Glossary›Emissions accounting and measurement›Purchased goods and services (Scope 3 Category 1)
Glossary term
Cluster D · D38
Tier 1
Purchased goods and services (Scope 3 Category 1)
Definition
Category 1 covers the cradle-to-gate emissions of every good and service a company buys in the reporting year, except those the GHG Protocol assigns to another category. It is the catch-all upstream category and for most non-industrial Australian businesses it is the single largest line in the entire emissions inventory.
· Appendix B, Scope 3 measured per the GHG Protocol Corporate Value Chain (Scope 3) Standard · first disclosed in the second reporting period
On this page
In practice
Category 1 is defined by exclusion, which is why it is so large. Anything you purchased that is not capital equipment, not fuel or energy, not freight you paid for, not waste, not travel and not a leased asset falls here. For a professional services firm, a distributor or a retailer, Category 1 is routinely 60 to 80 per cent of the total footprint and dwarfs Scope 1 and Scope 2 combined.
The measurement choice is where the money goes.
Method
What it gives you
What it costs you
Spend-based
Takes the accounts payable ledger, maps each supplier or expense account to an industry sector, and applies an emissions-per-dollar factor. Fast, covers 100 per cent of spend, and derived from a population a financial controller already trusts.
The number moves with prices, not with emissions: negotiate a 10 per cent discount from the same supplier for the same goods and your reported emissions fall 10 per cent, which is nonsense and an assurer will say so.
Supplier-specific
Fixes the price sensitivity and lets the figure respond to real procurement change.
An order of magnitude more to run.
The practical Australian pattern in year one of disclosure is a hybrid: supplier-specific data for the twenty to fifty suppliers that carry most of the spend, spend-based factors for the tail, and a written rule in the basis of preparation explaining where the line sits and why.
What the assurer does with it
The assurer starts at the population, not the number. The first request is a reconciliation of the spend used in the Category 1 calculation back to total cost of goods sold and operating expenses in the audited financial statements, with every exclusion named and explained. That reconciliation is the completeness evidence and there is no substitute for it, because there is no emissions ledger to tie to.
They then test the mapping: a sample of suppliers traced to the sector code assigned and the factor applied, checking the factor’s source and version.
They accept a documented hybrid with a stated threshold. They reject a spend-based total that cannot be agreed to the general ledger, a sector mapping done once and never reviewed after the supplier base changed, and any supplier-specific figure taken from a supplier’s marketing material rather than from a reported inventory.
The most common first-year finding is double counting: freight the company paid for sitting inside both the Category 1 spend total and the Category 4 freight calculation.
Commonly confused with
Capital goods. The GHG Protocol splits them only because capital purchases are lumpy and would otherwise distort a trend, not because the calculation differs. The calculation methods for Categories 1 and 2 are the same.
Timing and relief
The standard Scope 3 position applies. Scope 3, and therefore this category, may be omitted from an entity’s first annual reporting period under AASB S2 Appendix C paragraph C4(b), and under paragraph C5 the entity may keep relying on that relief when presenting the relieved year as comparative information in later periods. Group 1 first discloses Scope 3 for periods beginning on or after 1 January 2026, Group 2 from 1 July 2027 and Group 3 from 1 July 2028.
Sources
1
Corporate Value Chain (Scope 3) Accounting and Reporting Standard, full text
GHG Protocol
2
3
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist
Next scheduled review
1 July 2027
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The lumpy sibling category split out of Category 1
The cost-versus-quality choice that decides this figure
How Category 1 gets ranked against the other fourteen
Related questions
Our suppliers will not give us emissions data. What do we do?
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You estimate, and you disclose that you estimated. Nothing in AASB S2 requires primary supplier data, because the standard works on information that is reasonable and supportable and available without undue cost or effort. Rank suppliers by estimated emissions, engage the top of that list, and leave the tail on a documented spend-based method.
What is the difference between spend-based and activity-based, and which does the auditor prefer?
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Activity-based uses physical quantities such as litres or kilowatt hours, while spend-based applies a factor to dollars spent. Activity-based is more accurate and easier to evidence. An assurance practitioner has no preference in principle: they test whether the method you chose is appropriate, disclosed, and applied consistently.
How do we work out which Scope 3 categories are material for us?
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You screen all fifteen GHG Protocol categories, estimate each roughly off accounts payable spend, and document why you included or excluded each one. The screen is the deliverable as much as the answer, because the practitioner will test the reasoning behind an exclusion at least as hard as the numbers behind an inclusion. Expect the answer to be concentrated in a handful of categories.
Other terms in this cluster
Purchased goods and services (Scope 3 Category 1)