.
Definition — Which Way the Emissions Flow
Upstream and downstream are the two directions in which a company’s value chain emissions extend away from its own operations. Upstream emissions are the greenhouse gases released in producing the goods, services, and assets a company buys — the cradle-to-gate footprint of its inputs, from raw-material extraction through manufacture to the moment they arrive. Downstream emissions are the greenhouse gases released after a company’s product is sold — as it is distributed to end users, used, and finally disposed of or recycled.
The terms borrow the image of a river. Upstream is the flow into the company: everything that has to happen before it can make its product. Downstream is the flow out of the company: everything that happens to the product once it leaves. Both are indirect emissions — they occur at sources the company doesn’t own or control — and together they make up the whole of Scope 3.
Definition at a glance
| Upstream | Emissions from producing what the company buys, up to the point it receives them |
|---|---|
| Downstream | Emissions from distributing, using, and disposing of what the company sells |
| Dividing line | The company’s own operations — in for upstream, out for downstream |
| Both are | Scope 3 / value chain emissions (indirect) |
| Category split | 8 upstream categories · 7 downstream categories |
| Governed by | GHG Protocol Corporate Value Chain (Scope 3) Standard |
The Dividing Line: Your Own Operations
The boundary between upstream and downstream is the reporting company’s own gate. Emissions that occur before a purchased input reaches the company are upstream; emissions that occur after a sold product leaves it are downstream. The company’s own Scope 1 and Scope 2 emissions sit in the middle — they are neither, because they happen inside the company’s own operations rather than out in the value chain.
The GHG Protocol Corporate Value Chain (Scope 3) Standard defines upstream emissions as those “associated with purchased or acquired goods and services” and downstream emissions as those “associated with sold goods and services” after they leave the company’s control. It uses this rule to sort the 15 Scope 3 categories: the first eight are upstream, the last seven are downstream.
The clearest test is the point of sale. Transport paid for by the company on the way in is upstream (category 4); transport of the product on the way out to the customer is downstream (category 9). The same activity — moving goods on a truck — falls on either side depending on where it sits relative to the company’s own operations.
The 8 Upstream and 7 Downstream Categories
The GHG Protocol splits Scope 3 into 15 categories precisely so the upstream/downstream boundary is applied consistently. Categories 1–8 are upstream; categories 9–15 are downstream:
| Upstream (categories 1–8) | Downstream (categories 9–15) |
|---|---|
| 1. Purchased goods & services | 9. Downstream transportation & distribution |
| 2. Capital goods | 10. Processing of sold products |
| 3. Fuel- & energy-related activities (incl. well-to-tank, grid losses) | 11. Use of sold products |
| 4. Upstream transportation & distribution | 12. End-of-life treatment of sold products |
| 5. Waste generated in operations | 13. Downstream leased assets |
| 6. Business travel | 14. Franchises |
| 7. Employee commuting | 15. Investments |
| 8. Upstream leased assets |
A few placements surprise people. Business travel and commuting (6 and 7) are upstream, even though they feel like day-to-day operations — they are services the company effectively buys. Fuel- and energy-related activities (3) is upstream and captures the emissions of producing the fuel and electricity a company uses — its Scope 2 covers the generation, while category 3 covers the upstream well-to-tank and grid-loss emissions behind it. And investments (15) is downstream — for banks and asset managers this single category, the financed emissions of what they lend to and invest in, usually dwarfs everything else.
Which Side Dominates
Neither direction is inherently larger — it depends entirely on the business model. A company that sells energy-using products carries most of its footprint downstream, because “use of sold products” (category 11) captures years of fuel or electricity burned by customers after the sale. A company that buys and resells physical goods carries most of it upstream, in “purchased goods and services” (category 1). The illustrative split below shows a maker of energy-using products, where downstream leads:
An energy-using-product maker: upstream vs downstream (illustrative)
Amber is value chain (Scope 3); green is the company’s own operations. For a maker of energy-using goods — vehicles, boilers, appliances — the downstream use-phase dominates. Flip the business to a food retailer and the picture inverts: upstream purchased goods lead and downstream shrinks. Shares are illustrative and vary widely by sector.
The dividing line is your own front door: everything that flows in to make what you sell is upstream; everything that flows out after you sell it is downstream.
Common Confusions
- Treating “supply chain” and “upstream” as the whole story. A supply chain is upstream only. Reporting just the supply-chain footprint leaves out the entire downstream half — often the largest part for product makers.
- Assuming downstream doesn’t apply to you. Service firms may have little downstream, but any company selling an energy-using or disposable product usually finds “use of sold products” is its single biggest category.
- Putting fuel-and-energy (well-to-tank) in Scope 2. Category 3 is upstream Scope 3 — the emissions of producing your fuel and electricity — separate from the generation itself, which is Scope 2.
- Getting transport backwards. Inbound transport the company pays for is upstream (category 4); getting the sold product to the customer is downstream (category 9). The point of sale decides.
- Forgetting investments are downstream. For financial institutions, financed emissions (category 15) are downstream and typically the dominant category by far.
Frequently Asked Questions
Upstream emissions come from producing the goods, services, and assets a company buys, up to the point they reach it — the cradle-to-gate footprint of its inputs. Downstream emissions come after a product is sold — its distribution to end users, the energy customers use running it, and its eventual disposal or recycling. The dividing line is the company’s own operations: emissions from everything flowing in are upstream, and emissions from everything flowing out after the sale are downstream. Both are Scope 3 value chain emissions.
Yes. The GHG Protocol divides Scope 3 into 15 categories and sorts them by direction: categories 1–8 are upstream and categories 9–15 are downstream. Together they make up the whole of a company’s value chain emissions. A company’s own Scope 1 and Scope 2 emissions are neither upstream nor downstream — they occur inside its own operations, which is exactly the dividing line between the two directions.
There are 8 upstream categories and 7 downstream categories. The upstream categories are purchased goods and services; capital goods; fuel- and energy-related activities; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; and upstream leased assets. The downstream categories are downstream transportation and distribution; processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; and investments. Not every category applies to every company.
Roughly, yes — a supply chain runs upstream only, covering the suppliers, materials, and inbound logistics that feed into a company. That makes supply chain emissions essentially the upstream half of Scope 3. But it is not the same as value chain emissions, which include the downstream half as well — the distribution, use, and disposal of products after they are sold. A company reporting only its supply chain (upstream) footprint has left out everything downstream, which for makers of energy-using products is frequently the single largest source.
It depends entirely on the business model. Companies that sell energy-using products — vehicles, boilers, appliances, electronics — are usually downstream-heavy, because the “use of sold products” category captures years of fuel or electricity burned by customers after the sale. Companies that buy and resell physical goods, such as retailers and food businesses, are usually upstream-heavy, dominated by “purchased goods and services”. Financial institutions are downstream-heavy through their investments (financed emissions). There is no universal answer — the right first step is to measure the largest categories on each side, for example with a spend-based estimate upstream and a use-of-sold-products calculation downstream.
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