TCFD and Scope 3: why your SME is already part of someone else's climate report

The Task Force on Climate-related Financial Disclosures (TCFD) framework requires large UK companies to report on climate-related risks and opportunities. A key component of this is greenhouse gas emissions — specifically, Scope 1 (direct emissions), Scope 2 (purchased energy), and Scope 3 (all other indirect emissions, including the supply chain).

What are Scope 3 emissions?

Scope 3 emissions are everything that happens outside a company's direct operations — the emissions from the goods and services it buys (upstream), and the emissions from the use and disposal of the products it sells (downstream). For most manufacturing and retail businesses, Scope 3 represents 70–90% of their total carbon footprint.

The SME supplier problem

When a large company reports its Scope 3 emissions, it needs data from its suppliers. If a supplier does not provide data, the large company must use an estimate — typically a spend-based calculation that assumes a higher emissions intensity than the actual figure. This means a supplier with genuinely low emissions may appear more carbon-intensive than they are, simply because they have not provided their data.

More importantly, buyers are increasingly moving from estimates to actual supplier data. A supplier that cannot provide verified emissions data is at a competitive disadvantage compared to one that can.

What SME suppliers should do

Start by calculating your Scope 1 and 2 emissions — this is the foundation. ESGSimple's GHG Protocol questionnaire walks through this calculation step by step. Once you have your own baseline, you can respond to buyer requests with verified data rather than estimates.