CO2 Performance Ladder level 4: scope 3 and two supply chain analyses
Level 4 is the point where the ladder goes beyond the boundaries of your own company. You report not only on scope 1 and 2, but also on the emissions in your chain: purchasing, transport and the use of your products. Handbook 3.1 asks you to rank the most material scope 3 emissions, analyse two chains and formulate a reduction target for those chains. The requirements are in the CO2 Performance Ladder handbook 3.1 . Level 4 belongs to the overview page about levels, and you can read about the scope 3 categories at scope 1, 2 and 3 emissions.
From level 4, scope 3 reporting is mandatory. At level 3 you only need to report scope 1, 2 and business travel.
This page describes handbook 3.1. SKAO published handbook 4.0 on 14 January 2025. Audits under 3.1 can still take place until 14 January 2027. After that, only 4.0 applies, with tiers instead of levels. See the transition arrangement .
What does level 4 mean in practice?
Level 4 builds on levels 1 to 3. You must therefore have all the requirements of the lower levels in order, plus the requirements that apply specifically to scope 3. The handbook requires you to stay active on all underlying levels, with up-to-date performance.
There are two differences from level 3 that take the most work:
- You make a ranking of the most material scope 3 emissions and analyse two chains.
- You formulate a scope 3 reduction target, based on those supply chain analyses, with a plan of action.
In addition, there are requirements on communication with government and civil society organisations, and on the initiative you take in the sector.
The requirements per perspective at level 4
| Requirement | What you demonstrate | Maximum score |
|---|---|---|
| 4.A.1 | Insight into the most material scope 3 emissions, and two supply chain analyses | 15 (10 or 5 for weaker analyses) |
| 4.A.2 | A quality management plan for the emission inventory | 5 |
| 4.A.3 | One of the scope 3 analyses is professionally supported or commented on by an independent knowledge institute | 5 |
| 4.B.1 | A quantitative CO2 reduction target for scope 3, based on two analyses, with a plan of action | 15 |
| 4.B.2 | Half-yearly reporting, internal and external, on progress | 10 (5 if annual) |
| 4.C.1 | A regular dialogue (at least twice a year) with at least two stakeholders from government or NGOs | 20 (5 with one stakeholder) |
| 4.C.2 | Concerns raised by government or NGOs have been identified and addressed | 5 |
| 4.D.1 | Acting as initiator of a development project that helps the sector reduce CO2 | 20 |
The ladder takes the size of your organisation into account, based on your CO2 emissions. A small organisation makes only one supply chain analysis at 4.A.1, for one of the two most material emissions. Small and medium-sized organisations do not have to meet 4.C and 4.D. Those requirements are then treated as fictitiously met, which gives 90 percent of the maximum score. For 4.B.2, a small organisation only needs to report annually on scope 3.
Step 1: the ranking of scope 3 emissions
The handbook asks for a qualitative ranking of the scope 3 emission sources. You use a mandatory table with the columns: sector or activity, the activity that releases CO2, the relative importance of the CO2 impact, the potential influence of your organisation, and the rank. For the categories, preferably align with the 15 categories of the GHG Protocol Scope 3 Standard . GHG stands for greenhouse gas. Business travel is already in your inventory for level 3 and does not need to be included here. You do not give an exact number, but an indication: large, medium, small or negligible. The ranking includes upstream (purchasing) and downstream (sold products) emissions, unless you can show that you have no influence on one of those sides.
An example for a fictional office fit-out builder:
| Sector or activity | Activity that releases CO2 | Importance of CO2 impact | Potential influence | Rank |
|---|---|---|---|---|
| Office fit-out, wood and steel | Production of purchased materials | Large | Medium | 1 |
| Office fit-out, transport | Transport of materials to the construction site | Medium | Large | 2 |
| Office fit-out, waste | Processing of construction waste | Small | Medium | 3 |
| Subcontracting, assembly | Fuel of subcontractors | Small | Small | 4 |
As a rule of thumb, the assessor expects the top sources together to cover 70 to 80 percent of your total scope 3 emissions. You do not quantify this in the ranking. The assessor estimates it themselves.
The ranking is about emissions that are large and that you can influence. A source with large but uninfluenceable emissions does not automatically go to the top.
Step 2: two supply chain analyses
Based on the ranking, you choose two chains that you analyse in depth. One chain comes from the top two most material emissions, the other from the top six. You carry out the analyses yourself or have them carried out. Piggybacking on a paid client assignment is not allowed, and you quantify the emissions. The supply chain analysis describes how to set up such an analysis: which activities are in the chain, which parties are involved, which emissions per link, and which measures are possible.
For the fictional office fit-out builder, the two chains could be, for example, “wood production and delivery” and “transport to the construction site”. For each chain, you describe the links from supplier to construction site, the emissions per link, and the parties you can approach to reduce emissions.
What the auditor wants to see: an analysis that goes beyond a list. They want to see which link causes the most emissions, which party you can influence, and which measures follow from that.
Step 3: the reduction target for the chain
Requirement 4.B.1 asks for a quantitative target. The target is expressed in absolute figures or percentages relative to a base year, within a set timeframe, with a plan of action.
The target must be ambitious and comparable with that of sector peers. An example that suits the fictional builder: “We reduce the scope 3 emissions of wood delivery by 10% compared with 2025, by 2029, by working with our two largest suppliers to revise the transport route and the use of certified timber.” The percentages in this example are fictional. A real target must fit your own situation and your sector, and the handbook asks for a justification.
Requirement 4.B.2: reporting on progress
At level 4 you report on progress at least every six months, internally and externally. That sounds heavy, but it does not have to be extensive. A short overview per half year with the status of the measures, the measured emissions and publication on your website is sufficient.
Annual reporting earns 5 points, half-yearly reporting 10. At the first assessment at level 4, one progress report may suffice, if you have demonstrably secured the following, and at least three months lie between setting the targets and that first report. Then a small deduction of 2 points applies.
Requirements 4.C and 4.D: dialogue and initiative
At level 4 you conduct a regular dialogue with government and civil society organisations about your reduction target. This applies to large organisations. You hold at least two dialogues a year with a government body and two a year with an NGO (non-governmental organisation) or an independent expert. At least once a year, this takes place at management level. The aim is to test whether management gives the theme priority and to gather suggestions for improvement.
Requirement 4.D.1 asks for an initiative. You can show that you are the initiator of a development project that helps the sector reduce CO2. You can do this through publications, co-initiators, or by linking your name to the initiative. This also applies only to large organisations. The development project must be innovative and aimed at new measures in the ambitious category C of the measure list. As initiator, you must demonstrably record progress every six months. Requirement 4.D.1 earns 20 points.
Common mistakes at level 4
A supply chain analysis that only describes. A table of suppliers is not an analysis. The auditor wants to see which choices you have made and why.
A reduction target without a basis. The target must come from the supply chain analysis, not from a feeling. Refer to the figures in your justification.
A ranking without a method. You must follow the method in the handbook and explain the choice for each category.
Reporting too late. Half-yearly really means twice a year. If you do not record this in the management cycle, you will lose the points.
What does the auditor want to see at level 4?
- A ranking of scope 3 emission sources, with justification per source.
- Two supply chain analyses that meet the requirements of 4.A.1.
- A quality plan for the emission inventory and an independent review of one of the analyses.
- A quantitative reduction target with a plan of action and timeframe.
- Progress reports, half-yearly, internal and external.
- Evidence of the dialogue with government or civil society organisations, and of the initiative.
Level 4 or level 5?
Level 5 builds on level 4 and requires a scope 3 strategy and a higher level of ambition. If you want to know what that step additionally requires, read the page about level 5. To compare with the new tiers of handbook 4.0, see levels and tiers.
Next step
Start with the supply chain analysis and the scope 3 reporting. For the approach to the whole process, use the step-by-step plan.