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Sourcing and Procurement

Addressing Scope 3 Greenhouse Gas Emissions With Procurement Strategies

In the global push towards sustainability, addressing scope 3 greenhouse gas (GHG) emissions has become a pivotal challenge for organizations committed to the cause. Unlike scope 1 and scope 2 emissions, which stem directly from owned or controlled operations and energy consumption, scope 3 emissions encompass indirect emissions across the value chain-ranging from supplier activities in the usage and disposal of products. These emissions can account for 80% or more of a company’s total carbon footprint, making their management both critical and complex. Procurement is one of the most powerful levers organizations have in this fight.

This article explores how, by leveraging procurement strategies, organizations can transform their supply chains into powerful drivers of decarbonization and long-term resilience.


The role of procurement in reducing scope 3 emissions

Procurement plays a critical role in addressing scope 3 emissions because many of these emissions are tied to the sourcing, purchasing, and management of materials and services from suppliers. For instance, procurement strategies such as fostering sustainable supplier relationships, driving innovation, and embedding environmental criteria into sourcing decision can help in tackling scope 3. The following are a few key procurement strategies for addressing scope 3 emissions.


  • Sustainable supplier selection
  • Integrating sustainability in supplier selection goes beyond just evaluating cost, quality, and delivery performance; it involves assessing a supplier’s environmental practices, energy consumption, and commitment to carbon reduction. Key actions include:

    • Integrating environmental, social, and governance (ESG) criteria into supplier evaluation process by assessing suppliers’ carbon reduction goals, energy use, waste management practices, and overall environmental impact can deliver significant benefits. For examples, Ford Motor Company has integrated human rights environmental standards and ethical sourcing into their global terms and conditions for the suppliers. The FMCG leader Unilever has prioritized supplies to align with its sustainable agriculture code, focusing on water management, biodiversity, and fair labor practices.
    • Fostering long-term relationships with sustainable suppliers who share your organization’s sustainability goals can drive continuous improvement and innovation in reducing emissions.

  • Collaborative supplier engagement
  • To truly address scope 3 emissions, procurement teams need to engage in meaningful collaboration with their suppliers. By working together, procurement can help suppliers, including small and medium-sized enterprises (SMEs), improve their sustainability practices. Key actions include:

    • Co-investing in sustainable innovation: Procurement teams can partner with suppliers to co-invest in the development of new technologies, materials, or processes that reduce carbon emissions. For example, investing in renewable energy solutions or more energy-efficient production methods can have a significant impact on reducing scope 3 emissions.
    • Supplier training focused on sustainability: Establishing training programs and workshops that educate, reward, and incentivize suppliers into reducing their emissions can foster a culture of sustainability. This helps suppliers measure, report and reduce their emissions as well as achieve recognition for their performance, get long-term contracts, and obtain financial rewards.

  • Implementing circular procurement practices
  • The circular economy emphasizes reusing, recycling, and reducing waste, which can significantly lower the carbon footprint of procurement activities. Key actions include:

    • Encouraging suppliers to design for durability and recyclability: Based on the industry or category, procurement teams can prioritize purchasing products made from recycled or sustainable materials, such as recycled plastics, metals, and packaging. This reduces the need for raw material extraction, extend the product lifecycle, reduce waste, and decreases the associated emissions.
    • Adopting product-as-a-service models: Rather than purchasing products outright, procurement teams can explore product-as-a-service models, where the supplier retains ownership and responsibility for the product throughout its lifecycle. This encourages suppliers to focus on durability and end-of-life recovery, reducing the environmental impact.

  • Enhancing visibility and transparency in the supply chain
  • One of the biggest challenges in reducing scope 3 emissions is the lack of visibility into the emissions generated by suppliers and upstream activities. To address this, procurement teams need to enhance transparency and collect more data across the supply chain. Key actions include:

    • Requesting carbon reporting from suppliers: Procurement teams should mandate suppliers to measure and report their carbon emissions. This can be a part of the contractual agreement, ensuring that suppliers are accountable for their environmental impact. Procurement teams can also utilize digital tools to track and monitor supplier emissions data.
    • Implementing blockchain for traceability: Blockchain technology can be used to create a secure and transparent record of a product’s journey through the supply chain. This ensures that sustainability claims are verifiable and that emissions reductions are being achieved.

  • Incorporating low-carbon logistics and transportation
  • Transportation and logistics often represent a significant portion of scope 3 emissions, particularly for companies with global supply chains. By optimizing transportation strategies, procurement can make a substantial impact on reducing these emissions. Key actions include:

    • Optimizing transportation routes and methods: Procurement teams can work with logistics providers to optimize routes, consolidate shipments, and switch to more efficient modes of transportation. They can also source goods from suppliers that are closer to their production facilities to reduce transportation-related emissions. For example, rail or sea freight often has a lower carbon footprint than air freight.
    • Adopting electric or low-emission vehicles: Encouraging the use of electric or low-emission vehicles for transportation can help reduce emissions associated with the movement of goods. This may involve partnering with logistics providers who are investing in green transportation technologies.

  • Tracking progress and setting emissions reduction targets
  • Setting specific goals not only helps guide procurement decisions but also demonstrates the company’s commitment to sustainability. Key actions include:

    • Creating a carbon dashboard: A carbon dashboard allows procurement teams to visualize and track emission data across the supply chain. This provides real-time insights into how procurement activities are impacting a company’s overall carbon footprint.
    • Reporting progress to stakeholders: Setting ambitious, scientific emission reduction targets that align with the Paris Agreement and other global climate frameworks and then regularly reporting on the reduction builds accountability and trust with stakeholders, including customers, investors, and regulatory bodies.

The strategic value of sustainable procurement

Addressing scope 3 emissions is essential for companies aiming to achieve their carbon reduction and sustainability goals. However, there are industries and geographies that face challenges in implementing sustainability measures. In such cases, organizations can alternatively invest in green projects such as solar panels to buy carbon credits to meet the scope 3 reduction targets set by the government.

For organizations committed to meaningful climate action, sustainable procurement is more than a compliance initiative; it’s a competitive advantage. Addressing scope 3 emissions through strategic procurement practices is a journey that requires vision, collaboration, and innovation. By embedding sustainability into every aspect of the procurement process, companies can build resilient, low-carbon supply chains that align with global climate goals and respond to the growing expectations of consumers, investors, and regulators.


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