Supply chain decarbonization: your biggest lever for Scope 3 reduction
Léa Dubois
Head of Partnerships
Why upstream supply chain dominates your footprint
For most manufacturers, retailers, and consumer goods companies, upstream supply chain (Scope 3 category 1: purchased goods and services) represents 60–90% of total greenhouse gas emissions. Every product you buy carries embodied carbon from the energy, materials, and processes used to make it.
This creates an uncomfortable reality: even if you power your operations with 100% renewables and electrify your entire fleet, you may have reduced only 10–30% of your actual footprint. The remaining 70–90% lies in decisions made by thousands of suppliers you may have never visited.
This is not a reason for despair — it is a reason for strategy. Because Scope 3 category 1 is also where the largest absolute reductions are achievable. A 10% reduction in your top supplier's emissions intensity can outweigh years of internal efficiency improvements.
Supplier engagement strategy
Effective supply chain decarbonisation starts with tiering. You likely have hundreds of suppliers, but a Pareto analysis will show that 20% account for 80% of your Scope 3 category 1 emissions. Focus engagement resources there first.
For top-tier suppliers by emissions contribution, the goal is primary data: actual verified emission reports, ideally GHG Protocol-aligned and third-party assured. This requires relationship-building, not just questionnaires. Consider co-funding audits, offering data platform access, and integrating emission performance into procurement scoring.
For the long tail of suppliers, the CDP Supply Chain programme provides a structured questionnaire framework used by over 27,000 companies. Participating buyers represent over US$7 trillion in purchasing power. For many small suppliers, responding to CDP is their first serious engagement with GHG accounting.
The SBTi FLAG initiative
For companies in food, agriculture, forestry, and land-use-intensive industries, the SBTi's Forest, Land, and Agriculture (FLAG) guidance introduces sector-specific targets requiring accounting for land-use change emissions and setting separate land-based mitigation targets alongside standard science-based targets.
FLAG is particularly critical for food and beverage, paper and packaging, and agriculture companies, where Scope 3 category 1 emissions from agricultural inputs represent the majority of the corporate footprint. FLAG targets require engagement with Tier 2 and Tier 3 suppliers — commodity traders and raw material producers.
The practical implication: if you sell into a company committing to FLAG targets, they will be requesting detailed land-use and agricultural emissions data. Building that data infrastructure now — rather than when the request arrives — gives you a competitive advantage in procurement.
Practical tools: CDP, supplier scorecards, and incentives
The CDP Supply Chain programme is the most widely adopted supplier engagement tool. Member companies send CDP questionnaires to their supply chains annually. Suppliers respond with emissions data, reduction targets, and governance information. CDP aggregates and scores responses, giving buyers a standardised view of supplier climate performance.
Supplier scorecards integrate climate performance into procurement decisions. Leading companies are tying supplier renewal decisions and preferred-vendor status to emissions intensity improvements — creating a direct financial incentive for suppliers to invest in decarbonisation.
Green procurement clauses are emerging in supplier contracts: requirements to maintain SBTi-validated targets, provide annual verified GHG reports, and meet minimum emissions intensity thresholds by specific dates. Your legal and procurement teams should be involved in designing these clauses to ensure they are measurable and enforceable.
TerraLedger's supply chain module
TerraLedger's Supply Chain module provides an end-to-end platform for Scope 3 category 1 data collection and supplier engagement. Suppliers receive a branded data portal where they can submit verified emissions reports, upload third-party assurance certificates, and track their own progress against your requirements.
The platform automatically maps supplier data to your Scope 3 inventory, replacing spend-based estimates with primary data where available and flagging remaining estimation gaps. You can view supply chain emissions on a per-supplier, per-commodity, and per-region basis.
Supplier scorecards are auto-generated based on data quality, emissions intensity trends, and alignment with your net-zero targets — giving your procurement team actionable intelligence for vendor selection and contract renewal decisions.