A Turning Point in Carbon Accountability
As global climate targets tighten and environmental, social, and governance (ESG) regulations become more stringent, businesses are facing increasing scrutiny over their carbon footprints, not just within their own operations, but across their entire value chains. Central to this shift is the rising importance of Scope 3 emissions: the indirect emissions generated outside an organisation’s direct control, particularly from purchased goods and services. These emissions, which can account for more than 70% of a company’s total footprint, are putting procurement teams under the spotlight like never before.
The European Union’s Corporate Sustainability Reporting Directive (CSRD), which came into force in January 2024, has made reporting on Scope 3 emissions mandatory for a growing number of companies. This marks a new era in corporate climate responsibility, one in which procurement is no longer a back-office function but a frontline actor in decarbonisation efforts.
Scope 3: The Sleeping Giant of Corporate Emissions
While Scope 1 (direct) and Scope 2 (energy-related indirect) emissions are relatively straightforward to measure and control, Scope 3 emissions are dispersed, complex, and heavily dependent on external suppliers. They cover a broad range of activities, from the extraction of raw materials and the production of components to transportation, business travel, waste, and even product use and end-of-life. According to the Carbon Disclosure Project (CDP), Scope 3 emissions are, on average, 11.4 times greater than operational emissions in most sectors. Yet, until recently, they have remained poorly understood and rarely measured with precision. The new regulatory environment, however, is changing that.
The CSRD and Beyond: Regulatory Pressures Mount
The CSRD requires approximately 50,000 companies operating in the EU, both European and non-European businesses with significant activity in the bloc, to disclose detailed sustainability information. This includes Scope 3 emissions under the European Sustainability Reporting Standards (ESRS), especially ESRS E1, which covers climate change.
The directive builds upon the EU Taxonomy and dovetails with the Sustainable Finance Disclosure Regulation (SFDR), placing added pressure on firms to demonstrate credible carbon transition plans. Similarly, in the UK, the Streamlined Energy and Carbon Reporting (SECR) framework and the Transition Plan Taskforce (TPT) disclosure recommendations signal a growing emphasis on full-value-chain accountability.
Procurement at the Centre of Climate Strategy
This regulatory shift has propelled procurement teams into a new strategic role. No longer focused solely on cost, quality, and risk, procurement is now expected to deliver sustainability outcomes, measuring, reducing, and reporting emissions embedded in purchased goods and services. To do this effectively, procurement professionals must collaborate closely with sustainability teams, ESG officers, and finance departments. They must also develop new supplier engagement strategies, requiring vendors to disclose their own emissions data and commit to science-based targets.
The role of category managers, for instance, is evolving: they are now expected to incorporate emissions data into sourcing decisions and contract performance indicators, fundamentally reshaping supplier selection and relationship management.
Digital Tools and Carbon Accounting Platforms
Achieving Scope 3 transparency without digital infrastructure is nearly impossible. A new generation of carbon accounting tools, such as Watershed, Normative, Persefoni, and SAP’s Sustainability Footprint Management, are helping companies estimate and monitor supplier emissions using life cycle assessments (LCAs), environmentally extended input-output (EEIO) models, and increasingly, primary supplier data. Moreover, procurement software providers like Coupa, EcoVadis, and Vizibl are integrating ESG criteria into sourcing platforms, enabling real-time sustainability tracking at supplier and contract levels. These tools allow organisations to go beyond estimations and move towards data-driven decision-making.
However, many SMEs in the supply chain still lack the resources or technical capacity to measure and share their emissions data accurately. This creates a growing disparity between reporting companies and their upstream partners, highlighting the need for support, training, and harmonised methodologies.
Supplier Enablement and the Data Gap
For Scope 3 reporting to be truly reliable, suppliers must become active participants in the carbon accounting process. Yet, studies show that less than 20% of suppliers globally are currently able to provide high-quality emissions data. Many rely on average emission factors or lack visibility into their own operations.
This has prompted some large buyers to invest in supplier enablement initiatives: offering training on carbon accounting, subsidising life cycle assessments, or introducing digital onboarding tools that capture emissions-related KPIs from the outset. Some organisations are also introducing “carbon clauses” in procurement contracts, tying supplier bonuses or penalties to decarbonisation targets. Others are leveraging preferred supplier status to incentivise low-carbon performance.
Nonetheless, balancing transparency with feasibility remains a key challenge, especially in complex, global supply chains where supplier turnover, data inconsistencies, and confidentiality concerns are common.
The Road Ahead: From Compliance to Competitive Advantage
While the regulatory impetus is clear, the strategic opportunity for procurement leaders lies in going beyond compliance. Those who proactively build carbon-conscious supply chains stand to benefit from improved investor confidence, customer loyalty, and operational resilience. By embedding carbon data into supplier scorecards, integrating it into procurement performance reviews, and linking it with broader ESG goals, companies can position themselves as front runners in sustainable business. Procurement, once a transactional function, is now becoming a cornerstone of corporate climate strategy. But to fully realise this potential, procurement teams must be empowered with the right tools, cross-functional support, and supplier engagement frameworks.
Scope 3 transparency is no longer a nice-to-have, it is an imperative. As regulations tighten and stakeholder expectations rise, procurement departments must adapt swiftly. Those that do will not only ensure compliance but will help steer their organisations towards genuine climate leadership. The question is no longer whether procurement will rise to the challenge, but how fast, and how far.
Sources:
World Economic Forum – Net-Zero Supply Chains
European Commission – CSRD Explained
Transition Plan Taskforce – Framework Disclosure Guidance
EcoVadis – Sustainable Procurement Barometer 2024
