Glossary›Emissions accounting and measurement›Value chain
Glossary term
Cluster D · D32
Tier 1
Value chain
Definition
A value chain is the full set of activities that bring a product or service into existence and carry it through to end of life, from raw material extraction to disposal. In greenhouse gas accounting it defines the population of indirect emissions an organisation must consider, upstream from its suppliers and downstream through its customers.
GHG Protocol Corporate Value Chain (Scope 3) Standard (2011)
· chapter 5 ·
In force
On this page
In practice
The term does real work because it is the population definition for Scope 3. Everything in the value chain is a candidate for measurement; nothing outside it is. An entity that cannot describe its value chain cannot demonstrate that its Scope 3 screening was complete, which is the assertion most likely to fail in a first-year engagement.
The description that survives scrutiny is concrete and specific to the business. Not “our suppliers and customers”, but the tiers: what the entity buys, from roughly whom, in what volume; what it does to it; who it sells to; what happens to the product afterwards. For a private Australian business the upstream half is usually reconstructable from the accounts payable ledger, because the creditors listing is a near-complete map of purchased goods and services by spend. The downstream half rarely is, and that is where the work sits.
Value chain is not the same as legal control, and the distinction is the source of the most common objection. Entities argue they cannot report emissions they do not control. Scope 3 does not turn on control; it turns on the activity being in the value chain. Influence, not control, is the organising idea.
What the assurer does with it
The assurer asks for a documented value chain map and tests it against the entity’s own commercial records. The standard cross-check is the creditors listing by spend: they take the top suppliers by value and confirm each is reflected somewhere in the Scope 3 screening. A supplier in the top twenty by spend that appears nowhere in the screening is a direct completeness finding.
Downstream, they test against the revenue side (the customer or channel analysis, the product listing) and ask what happens to the product after sale. They accept a map derived from the entity’s own financial records with a stated method for how it was built. They reject a generic industry value chain diagram with no link to the entity’s actual suppliers or customers, and a map that stops at tier 1 for a business whose material emissions sit further up.
Commonly confused with
Supply chain, which covers the upstream half only and excludes everything after the sale. Where a business model is downstream-dominant, using the two terms interchangeably systematically understates Scope 3.
Sources
1
Corporate Value Chain (Scope 3) Accounting and Reporting Standard, full text
GHG Protocol
2
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 two halves the value chain divides into
The standard that turns the value chain into fifteen answerable questions
Where the value chain population stops and the consolidation begins
Related questions
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.
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.
Do we have to report Scope 3 in year one?
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No. AASB S2 gives first-time reporters relief from disclosing Scope 3 greenhouse gas emissions in their first annual reporting period, and Scope 3 is required from the second year. Taking the relief in year one is normal, but the supplier data work needs to start in year one anyway.
Other terms in this cluster
Value chain