Companies are increasingly expected to understand emissions across their value chains and demonstrate progress toward climate targets. This makes Scope 3 emissions central to how companies measure and manage their climate impact. In this context, Emission Factors (EFs) play a critical role by translating activity data into greenhouse gas emissions, enabling consistent quantification, reporting, and decision-making.

However, differences in data quality, traceability, and methodology can significantly influence results. This makes it essential to adopt structured and transparent approaches to EF development and application.

In 2025-26, the VCI Emission Factor Lab explored EFs to enable accurate, complete, and credible Scope 3 reporting across land‑based value chains, focusing on:

– A structured typology of Emission Factors: supplier‑specific, Supply Shed, stratified, and residual.

– Methodological rigor, highlighting the importance of data quality, traceability, system boundaries, and appropriate statistical choices.

– The distinct roles of EFs in reporting, noting that different reporting statements (physical inventories, contractual reporting, mitigation claims) require different EF types.

– The safeguards needed for credible corporate climate reporting, including the essential use of residual EFs, transparent documentation, and clear treatment of removals.

The output of the Emission Factor Lab is now available for download. Read on for key insights.

A structured typology of Emission Factors

The publication introduces four core EF types for land-based value chains: supplier-specific, Supply Shed, stratified, and residual EFs.

Each serves a distinct purpose.

– Supplier-specific EFs offer high accuracy but require strong traceability.

– Supply Shed EFs provide scalable regional averages.

– Stratified EFs capture the impact of specific interventions or practices.

– Residual EFs ensure that all remaining volumes are accounted for, preventing overstatement of mitigation outcomes.

These EF types are complementary rather than interchangeable. In particular, the combined use of stratified and residual EFs is essential in shared Supply Sheds to maintain completeness and avoid double counting.

Methodological considerations and data challenges

The robustness of Emission Factors depends on data collection, aggregation, and statistical treatment. In practice, hybrid approaches combining primary data, sampling, and modeling are often necessary.

Weighted averages are generally the most appropriate method for aggregating EFs across heterogeneous systems, as they reflect differences in production volumes or land areas. In contrast, medians may mask variability. This is especially relevant for residual EFs: when low-emission intervention farms are excluded, the mean increases to reflect the remaining emissions profile, while the median may remain unchanged, potentially understating emissions. These dynamics highlight the importance of carefully selecting and documenting statistical methods.

Traceability, boundaries, and integrity safeguards

Traceability is a key determinant of how EFs can be used. High-resolution EFs require a clear link between emissions data and sourced volumes. Without this, their use may be limited.

To ensure credibility, companies must define clear system boundaries, align spatial and temporal scopes, and implement safeguards to prevent double counting, particularly in shared Supply Sheds. Residual EFs are critical in this context, ensuring that all non-intervention volumes are captured and that mitigation claims are not overstated.

Treatment of removals and evolving reporting structures

Removals must be treated separately from emissions. They should be quantified as net carbon stock changes and reported independently, with monitoring systems in place to address permanence and reversals.

At the same time, reporting frameworks are shifting toward multi-statement approaches that distinguish between physical inventories, contractual reporting, and mitigation claims. This reinforces a key principle: the same EF cannot serve all reporting purposes. Its use depends on traceability, methodology, and the type of claim being made.

Implications for corporate reporting

This evolving landscape requires companies to strengthen governance and data systems while offering opportunities for more accurate and credible reporting.

Key priorities include:

– Defining clear boundaries and aligning them with reporting scopes

– Matching EF selection to traceability and intended use

– Applying residual EFs to ensure completeness

– Preventing double counting across shared supply chains

– Transparently documenting methodologies and assumptions

Supporting credible reporting with Emission Factors

EFs are no longer simple calculation tools. They are central to credible climate reporting and value chain engagement. A structured and well-governed approach enables companies to move beyond generic averages toward more accurate, transparent, and decision-useful accounting.

By strengthening EF methodologies and safeguards, companies can both improve reporting and support meaningful and verifiable climate action at scale.

Download the full publication for more insights: